Cut fossil fuel subsidies to curb climate change–and poverty?

Are fossil fuel subsidies undermining progress toward a greener, more climate-resilient global economy – and one that more effectively fights poverty?Governments each year spend around half a trillion dollars on fossil fuel subsidies – a huge expense that pulls investment away from other budget priorities that might more directly help the poor, including education, healthcare and infrastructure. Egypt, Indonesia, Pakistan and Venezuela each spend at least twice as much on fossil fuel subsidies as on public health, and studies show the subsidies disproportionately benefit the rich around the world, as well as making it harder for renewable energy to find support and funding. Is it time to reduce or eliminate them? How might that happen, and how could the political obstacles be overcome? Our experts take your questions.

3rd & 7 37yd

Armsfree: How about investment in solar panels in rural areas, with electricity generated going to power electric vehicles? Plus cheaper and better access to healthcare and education?

by Laurie Goering @TR_Foundation 12/10/2013 12:32:52 PM
Democracies should be able to decide where money from fuel subsidy reforms goes: @GSI bit.ly/1bevj0e #cutsubsidies

by Alertnetclimate via twitter 12/10/2013 12:33:37 PM
Laurie: In general I think the role of governments in supporting industry and driving private investment is under-acknowledged. We need to make clearer how critical government incentives/signals/subsidies are in directing our economies - in one direction or another. And the consequences for climate change if governments choose to use those tools to support fossil fuels as opposed to renewables and efficiency.

by Shelagh Whitley 12/10/2013 12:33:46 PM
Its a rather simple question: civil society orgs barely speak against #fossilfuel subsidies. Can govts be pressured w/o that? #cutsubsidies

by Stella Paul via twitter 12/10/2013 12:34:14 PM
Joydeep: So good governance is a prerequisite to reducing fossil fuel subsidies effectively?

by Laurie Goering @TR_Foundation 12/10/2013 12:34:15 PM
For this to work, developing countries need to have the kind of public transport that's available in north-western Europe. Don't see any sign of that

by Joydeep Gupta 12/10/2013 12:34:26 PM
The issue over difficulty of enacting cash transfers (spending some saved subsidy on reducing negative impacts on the poor) is really important. It seems no one on this debate is confident that any country has the ability or willingness to set up this type of redistribution scheme. The UK also shies away from direct cash transfers. We have a 'winter fuel allowance' to help retired people with the cost of heating homes during winter, however it is available to anyone, reagrdless of income.

by will_mcf 12/10/2013 12:34:29 PM
It's not just about cutting #fossilfuel subsidies - must get #energy pricing right too bit.ly/1bevj0e #cutsubsidies

by Alertnetclimate via twitter 12/10/2013 12:34:51 PM
Shelagh: I agree completely. Making clear to the public exactly what is going where surely would make some difference

by Laurie Goering @TR_Foundation 12/10/2013 12:35:04 PM
@Laurie it's a lovely idea. But I think we need to be mindful of the scale and size of rural areas in developing countries we're talking about. Many lack electricity and public transport. The infrastructure necessary to power electric vehicles across these areas would be very expensive.

by tancopsey 12/10/2013 12:35:06 PM
Tan: Do you see any mobility solutions in rural areas?

by Laurie Goering @TR_Foundation 12/10/2013 12:35:31 PM
I agree with you, government play a big role in it ..

by Temi 12/10/2013 12:35:33 PM
Laurie, that's a scary thought, but I have to agree. At the minimum, there's need to build trust

by Joydeep Gupta 12/10/2013 12:35:51 PM
@Joydeep Gupta; very much agree about the limits of communication. There are tactics governments can use to improve credibility though: providing compensation before subsidies are removed; setting up independent enquiries to explore the problem; and engaging in transparent consultations to come up with a solution to the issue. Malaysia is an interesting example, where a "Subsidy Lab" was setting up, bringing together around 60 major stakeholder representations to plan together on subsidy reform for a matter of weeks in 2010. Subsidies are still a very controversial topic in Malaysia, so this is no magic bullet; many are critical of the reforms that just took place in September. But it is a very interesting example that other countries might learn from.

by globalsubsidies 12/10/2013 12:36:02 PM
@Stella, it I think it has to do with transport. Everyone must move from place to place, and removal of the fossil subsidies without well implemented safety nets in the area of transportation will always bring chaos. At least from the Nigerian experience subsidy removal on fossil fuels have much more ripple effects on the ordinary man.

by armsforreel 12/10/2013 12:36:11 PM
If people don't trust governments to use extra money from fuel subsidy reform honestly, communication won't help: Gupta #cutsubsidies

by Alertnetclimate via twitter 12/10/2013 12:36:27 PM
A good example of simple but effective transparency is Mexico, where the components of the price of gasoline are public and constantly updated.

by Carlo Sdralevich 12/10/2013 12:36:43 PM
@ Will McFarland In Iran, on the ev
e of the price increase, over 61 million individuals (80 percent of Iran’s total population of about 75 million) received compensatory payments. www.imf.org

by Shelagh Whitley 12/10/2013 12:36:53 PM
Carlo: Yes, clear information I think is key in all of this. If people can see clearly what is going on, it helps them make better decisions

by Laurie Goering @TR_Foundation 12/10/2013 12:37:15 PM
This is amazing, it's all I wanted , I just want my voice heard somehow. I will come back. #nigeria "go green"

by Temi 12/10/2013 12:37:46 PM
Temi: Glad the debate is useful for you!

