Zombie Energy: Climate benefits of ending subsidies to fossil fuel production

This working paper explains how different production subsidies currently unlock “zombie energy” from fossil fuel deposits that would not be commercially viable to produce without government support.

It also presents new modelling of the global removal of certain subsidies to fossil fuel production. In doing so, the report builds on the dataset from the previous Overseas Development Institute (ODI) and Oil Change International (OCI) report “Empty Promises: G20 Subsidies to Oil, Gas and Coal Production” (Bast, Doukas, Pickard, van der Burg, L., & Whitley, 2015) as well as research by the Global Subsidies Initiative (GSI) on both the scale and impacts of various fossil fuel subsidies.

The report is structured as follows:

• Chapter 1 explains why fossil fuel production subsidies matter for climate change. The chapter also defines and categorizes fossil fuel production subsidies.
• Chapter 2 outlines how different subsidies influence investment decisions related to fossil fuel production.
• Chapter 3 discusses modelling of a removal of fossil fuel production subsidies and inputs of the GSI-IF (p) global model.
• Chapter 4 presents results of new modelling that shows how much coal, oil and gas could become uneconomical to produce—and the GHG emission reductions that would result—if certain fossil fuel production subsidies are removed globally.

The report concludes with a summary of the findings as well as opportunities for further research on the climate benefits of fossil fuel subsidy removal.