
Cutting Emissions Through Fossil Fuel Subsidy Reform and Taxation
Using the Global Subsidies Initiative – Integrated Fiscal Model (GSI-IF model), this report models the impact of fossil fuel subsidy reform (FFSR) on greenhouse gas (GHG) emission reductions for the following 32 countries: Algeria, Argentina, Australia, Bangladesh, Brazil, Canada, China, Egypt, Ethiopia, Germany, Ghana, India, Indonesia, Iran, Iraq, Japan, Mexico, Morocco, Myanmar, Nigeria, Pakistan, Russia, Saudi Arabia, South Africa, Sri Lanka, Tunisia, United Arab Emirates, the United States, Venezuela, Vietnam, the Netherlands, and Zambia. In total, these 32 countries accounted for 77% of global carbon dioxide emissions, 72% of global GDP, and 72% of the global population in 2019.
The GSI-IF model uses semi-continuous simulations to forecast energy demand and corresponding GHG emissions. It considers the gradual removal of all fossil fuel subsidies to consumers until 2030, a gradual introduction of a 10% fossil energy tax until 2030, and the investment of 30% of both subsidy savings and tax revenues to energy efficiency and renewable energy from 2021, respectively 2026, onwards.
The research finds a simple country average in GHG emission reductions of about 6% by 2030 compared to business as usual, while the data shows that FFSR can reduce as much as 35% of emissions in the countries modelled. Adding emission reductions from the fossil energy tax as well as the investments of parts of the subsidy savings and tax revenues into sustainable energy would almost double the average GHG emission reductions to 11.8% by 2030. Cumulative fiscal savings from FFSR alone by 2030 total close to USD 3 trillion across the countries analyzed, with total cumulative GHG emissions abated from FFSR of 5.4 gigatonnes of carbon dioxide equivalent (GtCO2e) by 2030—equivalent to the annual emissions of about 1,000 coal-fired power plants or 3.8 billion cars. For every tonne of CO2e removed through FFSR alone, governments save about USD 546.47 on average. When considering the resources reallocated via the subsidy swap, governments can increase their emission reductions and still save USD 164 for every tonne of CO2e removed.
You might also be interested in
Switching Fossil Fuel Subsidies in Indonesia to Support a Green Recovery
This brief looks at how Indonesia can start actively promoting renewable energy by removing the existing hurdles to its deployment—such as unattractive renewable energy feed-in tariffs and land and infrastructures barriers—and switching public support from fossil fuels to renewables to meet the country’s clean energy targets.
LNG the wrong choice at the wrong time for B.C.
As 2023 begins, B.C. Premier David Eby and his new cabinet are setting priorities and determining which policies of the Horgan government to carry forward and which to cast aside. Liquefied natural gas exports touch on a host of critical issues that Eby and key ministers are considering.
Fighting for a place to breathe
In the shadow of a retired coal-fired power plant in India's capital, Meena Devi tries to make her family home -- four brick walls with a tin roof -- a safe place to breathe.
Subsidies for renewable energy and EVs more than double: Study
Nagpur: India’s subsidies for renewable energy and electric vehicles more than doubled this fiscal, according to a new study by independent think-tank International Institute for Sustainable Development (IISD). However, it also found that it will be critical for the government to build this momentum over the coming years to reach the country's climate targets.