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Implications of Switching Fossil Fuel Subsidies to Solar: A Case Study for the European Union

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  • Jon Sampedro

    (Basque Centre for Climate Change (BC3), 48940 Leioa, Spain)

  • Iñaki Arto

    (Basque Centre for Climate Change (BC3), 48940 Leioa, Spain)

  • Mikel González-Eguino

    (Basque Centre for Climate Change (BC3), 48940 Leioa, Spain
    Department of Foundations of Economic Analysis, University of the Basque Country (UPV/EHU), 48940 Bilbao, Spain)

Abstract

Fossil fuel subsidies (FFS) constitute one of the most obvious barriers to tackling climate change, as they encourage inefficient energy consumption and divert investment away from clean energy sources. According to the International Monetary Fund, FFS amounted globally to $233 billion in 2014, over four times the value of subsidies awarded to promote renewable energy. In this study an integrated assessment model is used to analyse the CO 2 implications in the European Union of eliminating FFS and recycling the revenues to promote rooftop PV. It is found that eliminating FFS would give rise to a small reduction in CO 2 due to fuel-switching from coal to gas. If the revenues were recycled to promote solar, then the CO 2 reduction would increase from 1.8% to 2.2% by 2030. Eliminating FFS is not a panacea from the mitigation point of view, even if the revenues are recycled, but other important objectives, such as those related to renewable energy promotion and the reduction of air pollution, are advanced at zero cost for the government.

Suggested Citation

  • Jon Sampedro & Iñaki Arto & Mikel González-Eguino, 2017. "Implications of Switching Fossil Fuel Subsidies to Solar: A Case Study for the European Union," Sustainability, MDPI, vol. 10(1), pages 1-12, December.
    • Handle: RePEc:gam:jsusta:v:10:y:2017:i:1:p:50-:d:124415
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    References listed on IDEAS

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    Cited by:

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    2. Andrea Marcello Bassi & Georg Pallaske & Richard Bridle & Kavya Bajaj, 2023. "Emission Reduction via Fossil Fuel Subsidy Removal and Carbon Pricing, Creating Synergies with Revenue Recycling," World, MDPI, vol. 4(2), pages 1-16, April.
    3. Iwona Zdonek & Stanisław Tokarski & Anna Mularczyk & Marian Turek, 2022. "Evaluation of the Program Subsidizing Prosumer Photovoltaic Sources in Poland," Energies, MDPI, vol. 15(3), pages 1-23, January.
    4. Piotr Olczak & Dominik Kryzia & Dominika Matuszewska & Marta Kuta, 2021. "“My Electricity” Program Effectiveness Supporting the Development of PV Installation in Poland," Energies, MDPI, vol. 14(1), pages 1-16, January.
    5. Emodi, Nnaemeka Vincent & Chaiechi, Taha & Alam Beg, A.B.M. Rabiul, 2019. "A techno-economic and environmental assessment of long-term energy policies and climate variability impact on the energy system," Energy Policy, Elsevier, vol. 128(C), pages 329-346.
    6. Jacek Brożyna & Grzegorz Mentel & Eva Ivanová & Gennadii Sorokin, 2019. "Classification of Renewable Sources of Electricity in the Context of Sustainable Development of the New EU Member States," Energies, MDPI, vol. 12(12), pages 1-22, June.
    7. Rubio-Aliaga, Alvaro & García-Cascales, M. Socorro & Sánchez-Lozano, Juan Miguel & Molina-Garcia, Angel, 2021. "MCDM-based multidimensional approach for selection of optimal groundwater pumping systems: Design and case example," Renewable Energy, Elsevier, vol. 163(C), pages 213-224.

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