Fossil-Fuel Subsidies and Climate Change: Options for policy-makers within their Intended Nationally Determined Contributions

This paper reviews international models of fossil-fuel subsidy reform and greenhouse gas emissions to support parties to the United Nations Framework Convention for Climate Change.

Globally, the removal of subsidies to fossil fuels ($543 billion annually) can lead to global greenhouse gas emission reductions of between 6 and 13 per cent by 2050. The process unlocks domestic savings to governments of between 5 and 30 per cent of expenditure that could be reallocated to households and building a low-carbon energy future. In the context of a low oil price, many countries are phasing out such subsidies. Parties could include emission reductions from this policy tool, within their Intended Nationally Determined Contributions. This paper shows how parties could do that using the Global Subsidies Initiative – Integrated Fiscal model (GSI–IF model) to provide country estimates. For more information on country findings, please contact lmerrill@iisd.org.