Ditching fossil fuel subsidies can trigger unrest. Keeping them will kill the climate-EDITION

London (CNN Business)When protests swept Kazakhstan earlier this month, they were fueled by frustration with the ruling elite and entrenched inequality. But the unrest was sparked by a specific catalyst: an end to a government subsidy.

 

 

The cost of liquefied petroleum gas — which most people in the western part of the country use to power their cars — doubled overnight after the government lifted price caps. The ensuing turmoil, which saw thousands of protesters take to the streets, resulted in a Russian-led military intervention, the resignation of the government and the deaths of more than 200 people.

 

The episode is a reminder of the challenges facing governments that want to tackle longstanding fuel subsidies, either to reform markets and save money, as was the case in Kazakhstan, or to encourage people to switch to cleaner energy. There's a consensus that eliminating these subsidies soon is crucial to reaching net-zero emissions targets and averting the worst effects of the climate crisis.

 

"The overall direction of travel has got to be a quick move away from subsidies," said Peter Wooders, senior director of energy at the International Institute for Sustainable Development. "This isn't something we want to be talking about in 10 years, and ideally not something we want to be talking about in five years."

 

But rolling them back is a tricky task that requires careful maneuvering. Spiking energy costs are a frequent spark for political conflict, especially when trust in government leaders is already low.

 

The challenge is made harder by the fact that energy prices are rising sharply around the world, piling pressure on the most disadvantaged. Eliminating subsidies for consumers at such a moment would exacerbate that pain and amplify discontent.

 

The situation in Europe looks particularly perilous in the coming months. Natural gas prices have soared, and tension with Russia over Ukraine could send them even higher. In the United Kingdom, Prime Minister Boris Johnson's government faces mounting criticism over plans to raise a cap on household energy bills in April.

 

Government technocrats "know they need to get rid of" subsidies, said Glada Lahn, an energy policy expert at the think tank Chatham House in London. "But politically, it's difficult."

An end to subsidies

The value of government subsidies for fossil fuels dropped to $375 billion in 2020, their lowest in the past decade, according to data from the Organization for Economic Cooperation and Development, the International Monetary Fund and the International Energy Agency.

 

Yet that decline was mostly tied to the plunge in energy prices, which meant governments didn't have to pay as much to suppress costs for consumers. In 2021, subsidies shot back up again, IISD's Wooders said.

 

There are two main categories of subsidies for fossil fuels — those for consumers, which bring energy costs below market rates to lower the burden on the public, and those for producers, which can be harder to track, since they include tax breaks, loan guarantees and access to cheap credit. About three-quarters of global fossil fuel subsidies are for consumers.

 

In countries rich in oil and gas, consumer subsidies are often part of the social contract. Wealth from the energy sector is channeled to the government or business elites, so subsidies are seen as an important mechanism for redistributing those benefits more broadly.

 

Still, research shows that these policies tend to disproportionately benefit higher income segments of the population, since wealthy people are more likely to own cars that need gas and to use more electricity.

 

They're also a major impediment to slashing emissions, which needs to happen immediately to fight the climate crisis.

 

Subsidies encourage over-consumption by businesses and households, and reduce the urgency of limiting waste. They also eat up huge parts of government budgets that could be used for sustainable projects like greener public transport.

 

An IISD study published last year found that removing fossil fuel subsidies for consumers across 32 countries would reduce greenhouse gas emissions by an average of 6.1% by 2030. In some countries, emissions would drop by more than 30%.

 

"Phasing out the subsidies would provide more efficient price signals for consumers, and spur more energy conservation and measures to improve energy efficiency," the IEA said in its roadmap for achieving net-zero emissions.

 

The group's researchers said consumer subsidies must be eliminated to achieve net zero emissions by 2050 and limit global warming to 1.5 degrees Celsius.

Doing it right

 

Progress is possible. At least 12 countries took steps to reduce fossil fuel subsidies between the middle of 2020 and the middle of 2021, according to IISD.

