NOK 100 million for efforts to remove fossil fuel subsidies

Published under: Solberg's Government

Publisher Ministry of Foreign Affairs

'Norway will provide support to developing countries that are seeking to reduce subsidies for coal and other fossil fuels. Cutting fossil fuel subsidies will reduce greenhouse gas emissions and will free up more funding for sustainable development efforts. Norway is providing NOK 100 million for fossil-fuel subsidy reform,' said Minister of Foreign Affairs Børge Brende.

Norway is one of a group of eight countries, known as the Friends of Fossil Fuel Subsidy Reform, that is launching an international initiative in Washington today to encourage states to phase out fossil fuel subsidies. The funding Norway is providing will be channelled through the World Bank and other international partners to support fossil-fuel subsidy reform in poor countries.

'In 2013, over NOK 4 000 billion was spent globally on subsidising the use of fossil fuels. In some developing countries, the cost of these subsidies amounts to 20 % of GDP. Fossil fuel subsidies thus constitute a heavy burden for the economies of poor countries. These resources could be put to better use in development efforts, including in the areas of health and education,' Mr Brende said.

It may be difficult to achieve the phasing out of fossil fuel subsidies, because doing so will make transport and fuel more expensive. This will have the greatest impact on the poor and on lower middle class segments of the population. It is therefore vital to ensure that fossil fuel subsidy reform is accompanied by measures that counter the negative consequences that a reduction in subsidies would have for these groups.

The phasing out of subsidies would have a positive effect on the climate, since subsidies for fossil fuels increase the use of these fuels and thus lead to increased greenhouse gas emissions. The International Monetary Fund has estimated that the removal of fossil fuel subsidies could result in a 13 % reduction in global greenhouse gas emissions.

'The current low price of oil provides a unique opportunity to cut subsidies for fossil fuels, which will have significant climate and development benefits. More and more countries are coming on board, and we will continue to work closely with other states, international organisations and companies to support this transition,' Mr Brende said.

In 2014, the Government adopted a strategy for promoting fossil fuel subsidy reform at the international level.