Scrapping fuel subsidies can help climate – UN study

ACCRA (Reuters) – Abolishing subsidies on fossil fuels could cut world greenhouse gas emissions by up to 6 percent and also nudge up world economic growth, a U.N. report showed on Tuesday.

Subsidies on oil, gas or coal are meant to help the poor by lowering the price of energy but the report, issued on the sidelines of a 160-nation U.N. climate meeting in Ghana, said they often backfired by mainly benefiting wealthier people.


The study said fuel subsidies totalled about $300 billion a year, or 0.7 percent of world gross domestic product (GDP).

“Cancelling these subsidies might reduce greenhouse gas emissions by as much as 6 percent a year while contributing 0.1 percent to global GDP,” it said.

People forced to pay higher prices for energy would likely cut back on use of fossil fuels, the main source of greenhouse gases from human activities.

“Governments should urgently review their energy subsidies and begin phasing out the harmful ones,” said Achim Steiner, head of the Nairobi-based U.N. Environment Programme (UNEP).

“In the final analysis many fossil fuel subsidies are introduced for political reasons but are simply propping up and perpetuating inefficiencies in the global economy,” he said in a statement.

Reuters