 

But the removal of subsidies can be a lightning rod for dissent since it hits residents' pocketbooks immediately. Problems can also arise when people don't believe their government will fairly invest or redistribute the money they'd otherwise spend on reducing energy costs.

 

"Fuel subsidy cuts definitely can be a leading indicator for protests," said Hugo Brennan, an analyst at risk consultancy Verisk Maplecroft.

 

In Kazakhstan, protests started in the western city of Zhanaozen over a leap in the price of butane and propane, which is often used as a cheaper alternative to gasoline. Yet demonstrations soon tapped into deeper sentiments.

 

"What's really going on [is] people are angry about inequality, about inflation and a lack of political freedom," said Melinda Haring, deputy director of the Atlantic Council's Eurasia Center. Kazakhstan's government opted to restore the price caps for six months.

 

It's just one example. After Ecuador's government announced the removal of fuel subsidies in late 2019, the country experienced a wave of protests that occasionally turned violent. The government ultimately reversed course. India, Indonesia, Yemen and Jordan have also been rocked by unrest tied to the rollback of fuel subsidies over the past 15 years.

 

Nigeria's government is trying to remove gasoline subsidies for consumers this year. While the subsidies mean prices at the pump are among the lowest in the world, the World Bank has reported that they mostly help the wealthiest members of the population and entice smugglers. Still, large-scale protests one decade ago and the failure of previous attempts underscore how fraught the process will be.

 

Concerns about fuel prices also affect the richest countries. In France, the gilet jaunes or "yellow vest" protest movement kicked off after President Emmanuel Macron's government announced a new eco-tax on fuel in 2018, generating backlash among the country's working and middle class living outside of major cities.

 

"These people needed to have purchasing power to get gas in their car so that's why the protest began," Samy Shalaby, an early yellow vest activist, told CNN in 2019. "But after that the people wanted to do more than challenge one tax, they wanted to change the democracy ... the entire economic model."

 

To successfully roll back subsidies, governments need to plan well in advance, Wooders said. The impact on lower-income households can be mitigated by providing direct cash payments to offset price increases — an approach that tends to be much cheaper than maintaining fuel subsidies in the long run. Communication about the move also needs to be deliberate and clear, and leaders should consider a phased approach, he added.

 

Read more…

Go back

Partners News

Press Release: African Union Development Agency-NEPAD Launches Energize Africa - NEPAD

New York, September 19, 2022 – The African Union Development Agency-NEPAD in partnership with Afreximbank, co-launched the AUDA-NEPAD Energize Africa initiative on the margins of the 77th United Nations General Assembly in New York.  The Energize Africa initiative recognises that Africa’s youth and women – making up more than half of the continent’s populations - must be at the core of Africa’s economic growth and inclusive development strategies.

Press Release: Climate Finance to Address Global Challenges on Climate Change, Land Degradation and Biodiversity Loss - NEPAD

New York, September 20, 2022 – Climate financing will play an important role in unlocking Africa’s potential to combat climate change. It is estimated that Africa requires about 2.5 trillion dollars of climate finance between 2020 and 2030 averaging about 250 billion dollars each year. However, the total annual climate finance flows in Africa for 2020 were only 30 billion dollars, which is just about 12 percent of the amount needed.

African Union Launches Serious Game to Mark the International Day of Peace - AU

The African Union (AU) Youth for Peace Africa Programme, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the United Nations Office to the African Union (UNOAU) have launched a serious game known as “Mission55 Conflict in Anaka”, to commemorate the International Day of Peace (Peace Day) 2022. The game, which the AU and GIZ developed, aims to raise awareness, educate and inform the public, particularly youth, on the mandate of the AU to promote good governance, peace and security in Africa.

