Why fossil fuel producer subsidies matter

This article in Nature explains how subsidies affect fossil fuel investment and why they deserve greater attention in global modelling analyses.

It responds to a 2018 study in Nature that used the results of integrated assessment models to infer that eliminating subsidies would yield “limited emission reductions…except in energy-exporting regions”, and described the emission reduction benefits as “small”.

This characterization is potentially misleading, and this article uses a simple, sector-specific model to show how the emission reductions from producer subsidy reform could be more material than the 2018 study suggests. Fossil fuel producer subsidies delay a low-carbon transition in ways both material and political, and they deserve greater attention and transparency in global modelling analyses, as well as in policy-making.