OECD calls for the removal of fuel subsidies and introduction of green taxes

The Organization for Economic Cooperation and Development (OECD), representing the world’s 30 most developed economies, has issued a call for action, in order “to prevent irreversible damage to our environment over the next 20 years”.


In the organisation’s first such report, Environmental Outlook, the OECD has identified priorities “to prevent irreversible damage to our environment over the next 20 years”, which will be discussed by the environment ministers of 30 principal economies in May.

The report says that in many cases improvements in energy efficiency have failed to counter total increases in the environmental pressures caused by rising consumption and production levels and that more stringent policies are needed to ensure that environmental degradation is de-coupled from economic growth. Removing fossil-fuel subsidies in OECD countries, applying an energy tax linked to the carbon content of fuels and taxing all chemicals would produce significant effects, the report said. These would include 15% lower CO2 emissions in OECD countries in 2020 than would have been the case under a business-as-usual scenario, 9% lower sulphur dioxide emissions, 3% lower methane emissions, and 30% less nitrogen from fertilisers reaching waterways.

The economic costs of implementing this package of policies would be almost negligible, according to the report, with a projected GDP in OECD countries in 2020 of less than 1% lower than under the reference scenario. Without appropriate action, however, the major environmental concerns facing the OECD nations, which are the unsustainable use of renewable natural resources, the degradation of ecosystems and the disruption of essential ecosystems will only be exacerbated.

According to the report, the major environmental problems which are impacting on the world’s richest economies are:

  • three-quarters of marine fisheries, which are fished to their limits or over-fished;
  • tropical deforestation, which continues at alarming rates, despite the findings of recent UN report (see related story) with non-OECD regions losing a further 10% of their forests by 2020;
  • human-induced climate change already affecting weather patterns worldwide will worsen as OECD carbon dioxide emissions increase by a projected one-third by 2020;
  • urban air quality and associated health problems, which are deteriorating in many OECD countries;
  • energy use and transportation are already the main contributors to greenhouse gas emissions and air pollution, with motor vehicle use in OECD countries is expected to increase by 40% by 2020, passenger air kilometres to triple, and energy use to increase by 35%;
  • municipal waste generation, which is expected to increase substantially in OECD countries by 2020; and
  • groundwater pollution in most OECD countries, largely by farm chemicals, with nitrogen loading of waterways from agriculture predicted to increase in OECD countries by more than one-quarter, and persistent and toxic chemicals also due to become widespread in the environment.

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