Making the Switch
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Making the Switch

From fossil fuel subsidies to sustainable energy

This report estimates fossil fuel subsidies to be around USD 425 billion. Such subsidies represent large lost opportunities for governments to invest in renewable energy, energy efficiency and sustainable development. Removal of subsidies can lead to carbon emission reductions (6 to 8 per cent by 2050 globally), Reductions that can be improved further with a switch or a "SWAP" towards sustainable energy. This report describes the scale and impact of fossil fuel subsidies on sustainable development. It describes the SWAP concept to switch savings made from fossil fuel subsidy reform, towards sustainable energy, energy efficiency and safety nets. The report provides potential SWAP outlines for Bangladesh, Indonesia, Morocco and Zambia. "Making the Switch" was written for the Nordic Council Ministers by the Global Subsidies Initiative of IISD and Gaia Consulting.

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Author(s):
Nordic Council of Ministers

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We are at a point when we need better, fairer, smarter and cleaner government policies to build energy systems to rapidly redirect us toward zero emissions pathways. This report details why and how current global government subsidies to consumers and producers of fossil fuels – of around USD 425 billion in 2015 – hold us back from delivering sustainable development and building the sustainable energy systems needed in the 21st Century. Subsidies to fossil fuels represent massive and ongoing lost opportunities for governments to support the delivery of the Sustainable Development Goals: representing half the amount needed to plug the sustainable energy access finance gap; 11 times more than needed for the basic education finance gap; 13 times more than the basic health care gap; three times more than the equivalent subsidies to renewables; and a massive 22 times more than current financing toward adaptation and resilience to climate change. This report outlines how fossil fuel subsidies are a cost that governments can no longer afford to ignore from many perspectives, including economic, social protection and welfare; health care; education; air pollution; and gender.

Also available in Swedish