Prioritize carbon pricing over fossil-fuel subsidy reform

van den Bergh, Jeroen; van Beers, Cees; King, Lewis C.

doi:10.1016/j.isci.2023.108584

Prioritize carbon pricing over fossil-fuel subsidy reform

Title

Prioritize carbon pricing over fossil-fuel subsidy reform

Author

van den Bergh, Jeroen (Universitat Autònoma de Barcelona; Catalan Institution for Research and Advanced Studies (ICREA); Vrije Universiteit Amsterdam)
van Beers, Cees (TU Delft Economics of Technology and Innovation)
King, Lewis C. (Universitat Autònoma de Barcelona)

Date

2024

Abstract

While many climate activist groups enthusiastically advocate for the removal of fossil-fuel subsidies, we argue that this overstates both the climate effectiveness and political feasibility of such a strategy. Through synthesizing information from various global studies, we show that subsidies contribute to a relatively small portion of climate change and local externality problems, likely accounting for around 1%. We further argue that reform of fossil-fuel subsidies is hampered by various political and social factors, more so than the diffusion of carbon pricing. Based on these results, we argue that the far greater problem of unpriced externalities warrants a redirection or expansion of the enthusiasm for subsidy reform toward carbon pricing. This makes sense also as subsidy reform and carbon pricing essentially represent two sides of the same coin since both contribute to climate mitigation by raising fossil-fuel prices.

Subject

Environmental policy
Global change

To reference this document use:

http://resolver.tudelft.nl/uuid:2a3ae1b0-2d1e-4e8b-bb6d-a019edf14e23

DOI

https://doi.org/10.1016/j.isci.2023.108584

ISSN

2589-0042

Source

iScience, 27 (1)

Part of collection

Institutional Repository