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"Operation and critiques of fossil fuel subsidies" [2019] ELECD 2063; in Rive, J.C. Vernon (ed), "Fossil Fuel Subsidy Reform" (Edward Elgar Publishing, 2019) 49

Book Title: Fossil Fuel Subsidy Reform

Editor(s): Rive, J.C. Vernon

Publisher: Edward Elgar Publishing

Section: Chapter 3

Section Title: Operation and critiques of fossil fuel subsidies

Number of pages: 25

Abstract/Description:

This chapter provides an overview of the economic, policy and legal critiques of fossil fuel subsidies, examining three basic (connected) questions: (1) What do fossil fuel subsidies do? (2) Why do governments provide and maintain them? and (3) Why are fossil fuel subsidies seen as harmful? Assessing the effects of fossil fuel subsidies and their removal involves enquiry into first-order static effects, but also second-order dynamic effects which take into flow-on effects on domestic and global demand and supply of fossil fuels. The examination of underlying motivations for providing fossil fuel subsidies addresses the positive effects of fossil fuel subsidies including: poverty alleviation; fuel-switching; energy security; political stability; and the broader role of subsidies in contributing to economic growth. Critiques of fossil fuels include consideration of fiscal responsibility, resource conservation, distortion of international trade flows, non-climate change-related environmental impacts such as local and regional air quality, and greenhouse gas emissions-focused critiques. The chapter includes an introduction to the broad (and contested) concept of economic inefficiency which features strongly in a number of emerging international normative frameworks concerning fossil fuel subsidies.