Sunday, September 7, 2008


The United Nations Environment Programme (UNEP) has called on governments to reform subsidies on fossil fuels.
It said subsidies on fossil fuels were no longer serving their intended purpose of providing a social cushion for increases in international oil prices, but was rather costly in economic terms and adding to the carbon emissions in the atmosphere.
UNEP said governments needed to review the subsidies on fossil fuels, reduce or eliminate them and channel them to more renewable sources.
At a press conference to launch a new publication titled “Reforming Energy Subsidies, Opportunities to Contribute to the Climate Change Agenda” the organisation said about $300 billion or 0.7 per cent of the global Gross Domestic Product (GDP) was being spent by governments on energy subsidies annually.
“Subsidies reduce incentives to use energy efficiently, act as a drain on government finances and hold back economic development,” the report said.
The Spokesperson for UNEP and Head of Media, Mr Nick Nuttall, addressing the press conference said the issue of reducing subsidies on fossil fuels provided a great opportunity for developing countries to build their capacities in renewable energy resources, reduce emissions in the atmosphere and also gain by trading off the reduction for additional resources for development.
It was also an opportunity for African countries to shore up their adaptive or coping capacities to climate change and build their capacities in the Clean Development Mechanism (CDM).
The CDM is the primary international mechanism for offsetting carbon emission into the atmosphere under the Kyoto Protocol, and operates by developing countries establishing renewable development projects and exchanging that for financial resources paid by industries that significantly contribute to emissions.
The UNEP Climate Change Co-ordinator, Mr Kaveh Zahedi, said fossil fuel subsidies was a “blunt instrument” in poverty reduction measures.
It was for that reason that governments needed a reassessment of subsidies on fossil fuels, to find out better ways of development and poverty reduction initiatives through renewable resources.
That, he added, would also help countries contribute to reducing carbon emissions into the atmosphere.
The UNEP Deputy Director and African Ministerial Convention on the Environment (AMCEN) Secretary for the Regional Office of Africa, Dr Peter C. Acquah, said the subsidies from fossil fuels could be channelled into solar, wind and other renewable energy resources.
The UNEP describe subsidies on fossil fuel as environmentally harmful and retrogressive to social and economic development through access to reliable and affordable energy.
It says an energy subsidy is any governmental action that influences energy market outcomes by lowering the cost of energy production, raising the price received by energy producers or lowering the price paid by energy consumers.
It lists direct financial transfers in grants to producers or consumers, preferential tax treatment, trade restrictions and energy-related services provided directly by the government at less than full cost as some of the types of energy subsidies.


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