The climate can be saved to one-third of the cost of fossil fuel subsidies
Returning to an estimate made by the Leonardo DiCaprio Foundation when it presented its super-climate model.
How much does it cost to develop an economy with 100% clean and renewable energy?
Question always on time and very difficult to answer. Even in the United States, where the idea of a "green" New Deal is coming back to mobilize national industry, there are currently no precise estimates of the amount of investment needed.
According to the independent American Action Forum (AAF), the Green New Deal would require at least $ 1 billion to implement all the proposed rules and thus reduce polluting emissions and transform the country's energy mix.
In practice, the energy transition of the model proposed by the Leonardo DiCaprio foundation would require annual global investments of the order of one thousand seven hundred million dollars.
While the global grants account for traditional fuels amounts to 5,000 million dollars, according to estimates (of 2015) of the International Monetary Fund mentioned by the foundation.
So we could "clean up" the planet by spending about a third of what we spend today to promote the use of the most polluting energy resources. We are talking about a 66% savings.
Although the calculations on the extent of subsidies to fossil fuels are particularly complex and vary a lot according to the methods used, as well as the estimates on social-environmental costs related to the use of these fuels (the so-called "negative externalities") are particularly complex.
Would eliminating fossil fuel subsidies help growth from renewable sources? Would it drastically reduce CO2 emissions in the world?
According to a study published in Nature entitled "Limited emissions reductions due to the elimination of the fuel subsidy, except in the energy exporting regions", the answer is not obvious.
The authors of the research, including researchers from the Euro-Mediterranean Center on Climate Change (CMCC), Massimo Tavoni and Johannes Emmerling, believe that a drastic cut in fossil subsidies may affect mainly the main oil and gas exporters.
The point is that, as explained in the work and as emerges from the CMCC statement, to eliminate fossil fuels the elimination of subsidies would not lead to great results in terms of CO2 reduction, if not together with other more effective strategies.
According to the findings, the removal of subsidies to fossil sources at a global level would produce, by 2030, a reduction in CO2 emissions of between 1 and 5%, amounting to between 0.5 and 2 billion tons of CO2. So a figure much lower than the commitments set in the Paris agreement that instead requires a decrease of 4-8 billion tons of CO2, which, however, would not even allow you to stay below 2 ° C.
Tavoni states that this does not mean that eliminating subsidies is a wrong choice but it is a measure that alone is not enough. He said: "in some countries, as the major exporters of energy produced from fossils, the elimination of subsidies would lead to significant results both on the use of renewables and on the reduction of emissions. However, on a global scale, the consequences would be limited. Other solutions are needed, such as taxing CO2 and investing in innovation ".
In light of this analysis, CO2 taxation is one of the ideal tools to be adopted in energy policies. Low-income brackets can be protected from rising energy prices with compensatory measures (exemptions or reimbursements) incurred precisely by the tax revenue arising from the tax.
However, even this solution would not be enough, since it will be necessary to develop new technologies and reduce the costs of existing technologies, to spread to all income groups. For this it is important to invest in innovation.
Certainly, given the growing debate on these and other issues related to the costs / investments of the energy transition (carbon tax, environmental taxes, investments in individual renewable technologies, etc.), new ideas will be ready to reflect.
Finally, it is worth noting that the full study funded by Fundación Leonardo DiCaprio is available online for free from February 2.