How can we cut fossil fuel subsidies, without hurting poorer people who rely on cheap energy?

This is costing us all. Image: Getty.

Almost all governments in the world joined the Paris agreement in 2015 in an effort to tackle climate change. In the same year, many of the same governments paid about $400bn in direct and indirect subsidies to help people buy fossil fuels.

Subsidies are government policies which make energy cheaper than under normal market conditions. They mostly go towards fossil fuels, since most of the energy we use comes from oil, gas or coal. As one of us noted in a review published in the journal Ecological Economics, fossil fuel subsidies are a popular and pervasive tool for helping people across the world have access to energy.

But it isn’t clear whether both trends are possible. Isn’t there a contradiction between subsidising fossil fuels and meeting Paris climate targets? And, if the subsidies are removed, won’t many people suffer without cheap energy?

Though recent analysis shows that the worldwide removal would not magically solve climate change, there are many reasons for reform beyond reducing emissions.

Subsidies are inefficient

There is increasing disillusionment with subsidies. As one senior OECD official puts it:

Subsidies often introduce economic, environmental, and social distortions with unintended consequences. They are expensive for governments and may not achieve their objectives while also inducing harmful environmental and social outcomes.

Therefore, there is growing political momentum against fossil fuel subsidies. In 2016, the G20 leaders reaffirmed an earlier pledge to phase them out.

In theory, reforming or even completely removing these subsidies should not be a particularly difficult task because there is increasing evidence that they are not especially effective at poverty alleviation: the very reason they were introduced in the first place.

For example, an IMF study documented that across 20 developing countries the poorest fifth of the population received on average just 7 per cent of the overall subsidy benefit, whereas the richest fifth received almost 43 per cent. Another study looked at India and found that, of the $22.5bn spent on fossil fuel subsidies in 2010, less than $2bn benefited the poorest 20 per cent. This is essentially because poorer households in poor countries use less fuel than wealthier households, even when energy is subsidised.

Subsidies can also paradoxically lead to energy shortages. In Myanmar, fixed prices for electricity, diesel and petrol have resulted in shortages when those prices fall below international market levels. This has convinced suppliers to focus on exports to China and Thailand rather than domestic use, and has stripped them of the revenues needed for infrastructure.

Why does such an obviously inefficient policy stay around? One easy explanation may be that the main obstacle to subsidy reform is the fossil fuel lobbies. But recent research shows that the situation is not so simple.

Subsidies still help the poor

Most subsidies were introduced to serve a social mission and some have done it really well. Examples include the US’s Low Income Home Energy Assistance Program or the UK’s Warm Front Program, which helped 2.3m “fuel poor” homes.

In developing countries, subsidies are also typically introduced as well-meaning policies to support lower income groups and thus gain support from large numbers of people. And, although they are an extremely inefficient policy to support development, subsidies are sometimes the best option when institutions are under-developed.

Around the world, almost all subsidies are aimed at consumers rather than producers. It’s true that the bulk of this money goes to richer households, but since energy makes up a larger share of poorer household budgets, subsidies are relatively more important for people on low incomes. Many governments therefore fear that removing them risks political upheaval.

Regional distribution of global fossil fuel subsidies as of 2015. Image: Jewell et al, Nature.

A political opportunity

Despite this difficulty, the tension between providing energy subsidies to the poor and protecting the climate is not as insurmountable as it may seem. A recent article in Nature led by one of us shows that, if fossil fuel subsidies were removed worldwide, the largest emissions reductions would occur in oil and gas exporting regions: Russia and some of its neighbours, the Middle East, North Africa and Latin America.

Most subsidies originate in these regions, but they also benefit fewer people living below the poverty line than in lower income countries such as India. This presents a unique political opportunity, because it is these oil and gas exporting countries where subsidy cuts would be most welcomed, as government budgets are squeezed by low oil prices.

Projected reduction in greenhouse emissions from removing fossil fuel subsidies compared with Paris climate pledges. Image: modified from Jewell et al./Nature.

The trick to making subsidy reforms stick, even in the face of an oil price rise, is to combine them with effective pro-poor policies. Examples include India paying for cooking gas for those households which fall below a certain income level, or the way Indonesia and Iran have reallocated energy subsidy money to help finance infrastructure development and universal health care respectively.

