Reply to: Why fossil fuel producer subsidies matter

Access options

Rent or Buy article

Get time limited or full article access on ReadCube.

from$8.99

All prices are NET prices.

Data availability

The authors declare that the data supporting the calculations are available in the Methods or from publicly available sources cited in the Methods.

Code availability

No custom code or algorithms were developed for the discounted cash flow results reported in this paper.

References

  1. 1.

    Joint Report By IEA, OPEC, OECD And World Bank On Fossil-fuel And Other Energy Subsidies: An Update Of The G20 Pittsburgh And Toronto Commitments https://www.oecd.org/env/49090716.pdf (IEA, OPEC, OECD and World Bank, 2011).

  2. 2.

    Jewell, J. et al. Limited emission reductions from fuel subsidy removal except in energy-exporting regions. Nature 554, 229–233 (2018).

  3. 3.

    Erickson, P. et al. Why fossil fuel producer subsidies matter. Nature https://doi.org/10.1038/s41586-019-1920-x (2020).

  4. 4.

    Intergovernmental Panel on Climate Change (IPCC). Technical Summary. In Climate Change 2014: Mitigation of climate change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (eds Edenhofer, O. et al.) 33–107 (Cambridge Univ. Press, 2014).

  5. 5.

    Friends of Fossil Fuel Subsidy Reform. Briefing Note July 2015: Fossil Fuel Subsidy Reform and the Communiqué. http://fffsr.org/wp-content/uploads/2015/07/ffrs-communique-briefing-note.pdf (Friends of Fossil Fuel Subsidy Reform, 2015).

  6. 6.

    OECD OECD Companion to the Inventory of Support Measures for Fossil Fuels 2015. https://www.oecd.org/publications/oecd-companion-to-the-inventory-of-support-measures-for-fossil-fuels-2015-9789264239616-en.htm (OECD, 2015).

  7. 7.

    IEA World Energy Outlook 2016 https://webstore.iea.org/world-energy-outlook-2016 (International Energy Agency, 2016).

  8. 8.

    IEA World Energy Outlook 2014 https://webstore.iea.org/world-energy-outlook-2014 (International Energy Agency, 2014).

  9. 9.

    Bast, E., Doukas, A., Pickard, S., Burg, L. Van Der & Whitley, S. Empty Promises: G20 Subsidies to Oil, Gas And Coal Production. https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/9957.pdf (Overseas Development Institute and Oil Change International, 2015).

  10. 10.

    Gerasimchuk, I. et al. Zombie energy: climate benefits of ending subsidies to fossil fuel production. Working paper. https://www.iisd.org/sites/default/files/publications/zombie-energy-climate-benefits-ending-subsidies-fossil-fuel-production.pdf (International Institute for Sustainable Development, Global Subsidies Initiative, and Overseas Development Institute, 2017).

  11. 11.

    Erickson, P., Down, A., Lazarus, M. & Koplow, D. Effect of subsidies to fossil fuel companies on United States crude oil production. Nat. Energy 2, 891–898 (2017).

  12. 12.

    Erickson, P. & Lazarus, M. Impact of the Keystone XL pipeline on global oil markets and greenhouse gas emissions. Nat. Clim. Chang. 4, 778–781 (2014).

  13. 13.

    Damodaran, A. Cost Of Equity And Capital (Updateable) http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm (2019).

  14. 14.

    Johnson, N. et al. Stranded on a low-carbon planet: implications of climate policy for the phase-out of coal-based power plants. Technol. Forecast. Soc. Change 90, 89–102 (2015).

  15. 15.

    Compernolle, T., Welkenhuysen, K., Huisman, K., Piessens, K. & Kort, P. Off-shore enhanced oil recovery in the North Sea: the impact of price uncertainty on the investment decisions. Energy Policy 101, 123–137 (2017).

  16. 16.

    Ansari, E. & Kaufmann, R. K. The effect of oil and gas price and price volatility on rig activity in tight formations and OPEC strategy. Nat. Energy 4, 321–328 (2019).

  17. 17.

    Victor, D. G. The Politics of Fossil-Fuel Subsidies https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1520984 (Global Subsidies Initiative and International Institute for Sustainable Development, 2009).

  18. 18.

    Inchauste, G. & Victor, D. G. The Political Economy of Energy Subsidy Reform Public Sector Governance (World Bank, 2017).

  19. 19.

    Sovacool, B. K. Reviewing, reforming, and rethinking global energy subsidies: towards a political economy research agenda. Ecol. Econ. 135, 150–163 (2017).

  20. 20.

    Lockwood, M. Fossil fuel subsidy reform, rent management and political fragmentation in developing countries. New Polit. Econ. 20, 475–494 (2015).

Download references

Acknowledgements

This work was supported by the Research Council Norway under the Contractions project (“Analyzing past and future energy industry contractions: towards a better understanding of the flip-side of energy transitions”) under grant agreement number 267528/E10. We thank A. Cherp for discussions on the discounted cash flow model.

Author information

Affiliations

Authors

Contributions

The change in composition (removal of Nawfal Saadi and addition of Hannah Daly) and order of the author list in this Matters Arising compared to the original Letter reflects the contributions to the Matters Arising Reply, which relied on a discounted cash flow model and additional empirical research in order to validate the assumptions and sensitivity analysis from the original article. J.J., J.E., V.V. and C.B. wrote the Reply with contributions from L.B., H.D., I.K., V.K., D.E.H.J.G., K.F., D.M, L.P., K.R., M.T. and D.V. The numerical model was conceived and designed by J.J. and V.V. and implemented by V.V. The results were analysed by J.J. and V.V.

Corresponding author

Correspondence to Jessica Jewell.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary information

Supplementary Methods

This file contains Supplementary Methods, including Methods Table 1-4, and Supplementary References.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Jewell, J., Emmerling, J., Vinichenko, V. et al. Reply to: Why fossil fuel producer subsidies matter. Nature 578, E5–E7 (2020). https://doi.org/10.1038/s41586-019-1921-9

Download citation

Comments

By submitting a comment you agree to abide by our Terms and Community Guidelines. If you find something abusive or that does not comply with our terms or guidelines please flag it as inappropriate.