World Is ‘Backsliding’ on Gasoline Subsidies, Finds Study

Taxes on gasoline effectively reduce CO2 emissions, yet they are lower now than they were 13 years ago, finds a new study.

By increasing taxes and removing subsidies for fossil fuels, governments provide an incentive for consumers to start using cleaner alternatives.  However, this mechanism is not being put to full use, say US scientists, who have published their work in the journal Nature Energy.

While some countries have consistently removed subsidies on fossil fuels, the overall trend between 2003 and 2015 was for lower taxes, the study says.

Lack of clarity
The removal of subsidies is a high-profile issue when it comes to tackling climate change.

Last year, G7 countries, which include the US and UK, committed to removing “inefficient” fossil fuel subsidies by 2025.  The G20 made a similar proposal in 2009, while the World Bank has supported the scrapping of subsidies and the introduction of a carbon tax. Several governments have supported individually the removal of subsidies, including New Zealand, Sweden, and Argentina.

There are also large amounts of money involved.  The International Monetary Fund estimates that global fossil fuel subsidies, including social and environmental costs, amounted to $5.3tn in 2015, equal to 6.5% of global gross domestic product.

A study from the Stockholm Environment Institute and Earth Track, due to be published tomorrow, finds that 45% of US oil and gas fields can only be developed profitably if they are subsidised.  This highlights the role that subsidies play in allowing otherwise uneconomic oil and gas exploitation to go ahead.

Read more at World Is ‘Backsliding’ on Gasoline Subsidies, Finds Study