The ConversationUltimately, subsidy reform is not impossible, but neither is it easy. To gain maximum benefits for the climate while doing the minimum harm to the poor, reforms must be carefully targeted at the regions and sectors where they will be most effective.

Benjamin Sovacool, Professor of Energy Policy, University of Sussex and Jessica Jewell, Research Scholar, International Institute for Applied Systems Analysis (IIASA).

This article was originally published on The Conversation. Read the original article.


How can cities become more bike friendly? The Netherlands offers useful lessons

(Aurore Belot/AFP via Getty Images)

It might seem like cycling is in the DNA of the Netherlands, a country where even the prime minister takes his bicycle to work. But the Dutch haven’t always lived as one with their bikes. In the Amsterdam of the early 1970s, cars were considered the wave of the future. They can be seen filling up squares and streets in historical photographs, and killed an average of over two Amsterdammers per week, including many children.

It is nothing more than an “accident of history” that the Netherlands embraced cycling, says Marco te Brömmelstoet, the director of the Urban Cycling Institute in Amsterdam and a man better known as the city’s cycling professor. Today’s bike rider’s paradise was created after parents and activists took to the streets to protest “child murder” by car. A Saudi oil embargo, rising gas prices, concerns about pollution and anger about the destruction of entire neighbourhoods to build motorways did the rest. 

Amsterdam, 1958. Not a cyclist's paradise. (Keystone/Getty Images)

What’s important about this history is that it can be replicated in other cities, too. Of course, the Netherlands has certain advantages – it’s flat as a pancake, for example. But in the eyes of traffic reformers, the rise of e-bikes (and even cargo bikes) means there’s no excuse for prioritising cars everywhere. 

So how can cities, flat or not, follow Amsterdam’s path to creating places where cycling is a pleasant, safe and common way to get around? The Dutch have some tips. 

Separate bikes from car traffic

Any city could start painting dedicated bike lanes on the streets. But in the Netherlands, those white marks indicating space for cyclists are considered just a minor first step. 

“A line on the road is not enough. Motorists will ignore it,” says Frans Jan van Rossem, a civil servant specialising in cycling policy in Utrecht. If other cities want their residents to choose bikes instead of cars when dodging pandemic-era public transport, protecting them from fast-moving car traffic must be the priority, Van Rossem says. 

The Dutch research institute CROW developed a widely praised design manual for bicycle infrastructure, full of tips for creating these protected lanes: A row of vertical white posts or a curb can serve as a physical separator, for example. Still, cyclists tend to feel safest in a "solitary" path, separated from the road by grass, trees, or an elevated concrete island. 

“The main bottleneck, the main reason why people don’t cycle, is that they don’t feel safe,” Van Rossem notes. “To start, construct separate paths.”

Turn those bike paths into a network

Many cities may have some bike lanes on some streets, but leave cyclists to roll the dice everywhere else. Will conditions still be safe when they turn left or right? Often they have to continue their way without any protected facilities for cyclists. 

“In many cases, cities take fast action, without thinking it through very well,” says Lucas Harms. He leads the Dutch Cycling Embassy, a partnership between the Dutch government and several companies, which promotes Dutch bike knowhow globally. “Don’t build small pieces of bike lane from nothing to nowhere. Think about a network of cycling infrastructure.” 

Utrecht aims to have cyclists within 200 to 300 metres of a connected path anywhere in the city, Van Rossem says. Avoid constructing those paths in sketchy industrial areas, he warns. “A connection through an unattractive area may be fast, but won’t be used a lot.”

Embrace the ‘fietsstraat’, a street where bikes come first

On some streets, drivers have to give up their privileges. (Rick Nederstigt/AFP via Getty Images)

A peculiar Dutch invention called "fietsstraat" (cycling street) holds strong potential for the rest of the world, Kevin Krizek says. He’s a transportation professor from Colorado who spent three years at Radboud University in Nijmegen. 

