We’re spending US$550 billion a year on fossil fuel subsidies globally, but freeing up just a small portion of this money could finance access to water, sanitation and electricity for everyone on earth, a new commentary piece published in Nature Climate Change has found.
Contrary to arguments that coal is “good for humanity” and will alleviate energy poverty in developing nations, Michael Jakob and colleagues said phasing out fossil fuel subsidies could have a number of “human development benefits”.
“We put into perspective the amount of fossil fuel subsidies currently deployed in relation to the financial means required to provide access to basic services — in particular, water, sanitation, electricity, telecommunication and paved roads,” the authors said.
“Linking fossil fuel subsidy reform to infrastructure investments could not only promote environmental integrity, but also human development. In this way, it could successfully address one of the main obstacles to subsidy reform, namely the concern of adverse development outcomes.”
The cost calculations found that for all people on earth to have access to fresh water would cost US$190 billion, US$370 billion could cover universal access to sanitation, and US$430 billion could finance access to electricity.
“If spread over a period of 15 years, these amounts are only a small fraction of the US$8.2 trillion in fossil fuel subsidies that would be allotted globally over this period,” the authors said.
More ambitious would be providing universal access to telecommunication (requiring US$2.6 trillion) or paving all unpaved roads (US$8.7 trillion).
The move would be good for the environment, too, with the report saying phasing out fossil fuel subsidies would lead to a 4.4 per cent reduction in global CO2.
The report examined a number of countries with fossil fuel subsidies and found that in the majority of cases, phasing out the subsidies would free up enough funds to finance universal access to water, sanitation, and electricity.
In Nigeria, only four per cent of projected fossil fuel subsidies over 15 years would be needed to provide universal access to water. In China, almost half would be required. In India, investing 18 per cent of fossil fuel subsidies over the same period could cover the cost of universal sanitation.
“Our analysis indicates that redirecting fossil fuel subsidies to infrastructure investments could, at least for some countries, close a large share of current infrastructure access gaps, in addition to the indirect benefits of economic efficiency and environmental improvements.”
The authors said a gradual winding down of subsidies, as well as measures to begin building up infrastructure, would need to be implemented to protect against steep price rises.
“Linking fossil fuel subsidy reform to access considerations could turn out to be beneficial for development as well as the environment, and might even provide a viable basis for more ambitious climate change mitigation policies in the future,” they said.
- Read the commentary.