Zombie energy: climate benefits of ending subsidies to fossil fuel production

Zombie energy: climate benefits of ending subsidies to fossil fuel production

Ending subsidies to fossil fuel production is often a missing piece of comprehensive climate action plans. To implement the 2015 Paris Agreement and keep climate change well below 2oC, the world needs both supply-side policies (such as removal of fossil fuel production subsidies, moratoriums and “no-go zones” or coal phase-out) and demand-side policies (such as carbon pricing, removal of fossil fuel consumption subsidies, or fuel and energy efficiency standards).
 
This report sheds light on the potential climate benefits of the removal of fossil fuel production subsidies in terms of both greenhouse gas (GHG) emission reductions and the oil, gas and coal reserves that could become uneconomical to produce. The paper explains how different production subsidies currently unlock “zombie energy” from fossil fuel deposits that would not be commercially viable to produce without government support. It also presents new modelling of the global removal of certain subsidies to fossil fuel production.
 
The report is structured as follows:
  • chapter 1 explains why fossil fuel production subsidies matter for climate change. The chapter also defines and categorises fossil fuel production subsidies
  • chapter 2 outlines how different subsidies influence investment decisions related to fossil fuel production
  • chapter 3 discusses modelling of a removal of fossil fuel production subsidies and inputs of the GSI-IF (p) global model
  • chapter 4 presents results of new modelling that shows how much coal, oil and gas could become uneconomical to produce—and the GHG emission reductions that would result—if certain fossil fuel production subsidies are removed globally
The report concludes with a summary of the findings as well as opportunities for further research on the climate benefits of fossil fuel subsidy removal.
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