On cycling streets, cars are “guests”, restricted by a speed limit of 30 kilometres per hour. Drivers are not allowed to pass, so cyclists comfortably dominate the road. In the Netherlands the fietsstraat is usually paved with red asphalt, to resemble a bike path and notify drivers of their secondary status. But creating a cycling street can be easy. “All you need to do is put signs at intersections,” Krizek says. The effect is revolutionary in his view. Drivers have to give up their privileges, and cyclists can take the lead. 

Some Dutch traffic experts worry the cycling street won’t work if a city doesn’t also have a robust cycling culture. In the Netherlands, drivers are aware of the perils of urban cycling because they too use bicycles. Moreover, Dutch cities use sophisticated “circulation plans” to direct cars away from city centres and residential areas, onto a few main routes. 

Without “calming” traffic this way, the cycling street could be a step too far, Harms says. “In a city like New York, where all roads are equally accessible and full, it’s better to separate bicycles and cars,” he says.

Redesign intersections for cyclists' safety

If cyclists have to cross intersections “at the mercy of the Gods”, you’re not there yet, says Harms. When he travels abroad, he often finds clumsily designed crossings. As soon as cars turn, cyclists may fear for their lives. 

Harms recommends placing physical barriers between cars and bikes in places where they must cross. The Dutch build elevated islands to direct traffic into separate sections. The golden rule: cars wait behind bicycles. That way, drivers can see cyclists clearly at all times. Barriers also force Dutch cyclists to turn left in the safest way possible. They cross the street first and wait for their turn again before making their way left.

“You can create that with simple temporary measures,” Harms says. Planters work fine, for example. “They must be forgiving, though. When someone makes a mistake, you don’t want them to get seriously injured by a flower box’s sharp edge.”

Professor Krizek points out how the Dutch integrated cycling routes into roundabouts. Some are small; some are big and glorious, like the Hovenring between Eindhoven and Veldhoven, where cyclists take a futuristic-looking roundabout lifted above the highway. Most of those traffic circles move high volumes of cars and cyclists through intersections efficiently and safely. For a simpler solution, the Dutch manual suggests guiding cyclists to quieter streets – crossing a block up or down may be safer. “Nobody knows how to do intersections better than the Dutch,” says Krizek. 

Ban cars, or at least discourage them

A man rides down from a three-level bicycle parking garage near Amsterdam's main train station. (Timothy Clary/AFP via Getty Images)

The quickest, most affordable way to make a city more bikeable is to ban cars, says Ria Hilhorst, cycling policy advisor for the City of Amsterdam. It will make streets remarkably safe – and will most likely enrage a significant amount of people. 

Amsterdam doesn’t outlaw cars, but it does deliberately make their owners feel unwelcome in the historic city’s cramped streets. Paid parking is hugely effective, for example. Many car owners decide to avoid paying and use bicycles or public transportation for trips into the city. Utrecht, meanwhile, boasts the world’s largest bicycle parking garage, which provides a dizzying 12,500 parking spots.

To further discourage drivers from entering the city’s heart, Amsterdam will soon remove more than 10,000 car-parking spaces. Strategically placed barriers already make it impossible to cross Amsterdam efficiently by car. “In Amsterdam, it is faster to cross the city on a bike than by car,” Harms says. “That is the result of very conscious policy decisions.”

Communicate the benefits clearly

Shopkeepers always fear they will lose clients when their businesses won’t be directly accessible by car, but that’s a myth, says Harms. “A lot of research concludes that better access for pedestrians and cyclists, making a street more attractive, is an economic boost.”

Try replacing one parking space with a small park, he recommends, and residents will see how it improves their community. Home values will eventually rise in calmer, bike-friendlier neighbourhoods without through traffic, Van Rossem says. Fewer cars mean more room for green spaces, for example.

“I often miss the notion that cycling and walking can contribute a lot to the city. One of the greatest threats to public health is lack of exercise. A more walkable and bikeable city can be part of the solution,” says Ria Hilhorst. “But in many countries, cycling is seen as something for losers. I made it, so I have a car and I’m going to use it, is the idea. 

“Changing this requires political courage. Keep your back straight, and present a vision. What do you gain? Tranquility, fewer emissions, health benefits, traffic safety, less space occupied by vehicles.” 

Again, she points to Amsterdam’s history. “It is possible; we were a car city too.”

Karlijn van Houwelingen is a journalist based in New York City.