Raising Ambition Through Fossil Fuel Subsidy Reform

This simple average of GHG emission reductions (from across the countries modelled) improves with modest additions to the modelled scenario, which includes a 10 per cent energy tax from 2025 until 2030 and a shift of 30 per cent of the savings from reforms, and of revenues from taxation, into investments in renewable energy and energy efficiency. [...] Our model, and others, is likely to underestimate the impact of the removal of fossil fuel subsidies on emission reductions, and this highlights the need for better data and information surrounding fossil fuel subsidies, especially for producer subsidies (see Sections 3 and 4). [...] Demand and fuel mix are also influenced by other policy interventions, namely the reallocation of subsidy savings and tax revenues to investments in energy-efficiency improvements (assumed to be 20 per cent of subsidy savings and additional revenues) and in renewable energy equipment (assumed to be 10 per cent of subsidy savings and additional revenues). [...] When weighting reductions by the size of the economy of the countries using GDP, the average decline in GHG emissions from FFSR, a modest tax and reallocation of the savings to investments in energy efficiency and renewable energy reaches 7.3 per cent by 2030 compared to BAU. [...] With as many as over 180 additional NDCs to be developed over the coming years as countries begin to look past the initial 2025 or 2030 time frame, the current time frame is ideal for the additional consideration of the co-benefits (in terms of emission reductions) stemming from FFSR or a modest fossil energy tax as an additional action to assist countries in meeting their contributions to the Par