Even global subsidy removal can’t solve

(Jessica Jewell1,2 , David McCollum1,3, Johannes Emmerling4,5, Christoph Bertram6, David E. H. J. Gernaat7,8, Volker Krey1 , Leonidas Paroussos9, Loïc Berger4,5,10, Kostas Fragkiadakis9, Ilkka Keppo11, Nawfal Saadi11, Massimo Tavoni4,5,12, Detlef van Vuuren7,8, Vadim Vinichenko13 & Keywan Riahi1,14 1Energy Program, International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria. 2Centre for Climate and Energy Transformations and Department of Geography, University of Bergen, 5020 Bergen, Norway. 3Howard H. Baker Jr. Center for Public Policy, University of Tennessee, Knoxville, Tennessee 37996, USA. 4Fondazione Eni Enrico Mattei, 20123 Milan, Italy. 5Centro Euromediterraneo sui Cambiamenti Climatici, 73100 Lecce, Italy. 6Potsdam Institute for Climate Impact Research, Member of the Leibniz Association, PO Box 60 12 03, D-14473 Potsdam, Germany. 7Copernicus Institute for Sustainable Development, University of Utrecht, 3584 CS Utrecht, The Netherlands. 8PBL Netherlands Environmental Assessment Agency, The Hague, The Netherlands. 9School of Electrical and Computer Engineering, Department of Electric Power, National Technical University of Athens, 15773 Athens, Greece. 10Department of Economics and Quantitative Methods, IESEG School of Management (LEM-CNRS), 59000 Lille, France. 11UCL Energy Institute, University College London, London WC1H 0NN, UK. 12Department of Management, Economics and Industrial Engineering, Politecnico di Milano, 20156 Milan, Italy. 13Department of Environmental Sciences and Policy, Central European University, 1051 Budapest, Hungary. 14Institute of Thermal Engineering, Graz University of Technology, 8010 Graz, Austria Limited emission reductions from fuel subsidy removal except in energy-exporting regions

Limited emission reductions from fuel subsidy removal except in energy-exporting regions doi:10.1038/nature25467)

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy1–3. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders’ Summit) to phase out fossil fuel subsidies4,5 and many national governments are using today’s low oil prices as an opportunity to do so6–9. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices10,11. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2–12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower income regions.