Southern & Eastern Africa CSOs urged to promote the AU’s Free Movement Protocol - AU

African Civil Society Organizations (CSOs) in eastern and southern Africa have been prompted to support and promote the implementation of the African Union’s Free Movement Protocol (FMP) and the Migration Policy Framework for Africa (MPFA). The call to action to CSOs was made during the opening of the second Regional CSO Sensitization Forum on the Continental Free Movement Protocol organized by the AU Economic, Social, and Cultural Council (AU-ECOSOCC) with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

IGAD Launches its Regional Trade Policy 2022-2026 – IGAD

September 15, 2022 (NAIROBI, Kenya): The Intergovernmental Authority on Development (IGAD) today launched the IGAD Regional Trade Policy 2022-2026 in Nairobi. Representatives of IGAD Member States from Ministry of Trade and Heads of Chamber of Commerce and Industry, representatives of partners such as the African Development Bank (AfDB), and the Pan-African Chamber of Commerce and Industry (PACCI) attended the one-day event.

New biodiversity commitments announced as world leaders declare nature summit COP15 a priority - GEF

New commitments aimed at catalyzing biodiversity finance and conservation were unveiled today at a high-level event convened on the sidelines of the UN General Assembly to showcase action and support for a nature-positive world. New initiatives announced include €0.87 billion of new funding from the German government; a 10 point plan for financing biodiversity, endorsed by 16 initial countries; and the next phase of the High Ambition Coalition for Nature and People (HAC for Nature and People 2.0)...

The path of migratory birds connects us all - thegef

Patricia Zurita is CEO of BirdLife International, a leading conservation organization that works with 115 national partner organizations and 13 million members to protect birds and their habitats worldwide. In an interview marking BirdLife’s 100th anniversary, she shared her vision for how the world can create a healthy environment for healthy societies in the coming century.

Media Release: Governments Meet on Science and Evidence to Address Global Biodiversity Crisis - ipbes

Bonn, Germany – Representatives of almost 140 Governments will begin a week-long meeting on Sunday in Bonn, Germany to advance the science and evidence necessary to address the global biodiversity crisis. The ninth session of the Plenary of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (#IPBES9) will be the first in-person meeting, since the start of the COVID-19 pandemic, of the global body tasked with presenting decision-makers with the best-available science and expertise, to inform policy and action on nature.

5 Indigenous Women Climate Activists You Should Know About - forestdeclaration

Hindou, a Mbororo Indigenous pastoralist woman, is the founder of the Association of Indigenous Peul Women and Peoples of Chad (AFPAT), a community-based organization focused on promoting the rights of girls and women in the Mbororo community and inspiring leadership and advocacy in environmental protection. She is an influential climate leader in Africa, advocating for the importance of traditional knowledge for building resilience of Indigenous and forest communities to cope with the climate crisis.

Southeast Asia officers level up on CITES enforcement - Traffic

Enforcement officers new to the fight against wildlife crime have put a suite of TRAFFIC resources and newly developed materials to the test in a series of trainings in Southeast Asia. The face-to-face trainings with newly designed materials have been critical in bringing up-to-date information and tools to frontliners in some of the region’s major wildlife trade hotspots. However, staff turnover, regulatory changes, and evolving trends in wildlife crime mean there is a constant need for training.” Renee Yee, TRAFFIC’s Training and Capacity Building Officer in Southeast Asia

Cooperation Needed to Correct Course on Gender Equality: UN Report – SDG

UN Women and the UN Department of Economic and Social Affairs (DESA) issued a report, which presents evidence on gender equality across all 17 SDGs. Emphasizing the pivotal role of gender equality in driving progress on the entire 2030 Agenda, the report warns that global crises, such as the COVID-19 pandemic, violent conflict, and climate change have exacerbated gender disparities.

UN Report Stresses “Urgent Need” to Accelerate Progress on SDG 4 in LAC – SDG

The UN Educational, Scientific and Cultural Organization (UNESCO) and the UN Children’s Fund (UNICEF) regional offices for Latin America and the Caribbean (LAC), and the UN Economic Commission for Latin America and the Caribbean (ECLAC) published the results of a regional assessment of progress towards SDG 4 (quality education). The report highlights the urgent need for more investment and social participation to enable a systemic transformation of education.

