BAKU, Azerbaijan, September 10. European countries still have ample opportunities to reduce CO2 emissions through broadbased policies and reforms, Trend reports with reference to the International Monetary Fund (IMF).
“In particular, there are three key areas where more ambitious and comprehensive initiatives could make a significant contribution towards net-zero emissions throughout Europe: (i) eliminating distortionary energy subsidies; (ii) introducing a carbon tax and fees on high-emission products combined with rebates on low-emission products; and (iii) improving energy efficiency and decarbonizing the energy sector. Energy subsidies in Europe continue to distort economic incentives and contribute to environmental degradation. Subsidies on fossil fuels and electricity amount to significant amounts in some countries in Europe, but there is considerable variation in the size and types of energy subsidies. Fossil fuel subsidies are larger in commodity-rich countries, such as Russia, while electricity subsidies are more prevalent in the rest of the continent,” reads the latest IMF report.
The report reveals that the widespread use of energy subsidies undermines fiscal sustainability, divert resources away from more productive areas (such as education and healthcare), benefits the rich more than the poor, and discourages efficiency improvements in the energy sector.
“Consequently, energy subsidies have become a distortionary burden on long-term economic growth and the environment due to overconsumption. More efficient pricing of energy, on the other hand, would reduce CO2 emissions by more than a third relative to the baseline level, keep global warming below 1.5°C, raise additional revenues, and improve environmental quality,” say IMF analysts.
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