Economics Dictionary of Arguments

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Fossil fuels: Fossil fuels are natural resources like coal, oil, and natural gas formed from decayed organic matter over millions of years. They're non-renewable energy sources, used for power generation, transportation, and heating. Burning fossil fuels releases carbon dioxide, contributing to environmental issues like climate change and air pollution. See also Climate damages, Climate change, Environmental goods, Environmental damages.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Robert N. Stavins on Fossil Fuels - Dictionary of Arguments

Stavins I 161
Eliminating Fossil Fuel Subsidies/Aldy/Stavins: Phasing out fossil fuel subsidies can represent significant progress toward “getting prices right” for fossil fuel consumption, especially in some developing countries, where subsidies are particularly large. Imposing a carbon price on top of a fuel subsidy will not lead to the socially optimal price for the fuel, but removing such subsidies can deliver incentives for efficiency and fuel switching comparable to implementing an explicit carbon price.
The economic and climate benefits of fossil fuel subsidy reform could be significant. In 2008, fossil fuel consumption subsidies exceeded US$500 billion globally and could exceed US$660 billion by 2020 without policy reforms (International Energy Agency [IEA], 2011)(1). In at least 10 countries, fossil fuel subsidies exceeded 5% of GDP, and constituted substantial fractions of government budgets (IEA, 2010)(2). Eliminating fossil fuel subsidies could reduce global oil consumption by about 4.7 million barrels per day by 2020, representing a decline of about 5% of current consumption. The International Energy Agency (2010)(2) estimates that eliminating all fossil fuel subsidies would reduce global CO2 emissions by about two gigatons per year by 2020.
VsEliminating Fossil Fuel Subsidies: The vast majority of fossil fuel subsidies suppress the prices for petrol, diesel, electricity, natural gas, and coal that consumers face, primarily in developing countries. Some developing country governments have been historically reticent to let fuel and electricity prices rise to market-determined levels because of concerns of public opposition. Critics of subsidy reform claim it will harm low-income households, but most fossil fuel subsidies disproportionately benefit the relatively wealthy in developing countries. Indeed, about 40% of the benefits of petroleum subsidies accrue to the wealthiest quintile, while the lowest income quintile enjoys less than 10% of the subsidy benefits, on average globally (Coady et al., 2010)(3).
>Carbon Pricing Strategies/Stavins.

1. International Energy Agency. (2011). World energy outlook 2011. Paris, France: IEA.
2. International Energy Agency. (2010). World energy outlook 2010. Paris, France: IEA.
3. Coady, D., Gillingham, R., Ossowski, R., Pietrowski, J., Tareq, S., & Tyson, J. (2010). Petroleum product subsidies: Costly, inequitable, and rising (IMF Staff Position Note SPN/10/05). Washington, DC: International Monetary Fund.

Robert N. Stavins & Joseph E. Aldy, 2012: “The Promise and Problems of Pricing Carbon: Theory and
Experience”. In: Journal of Environment & Development, Vol. 21/2, pp. 152–180.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Stavins I
Robert N. Stavins
Joseph E. Aldy
The Promise and Problems of Pricing Carbon: Theory and Experience 2012

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