COP 15 PRESIDENCY: latest news from Huang Runqiu, President of the COP 15 and Minister of Ecology and Environment of China – CBD

On September 12, Huang Runqiu, President of the Fifteenth Meeting of the Conference of the Parties to the United Nations Convention on Biological Diversity (COP 15) and Minister of the Ministry of Ecology and Environment, had a video meeting with Virginijus Sinkevičius, EU Commissioner for Environment, Oceans and Fisheries. The two sides had in-depth exchanges on the second part of COP 15 and key issues related to the post-2020 global biodiversity framework (GBF) .

CBFP MOP 19: Civil Society Declaration on the fight against deforestation in Congo Basin countries

We, the representatives of Central African civil society who participated in-person and virtually in the 19th Meeting of Parties of the Congo Basin Forest Partnership (CBFP), which was organized by the Federal Republic of Germany and took place from 5 to 8 July, 2022, in Libreville, Republic of Gabon, came together on 6 July 2022, as part of a strategic workshop of civil society organizations working to ensure effective management of natural resources in Congo Basin countries…

Welcome to our new partner the International Bamboo and Rattan Organization (INBAR)!

Berlin, 12th September 2022, the International Bamboo and Rattan Organization (INBAR), has officially joined the 124 members of the Congo Basin Forest Partnership (CBFP). INBAR has submitted its application and consented to the CBFP members’ cooperation framework to promote sustainable management of forest ecosystems in Central Africa.

CBFP RDP 19: Main conclusions of Streams of the 19th Meeting of the Parties of the CBFP: Strong messages and recommendations...

Please download the recommendations, conclusions, messages coming out of the deliberations of Streams 1a, 1b, 2 and 3, Technical Segment of the MOP 19 of the CBFP of Libreville towards sustainable development for Central Africa’s countries, people, forests and biodiversity...These conclusions also serve as a roadmap for the partners to implement the "Declaration of commitment of COMIFAC Member States to the forests of Central Africa and call for equitable financing" and the “Joint Declaration of the Congo Basin donors of COP26”…

MoP 19 - CIFOR - USFS: Peatlands, mangroves, and other wetlands: climate responses in the Congo Basin

Please kindly consult the main conclusions of the two side events organised by CIFOR and USFS in the margins of CBFP MOP 19 on: Slot 1: Current scientific activities on peatlands (and other wetlands) in the Congo Basin and  Slot 2: Early responses to protect and manage peatlands in the Congo Basin.

A new member of the great CBFP family: Welcome to the Republic of Korea (ROK) represented by the Korean Forest Service (KFS)!

Berlin, 12th August 2022, the Republic of Korea (ROK), represented by the Korea Forest Service (KFS), has officially joined the Congo Basin Forest Partnership (CBFP). ROK has submitted their application and consented to the CBFP members’ cooperation framework in promoting sustainable management of forest ecosystems in Central Africa.

 

UN Global Compact Unveils Strategy to Maximize China’s Contribution to SDGs – IISD

The UN Global Compact published its China strategy seeking “to unlock the potential of business and other stakeholders to maximize their impact on the SDGs and contribute to sustainable development in China and the rest of the world.” The document recognizes China’s local priorities while striving to align itself with the UN Global Compact’s Ten Principles and global ambition.

UNDP Report Calls for Investment, Insurance, Innovation to Shape Our Future - IISD

The latest Human Development Report, published by the UN Development Programme (UNDP), warns that due to the impacts of the multiple crises, mounting layers of uncertainty, and increasing polarization, human development has dropped to its 2016 levels, “reversing much of the progress” towards the SDGs. Yet, it argues, there is “promise and opportunity in uncertainty” to “reimagine our futures, to renew and adapt our institutions and to craft new stories about who we are and what we value.”

The Facilitator in conversation with EU- Parliamentarians on saving the world’s great lungs

Berlin September 7, 2022. Honourable Dr. Christian Ruck, CBFP Facilitator of the Federal Republic of Germany travelled to Brussels to co-host together with the Member of the European Parliament from the Group of the European People's Party (EPP) Dr. Angelika Niebler, a casual round table on the importance of the EU’s support in achieving better protection of the Congo Basin Forests, including through a “Fair Deal” mechanism for long-term financing of the region by means of payments for ecosystem services approach.

