Governments urged to reform fossil fuel subsides

Half a trillion dollars spent propping up fossil fuels is 'inefficient' and needs reforming according to a new analysis.

Two leading organisations said today (October 4) that both developing and developed countries need to phase out fossil fuel subsidies.

According to the
International Energy Agency (IEA) and the Organisation for Economic Co-operation and Development (OECD)
reforming the subsidies would improve both the economy and the environment.

In the analysis the two organisations argue for phasing out fossil-fuel subsidies to provide an 'impetus' for investment, growth and jobs in renewable energy and energy efficiency.

But it also spells out how efforts to reform subsidies have been 'hampered by a lack of information on the support measures in place' particularly in developing countries.

OECD secretary-general, Angel Gurria, said: "Phasing out subsidies is an obvious way to help governments meet their economic, environmental and social goals.

"For this to succeed, we need well-targeted, transparent and time-bound programmes to assist poor households and energy workers who might be adversely affected in the short-term. OECD and IEA data and analysis can help guide the process."

IEA executive director, Maria van der Hoeven, added: "In a period of persistently high energy prices, subsidies represent a significant economic liability."

Work by the IEA, due to be published in the World Energy Outlook 2011 on November 9, will also argue phasing out subsidies to fossil fuels, if well-executed, can generate important economic, energy security and environmental benefits.

Luke Walsh


energy manager


Energy efficiency & low-carbon
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