The United Nations Environment Programme (UNEP) has called on governments to reform subsidies to fossil fuels as a means to lower greenhouse gas emissions.

The report, “Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda”, provides an overview of the studies that have attempted to quantify the size of energy subsidies, before reviewing the economic, social and environmental impacts that have been linked to their use.

Explaining the environmental consequences of energy subsidies, the report notes that these policies often hamper attempts to reduce fuel use, given that lower consumer prices provide no incentive to conserve.

The social objectives behind energy subsidies are also often flawed, says UNEP. While energy subsidies may be implemented to help poor households cope with the price of fuel, a number of studies have shown these policies to be of greater benefit to middle and upper-middle classes. The UNEP report explains that “even if the poor are able to benefit from an energy subsidy, the financial value to them may be very small since their consumption is generally modest.”

Nonetheless, governments often face resistance to reducing energy subsidies.  UNEP suggests that a gradual, phased-in approach to reducing energy subsidies can alleviate opposition from those who stand to lose. Communication is important too. “Politicians need to communicate clearly to the public the overall benefits of subsidy reform to the economy and to society in order to counter political inertia and opposition,” says UNEP.

The full report, “Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda” can be downloaded by clicking here.