Abolishing fossil fuel subsidies: A brain teaser rather than a no-brainer

Looking at climate damages requires a different approach

From a climate perspective, it makes sense to focus first on schemes that cause polluters to pay insufficiently for the climate damage they cause. If due to exemptions and reductions the price polluters pay for CO₂ emissions is too low, additional pricing is of the utmost importance. This is the starting point of an analysis using the ‘external cost approach’. The infographic below explains the figure in the report that visualises the fossil fuel subsidies based on the external cost approach.

Bring indirect fossil fuel subsidies into focus

It is equally important to look at schemes that may slow the energy transition by indirectly stimulating fossil energy use. In this study, CPB and PBL have compiled an overview of fossil fuel subsidies using the inventory approach mentioned earlier, which includes many indirect schemes. 

Both approaches are needed

The inventory approach and the external cost approach both have their merits. Without the inventory approach, it is impossible to see which schemes support fossil fuel use both directly and indirectly. Without the external cost approach, it is impossible to see which changes are most important from a climate perspective.