If countries abolished financial support for coal, oil and gas, they could invest in new infratructures. An interactive MCC map illustrates just how much could be achieved.
In almost 80 countries in the world, a significant proportion of the population still lacks access to water, electricity, sanitation or telecommunication. Yet, in many of these states, the governments could ensure almost complete access to the corresponding infrastructures. To do this they would have to abolish fossil-fuel subsidies, which amount to around 550 billion US dollars globally, and invest these funds in infrastructure instead. A new interactive online map from the Mercator Research Institute on Global Commons and Climate Change (MCC) now illustrates what the reduction of subsidies can contribute to the financing of the infrastructure in each country.
Users of the MCC Subsidy Map can determine by themselves what proportion of the current subsidies for fossil fuels should be phased out. Afterwards, they can define the rates of access to water, electricity, telecommunications and sanitary facilities that shall be achieved. The map then shows, in red, yellow and green shading, to what extent the freed up financial resources can provide the access target set by the user.
The map is especially relevant with regards to the Sustainable Development Goals (SDGs) of the United Nations. The SDGs include, among other things, access to energy, water and sanitation. They could be decisively pushed forward by abolishing subsidies for fossil fuels. At the same time, cutting fossil-fuel subsidies would reduce greenhouse gas emissions and constitute a first step towards ambitious climate policies.
“Access to basic infrastructure is the foundation for combating poverty, a main objective of the SDGs,” says Michael Jakob, Coordinator of the MCC Task Force Public Economics. “By means of the MCC interactive map, the user can slip into the role of the political decision-makers, and make a value judgement which infrastructure has priority for them. Because even though a lot can be achieved in many countries with the phase-out of the subsidies, access to all infrastructures can by no means be guaranteed in all of them.”
The map user can achieve a relatively strong effect with comparatively modest subsidy reforms in South Asia and some states of sub-Saharan Africa. Countries such as the Republic of the Congo, Zimbabwe and Nigeria, as well as Indonesia and India, have particularly high subsidies for fossil fuels and at the same time a high need for infrastructure development. For example, Nigeria would have to use only four percent of its subsidies for 15 years in order to supply water to the 40 percent of its population who currently have no access to it. In India, for instance, the 370 million people who still lack access to electricity could have it if the country would redirect only six percent of its subsidies.
“The developing and emerging countries play a key role in the future mitigation of carbon emissions. At the same time, public finances are in such a poor condition in many of these states that urgently needed investments into the infrastructure can hardly be made,” says MCC Director Ottmar Edenhofer. “A fossil fuel subsidy reform appears to be required as it regards both environmental and social policies as well as economics. New coalitions should be forged in order to overcome the respective national political obstacles.”
The interactive map is based on calculations of the MCC, which were published in the article “Development incentives for fossil fuel subsidy reform” in the scientific journal Nature Climate Change. It was written by the MCC scientists Michael Jakob, Claudine Chen, Sabine Fuss, Annika Marxen and Ottmar Edenhofer.
For their calculations the authors used data from the International Energy Agency (IEA), the World Bank, as well as numerous studies on infrastructure costs.
In the interactive MCC map, only direct financial support for the consumption of fossil fuels is considered as a subsidy. It is derived from the difference between the world market price and the respective national selling price. Tax reductions as well as the social costs of using fossil fuels (e.g., air pollution) are not included in the data.