Stop subsidizing fossil fuels
Subsidizing the use of fossil fuels must end, and the carbon price must provide a market-driven transition to a decarbonized economy. Perpetrators must pay for environmental pollution that harms communities, workers and consumers.
According to the IEA, $ 320 billion in fuel subsidies were provided worldwide in 2019. Of these, $ 150 billion were subsidies for petroleum products, $ 115 billion for electricity, $ 50 billion for natural gas, and $ 2.5 billion for coal. These estimates do not fully take into account all other forms of government financial support for this sector, in addition to direct subsidies. In simple terms, this means taxpayers' hard-earned money is being used to improve the profitability of multi-billion dollar corporations. This is why the Secretary-General of the United Nations has repeatedly called on governments to „tax those who pollute the environment, not people."
Reforms in carbon pricing and fossil fuel subsidies can play an important role in increasing government revenues or spending more efficiently. According to the World Bank, government revenues generated from carbon pricing programs, which aim to ensure that the price of fossil fuels, including emissions, reflects their true value, amounted to about $ 44 billion in 2018. US dollars.
By creating new sources of government funding, carbon pricing can help governments invest more in other priority areas such as health, education or infrastructure, and ensure equitable change in the workforce. For example, the attention should be paid to workers who may lose employment as a result of the transition to sustainable energy around the world, in particular those working in the fossil fuel industries. Rather, they should be supported to find new and better income opportunities.
Quite a few countries, including many developing countries, are taking action to reduce fossil fuel subsidies. Nigeria, for example, recently reformed its fossil fuel subsidy system.
In recent months, the oil and gas markets have seen an unprecedented drop in demand, coupled with a price war, putting the price per barrel below the margins for many producers. As a result, prices for coal, oil and gas are likely to remain low for the foreseeable future. This situation presents an opportunity for governments to phase out fossil fuel subsidies and accelerate the redevelopment of fossil fuel industries.
In oil and gas producing countries and coal-rich countries, it would be prudent to adopt fiscal stimulus measures aimed at quickly disposing of the least competitive assets, diversifying their economies and adopting supportive measures for the benefit of workers and regions that will be affected by the transition.