RP0275 – Phase-out of fossil fuel subsidies: implications for emissions, GDP and public budget

In this study we assess the potential benefits of removing fossil fuel subsidies around the world using a Computable General Equilibrium approach. Results confirm the win-win nature of the policy. World GDP increases and emissions decrease compared to the baseline scenario in 2030. In addition to the previous studies, the model allows the evaluation of the economic consequences for the public finance. Fiscal benefits can be observed all around the world, especially for Middle East, North Africa and former Soviet Union where public debt and deficit reduce substantially over the years. In these regions fossil fuel subsidies represent a not negligible burden for public budget.

  • Keywords: Fossil Fuel subsidies, climate change mitigation, general equilibrium.

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