Fossil fuel subsidies undermine green economy: UNEP
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E-mail China.org.cn, April 29, 2014
In comparison, according to the International Energy Agency, global subsidies to the renewable energy industry were $88 billion in 2011.
"Fiscal policies are of particular importance in a green economy transition. Confronted by a fiscally constrained world, government reforms might appear to be a daunting challenge," said UN Under-Secretary-General and UNEP Executive Director Achim Steiner.
"However, it is important to note that fossil fuel subsidies cost countries precious funds. For example, they divert government resources from pro-poor spending in Africa, where governments spend an estimated 3 per cent of GDP - equivalent to their total health care allocation - on fossil fuel subsidies," he added.
Several countries, including Ghana, Namibia, the Philippines and Turkey, have all shown that it is possible to reform energy subsidies and prices. UNEP is currently undertaking green economy fiscal policy studies in several countries, including Ghana, Kenya and Mauritius, which will inform the respective governments as they advance their fiscal policy reforms.
Experts are calling on governments to use government policies to leverage private investment in green sectors by redirecting public investments to clean technologies and providing direct public expenditure for research and development. For example, tax incentives could make investments in clean technologies more attractive, while government funds could reduce the risk profile of capital intensive new technologies.
In addition, experts acknowledge that, in some cases, eliminating these subsidies could have ramifications on the poor or weaken the competitiveness of domestic industries. Therefore, they said, social protection measures are needed to ensure vulnerable groups are not overlooked and receive assistance during a transition period.
