In a project supported by the Nordic Council of Ministers, Gaia Consulting and the Institute for Sustainable Development (IISD) are building roadmaps for developing countries to end subsidies for fossil fuels. The first part of the project has now concluded, highlighting best practices from the Nordics and global pioneers of Fossil Fuel Subsidy Reform (FFSR).
In our common work towards a cleaner future, we often tend to only focus on the promotion of green technologies and forget that old structures work against these aims. According to the IEA World Energy Outlook, fossil-fuel consumption subsidies amounted to $493 Billion (source) in 2014, which stands at approximately 4 times the current subsidies for renewables. Even compared to the global climate finance of $714 Billion (source), which includes e.g. all global investments in renewables, energy efficiency and sustainable transport, fossil fuel subsidies are only 30% smaller. It is evident that the efficiency of our actions is severely hampered, if at the same time we significantly support the very source of our climate problems.
The ongoing COP22 conference in Marrakech pinpoints the urgency of the topic as the Nordic Council of Ministers will host an event titled “Best Practices with Fossil Fuel Subsidy Reform” at the New Nordic Climate Solutions Pavilion on November 16th at 10:30-12:00. The event will be opened by the Finnish Minister of Agriculture and the Environment, Kimmo Tiilikainen. As input for the event, Gaia and IISD have jointly prepared a Nordic Council of Ministers publication: Learning from Leaders – Nordic and International Best Practice with Fossil Fuel Subsidy Reform.
Nordic countries have set ambitious environmental targets beyond 2020 and as a response, energy and climate policies have undergone significant strengthening. For example, Denmark, Norway and Sweden aim to rely exclusively on renewable energy sources in their energy and transportation sectors by 2050. In the publication, Gaia highlights some of the most prominent Nordic policy actions of the recent years, which aim detachment from fossil fuels. In Finland, all fossil fuel subsidies have gone through tight scrutiny by the Ministry of Finance to separate the good subsidies from the bad and the ugly. The report also enlightens the regulative actions, which led 1) Sweden to replace heating oil used for apartments and commercial buildings with heat pumps; 2) Norway to become the global leader in adoption of electric vehicles; and 3) Denmark to gain an undisputable reputation as the cradle of modern wind technology and the consequential effects on GDP and employment.
Fossil Fuel Subsidy Reform (FFSR) has also brought about significant changes in other parts of the world. For example, Morocco, the Philippines, Ethiopia and Peru all have freed significant amounts of government budgets through FFSR and by relying on market-based pricing. This has led to e.g. increased adoption of renewable energy sources, energy efficiency measures and more resources for the energy infrastructure. Taking into account the reliable supply of affordable energy to the poorest has been a key success factor of the FFSRs in these countries and the lessons learnt are now ready to be scaled throughout the world.
Gaia and IISD will now continue the work by identifying most promising partner developing countries for the Nordic Council of Ministers and by deploying the found best practices into suggested roadmaps for these countries in their paths to Fossil Fuel Subsidy Reform.
More information
- Paula Tommila, Business Manager, +358 40 538 4813, firstname.lastname@gaia.fi
- Link to the report Learning from Leaders – Nordic and International Best Practice with Fossil Fuel Subsidy Reform
