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OECD Paper Highlights Benefits of Removing Fossil Fuel Subsidies

8 April 2011: The Organisation for Economic Co-operation and Development (OECD) has published an Economics Department Working Paper titled “Mitigation potential of removing fossil fuel subsidies, a general equilibrium assessment,” authored by Jean-Marc Burniaux and Jean Chateau.

This working paper analyzes the assumptions, data and environmental and economic implications of removing fossil fuel subsidies. Its primary findings are that removing these subsidies would equate to approximately one-seventh of the action needed to keep global temperature increase below 2°C, and that although their removal would provide global economic and environmental benefits, not all countries and regions would benefit evenly. In particular, it notes that oil-exporting countries would likely face small real income reductions, but that these could be mostly compensated for by using former fossil fuel subsidy monies for social welfare-improving activities. [Publication: Mitigation Potential of Removing Fossil Fuel Subsidies: A General Equilibrium Assessment]