| ID | 128450 |
| Title Proper | Long-term climate policy implications of phasing out fossil fuel subsidies |
| Language | ENG |
| Author | Schwanitz, Valeria Jana ; Piontek, Franziska ; Bertram, Christoph ; Luderer, Gunnar |
| Publication | 2014. |
| Summary / Abstract (Note) | It is often argued that fossil fuel subsidies hamper the transition towards a sustainable energy supply as they incentivize wasteful consumption. We assess implications of a subsidy phase-out for the mitigation of climate change and the low-carbon transformation of the energy system, using the global energy-economy model REMIND. We compare our results with those obtained by the International Energy Agency (based on the World Energy Model) and by the Organization for Economic Co-Operation and Development (OECD-Model ENV-Linkages), providing the long-term perspective of an intertemporal optimization model. The results are analyzed in the two dimensions of subsidy phase-out and climate policy scenarios. We confirm short-term benefits of phasing-out fossil fuel subsidies as found in prior studies. However, these benefits are only sustained to a small extent in the long term, if dedicated climate policies are weak or nonexistent. Most remarkably we find that a removal of fossil fuel subsidies, if not complemented by other policies, can slow down a global transition towards a renewable based energy system. The reason is that world market prices for fossil fuels may drop due to a removal of subsidies. Thus, low carbon alternatives would encounter comparative disadvantages. |
| `In' analytical Note | Energy Policy Vol.67; Apr 2014: p.882-894 |
| Journal Source | Energy Policy Vol.67; Apr 2014: p.882-894 |
| Key Words | Fossil Fuel Subsidies ; Climate Change ; Sustainable Energy Transformation |