“Zero Draft” Outlines Vision, Scope of Future Chemicals and Waste Framework – IISD

Delegates to the fourth session of the Intersessional Process for Considering the Strategic Approach to International Chemicals Management (SAICM) and the Sound Management of Chemicals and Waste Beyond 2020 (IP4) advanced their work on the outline for a future global policy framework to promote chemical safety.

New poll reveals support for EU action to stop companies from selling forest-ravaging goods – FERN

A strong majority of Europeans think businesses are failing in their responsibility to protect the world’s forests and therefore support a new law to ban products that destroy them. On Amazon Rainforest Day, a new poll shows that an overwhelming majority of Europeans (82%) believe businesses should not sell products that destroy the world’s forests and think (78%) that the government needs to ban products that drive deforestation. When informed that the European Parliament has proposed such a law, support rises to 81 per cent.

A carbon bomb in the heart of Europe – FERN

Will the EU biomass loophole give a lifeline to energy giant EPH’s coal power plants? “A carbon bomb in the heart of Europe” investigates the rapidly growing Czech energy company EPH’s exploitation of loopholes in the European Union’s (EU) Renewable Energy Directive. The loopholes allow Member States to offer subsidies to extend the life of power stations. EPH is using such subsidies to burn biomass from forests, thereby dangerously delaying the energy sector’s decarbonisation.

Room for improvement in the Council’s deforestation-free position - FERN

On 28 June 2022, European Union Council of Environment Ministers (Council) adopted their opinion on the Commission’s proposal for a deforestation-free regulation intended to rein in the forest destruction caused by EU consumption of coffee, cocoa, palm oil, soya, beef and wood. While the text makes certain advances, other concerns and notable omissions must be addressed by the European Parliament when it adopts its position in mid-September.

CBFP MOP19; Summary of proceedings of side Event II: Monitoring the implementation of the N’Djamena Declaration and the development of Country Investment Plans in preparation for N’Djamena 2

A side-event entitled "Monitoring the implementation of the N'Djamena Declaration and the Development of Country Investment Plans in preparation for N'Djamena 2” was held on 07 July 2022. Experts from the 3 geographical and thematic blocs of the N'DJAMENA Declaration attended the day of strategic reflection on the subject of transhumance. A roadmap and a logical framework which the experts had established during previous work sessions were presented at the meeting. Other presentations delivered during the gathering highlighted the wide range of activities conducted by conservation actors, from the perspective of peaceful management of transhumance.

MOP19 CBFP - Summary of proceedings of DYNAFAC side events: From Mbaiki to Bambidie, 40 years monitoring the dynamics of production forests

The DYNAFAC side event consisted of presentations reviewing the results of 40 years of research on forest dynamics and ended with draft recommendations for policy makers. The first presentation entitled "Structure, diversity and dynamics of Central African forests: main achievements of the DynAfFor and P3FAC projects" was delivered by Sylvie GOURLET-FLEURY (CIRAD, France) and Félix ALLAH-BAREM (ICRA, CAR), and the second presentation entitled “Population dynamics of commercial species in Central Africa: main achievements of the DynAfFor and P3FAC projects” was delivered by Jean-Louis DOUCET (Gembloux Agro-Bio Tech – University of Liège, Belgium) and Franck MONTHE (Nature+ asbl, Belgium).

Final Press Release: Thirteenth Workshop of COMIFAC Protected Areas and Wildlife Sub-Working Group (SGTAPFS)

The 13th Workshop of the Central African Forest Commission's Sub-Working Group on Protected Areas and Wildlife (SGTAPFS) took place in Libreville, Republic of Gabon, from 11 to 15 July 2022. The German Cooperation through the GIZ Regional Project to Support COMIFAC, the European Union through the ECOFAC VI Program, and WCS provided technical and financial support for the workshop, which was coordinated by the institution's Executive Secretariat.