July 27, 2021
Economy

How the United States can restart international cooperation

Globally, governments spend more than $500 billion on subsidies for fossil fuels that contribute to inefficiency, inequity, and negative externalities. Despite this obvious problem, efforts at reforming fossil fuel subsidies across the world have been piecemeal. If countries are to achieve the decarbonization goals of the Paris Agreement on climate change, they need to urgently address these subsidies as part of the transition away from fossil fuels.

In doing so, countries need to accurately measure all types of support offered to fossil fuels and devise solutions accordingly. This means that they need to identify and tackle both production and consumption subsidies. Production subsidies increase the profitability of extracting and transporting fuels, usually by offering tax breaks, production credits, or accelerated depreciation for capital investment. The Organization for…

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