Cutting Ties to Fossil Fuels
A U.N. study found that doing away with fossil fuel subsidies could in fact cut greenhouse gas emissions by 6 percent globally, as well as increase world economic growth.
Experts believe subsidies on oil, gas and coal are meant to help the poor by lowering the price of energy, but they typically backfire by mainly benefiting the wealthy.
The study estimated that energy subsidies totaled about $300 billion a year or 0.7 percent of world gross domestic product (GDP).
"Canceling these subsidies might reduce greenhouse gas emissions by as much as 6 percent a year while contributing 0.1 percent to global GDP," the study noted.
People with lower income would likely cut back on use of fossil fuels if they were forced to pay more.
"Governments should urgently review their energy subsidies and begin phasing out the harmful ones," said Achim Steiner, head of the Nairobi-based U.N. Environment Programme (UNEP).
"Many fossil fuel subsidies are introduced for political reasons but are simply propping up and perpetuating inefficiencies in the global economy," said Steiner.
Russia had the largest subsidies totaling about $40 billion a year spent mainly on making natural gas cheaper.
Iran checked in with $37 billion, while China, Saudi Arabia, India, Indonesia, Ukraine and Egypt also had big subsidies on fuels.
"Some countries spend more on subsidies than on health and education combined … they stand in the way of more environmentally friendly technologies," said Kaveh Zahedi, climate change coordinator at UNEP.
The report said liquefied petroleum gas (LPG) subsidies in India totaled $1.7 billion in the first half of 2008.
The report suggested smarter subsidies such as tax breaks, financial incentives or other market mechanisms could generate benefits for both the economy and environment if properly targeted. Examples include subsidies to promote wind energy in Germany and Spain that are aimed at helping to shift from fossil fuels.
Researchers said in a dozen years, well-orchestrated subsidies in Chile spread rural electrification to 90 percent of the population.
The UN said Africa was beginning to benefit from a U.N. project to help investments in clean technologies such as wind or geothermal power. China, India and Brazil have won a majority of the 3,500 projects.
UNEP spokesman Nick Nuttall said new projects started during recent months in Mozambique, the Democratic Republic of Congo, Madagascar, Mauritius, Mali and Senegal.
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