Zombie energy: climate benefits of ending subsidies to fossil fuel production

Working and discussion papers
February 2017
Ivetta Gerasimchuk, Andrea Bassi, Carlos Dominguez Ordonez, Alexander Doukas, Laura Merrill and Shelagh Whitley

Ending subsidies to fossil fuel production is often a missing piece of comprehensive climate action plans. To implement the 2015 Paris Agreement and keep climate change well below 2°C, the world needs both supplyside policies (such as removal of fossil fuel production subsidies, moratoriums and 'no-go zones' or coal phaseout) and demand-side policies (such as carbon pricing, removal of fossil fuel consumption subsidies, or fuel and energy efficiency standards).

This working paper is a first-of-its-kind attempt to shine a light on how global removal of subsidies to the production of coal, oil and gas (a key supply-side policy) could contribute to climate change mitigation and leaving unburnable carbon in the ground.

Our objective is to help close a significant gap in understanding the scale, scope and – in particular – the climate impact of current fossil fuel production subsidies and assist those concerned with the issue in three ways. First, the working paper brings together both quantitative and qualitative knowledge on fossil fuel production subsidies and highlights their negative implications for the climate. Second, as a proof of concept, it undertakes a thought experiment by modelling a global removal of fossil fuel production subsidies using the best available bottom-up data and a set of conservative assumptions. Third, it provides recommendations for further steps in overcoming data limitations and further research on the impact of removing fossil fuel subsidies.