by Laurie Goering @TR_Foundation 12/10/2013 12:38:02 PM
I don't but it would be very interesting if others had examples of removing subsidies while increasing mobility in rural areas. Anyone?

by tancopsey 12/10/2013 12:38:06 PM
@will_mcf - Actually, subsidy reform has proved instrumental to building up the social welfare system in Indonesia. The register of poor households that underlies all social welfare programs today was original put together to support a reform attempt in 2005, and was just this year updated again to support another reform attempt. So there are in fact some countries where it is certainly possible to set up cash transfer systems around subsidy reform, that can continue to provide long-term benefits.

by globalsubsidies 12/10/2013 12:38:12 PM
Clear information - key phrase. Part of that should be clear information on externalities and the social costs of these externalities. Any studies that lay people can use?

by Joydeep Gupta 12/10/2013 12:38:15 PM
@Armsfree Do you think its that "ripple effect" that discourages CSOs openly demanding fossil fuel subsidy end?

by Stella Paul 12/10/2013 12:38:35 PM
Actually, Temi's point is a particularly good one: People want their voices heard, somehow. Maybe just giving people a chance to talk first, before the subsidies are cut, and genuinely taking their ideas into account would be a first step. I assume that's going on some places, right?

by Laurie Goering @TR_Foundation 12/10/2013 12:38:56 PM
Without better public transport in developing countries, cutting #fossilfuel subsidies is problematic bit.ly/1bevj0e #cutsubsidies

by Alertnetclimate via twitter 12/10/2013 12:39:01 PM
@GSI Building on your point of setting up independent enquiries to explore the problem - it might be of interest to others that the UK just completed such an inquiry on energy subsidies - bit.ly

by Shelagh Whitley 12/10/2013 12:39:54 PM
The IMF website has a page with links to our studies, which I believe lay out well the problems with subsidies, but also the challenges of reform www.imf.org

by Carlo Sdralevich 12/10/2013 12:39:57 PM
Joydeep: Maybe part of the solution is journalists doing a better job of turning reports full of jargon into something people can genuinely understand

by Laurie Goering @TR_Foundation 12/10/2013 12:40:03 PM
Laurie :)

by Joydeep Gupta 12/10/2013 12:40:19 PM
Globalsubsidies: Sounds like Malaysia got it right

by Laurie Goering @TR_Foundation 12/10/2013 12:40:45 PM
Fuel subsidy reform has proved instrumental to building up Indonesia's social welfare system: @GSI bit.ly/1bevj0e #cutsubsidies

by Alertnetclimate via twitter 12/10/2013 12:40:50 PM
How often do you guys do this? I currently live in Portugal so a time idea will be nice

by Temi 12/10/2013 12:40:53 PM
@Laurie; I very much support solar in rural areas. It is off grid and gives people small, but green solutions. But we are light years away from the electric cars part.

by armsforreel 12/10/2013 12:41:16 PM
Temi: We run debates on various subjects around climate change every month or two....

by Laurie Goering @TR_Foundation 12/10/2013 12:41:18 PM
Stella Paul – you’ve hit the nail on the head, governments need the confidence to act and for that do need pressure from the public. There are many more vested interests protecting their positions than the majority pushing for change. Pressure comes from civil society and from politicians, and this needs championing and facilitation by local CSOs, with help from the international community. GSI works heavily with stakeholders and media around the world.

by GSI 12/10/2013 12:41:22 PM
GSI: I suppose what we really need is marches in the streets against fossil fuel subsidies, not just riots in the streets when they're removed

by Laurie Goering @TR_Foundation 12/10/2013 12:42:08 PM
Laurie: I don't know if others managed to copy or get to all the links posted. I certainly didn't. Is it possible for someone to put the links into a mail for everyone?

by Joydeep Gupta 12/10/2013 12:42:13 PM
One of the reasons that it is difficult to have transparency on subsidies is that they are very difficult to account for, because they are dispersed in the economy and very rarely on the budget. So the first step would be to do some accounting and budgeting of subsidies - and that's not necessarily easy in some countries even with the best of intentions.

by Carlo Sdralevich 12/10/2013 12:42:14 PM
Joydeep: We'll aim to write up a summary of this as a blog after the event, and will try to get links in there

by Laurie Goering @TR_Foundation 12/10/2013 12:42:45 PM
@Shelagh & @Will McFarland, the Iran case is another country where cash transfers were quickly developed for fuel subsidy reform it is true. But the % of households receiving support is now much larger than 80%. As of our last study, it was over 90%: www.iisd.org

by globalsubsidies 12/10/2013 12:42:47 PM
Okay cool Iwill watch out

by Temi 12/10/2013 12:42:51 PM
@Megan - maybe we will see businesses calling for market pricing, as opposed to fighting over a subsidy pie?

by Shelagh Whitley 12/10/2013 12:42:58 PM
You can get marches in the streets if you can give people actualo figures of the health costs of fossil fuel pollution

by Joydeep Gupta 12/10/2013 12:43:06 PM