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Making the Switch

From fossil fuel subsidies to sustainable energy

image of Making the Switch

This report estimates fossil fuel subsidies to be around USD 425 billion. Such subsidies represent large lost opportunities for governments to invest in renewable energy, energy efficiency and sustainable development. Removal of subsidies can lead to carbon emission reductions (6 to 8 per cent by 2050 globally), Reductions that can be improved further with a switch or a "SWAP" towards sustainable energy. This report describes the scale and impact of fossil fuel subsidies on sustainable development. It describes the SWAP concept to switch savings made from fossil fuel subsidy reform, towards sustainable energy, energy efficiency and safety nets. The report provides potential SWAP outlines for Bangladesh, Indonesia, Morocco and Zambia. "Making the Switch" was written for the Nordic Council Ministers by the Global Subsidies Initiative of IISD and Gaia Consulting.

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Foreword

This report estimates current global subsidies to both consumers and producers of fossil fuels to be approximately USD 425 billion in 2015. The benefits go mainly to richer urban households. Removing these subsidies will bring about not only emissions reductions, but also free up domestic resources to invest elsewhere. Systemic subsidization of fossil fuels by governments restrains sustainable development: economically, socially, for women, for health and education, for clean air, and finally from reductions in carbon emissions. Huge opportunities to invest these resources more productively are lost every year because of such subsidies. A number of governments have made progress in phasing subsidies out, while in other countries they still persist.

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