Financing the Sustainable Development Goals Through Fossil-fuel Subsidy Reform: Opportunities in Southeast Asia, India and China

This report from the Global Subsidies Initiative of IISD was launched in conjunction with the Asia Europe Foundation, at a conference exploring the financing of future Sustainable Development Goals (September 29–30, 2014).

The report finds that fossil-fuel subsidy removal and the subsequent taxation of fossil fuels via carbon taxes and VAT could provide significant fiscal resources to Asian governments in order to support the implementation of Sustainable Development Goals (SDGs) via a “Means of Implementation.” The report estimates that in Emerging and Developing Asia fossil-fuel subsidies account for US$104 billion annually, or close to the OECD’s total aid to the developing world. The report analyzes three areas: the potential savings from fossil-fuel subsidies to fund other more productive and targeted government spending, the impact from the persistence of fossil-fuel subsidies on wider proposed Sustainable Development Goals and case studies from the Philippines and Indonesia where governments have reformed fossil-fuel subsidies and been able to channel part of the savings towards social spending and investment in infrastructure. The reports includes a framework for revealing the links between fossil-fuel subsidies, their reform and opportunities for the financing and delivery of the SDGs. It is released as a working paper produced from the GSI with support from the Asia Europe Foundation and core funders. Comments to the author on the paper are welcomed.