CLIMATE CHANGE AND SUBSIDIES

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Context

• The World Bank study highlights the uselessness of subsidies given, in context of climate change.
• Subsidies given for Agriculture, fossil fuel, fishing could be inefficient and have negative consequences for environment.

Other Details

• If calculated in monetary terms, around the globe, these subsidies are in excess of $7 trillio
• It is more than 8% of the global GDP.

Subsidy Burden

Global

• In agriculture to support specific crops growth - Explicit input subsidies in the range of $635 billion to $1 trillion per year.
• Fisheries sector - 4 billion dollar per year and most of it contributes to overfishing.
• Fossil fuel - $577 billion annually to incentivise the use of fossil fuels

India’s Burned

• Fertilizer subsidies – 1,63,973 crore ruppes during 2022-23
• Fossil fuel subsidies - 60,316 crore rupees in FY 2022
• Fishing subsidies – 277 million USD for small farmers in 2018 (less compare to other European nation)

Concerns related to Subsidies

• Increasing pollution due to excessive use of fossil fuel
  • In 2021, $577 billion were spent globally to incentivise the use of fossil fuels such as oil, gas, and coal. These measures amounted to incentivising the overuse of fossil fuels.
  • It is responsible for polluting environment in middle-income countries
  • More health Burden like 7 million premature deaths due to increasing air pollution
  • Poor demographic dividend
  • In previous 3 decades, 17% of all nitrogen pollution in water is attributed to these subsidies.
• Overfishing leading to depleting fish population and may result into loss of biodiversity and a threat to food security.
• Agricultural subsidies cause 14% of global deforestation every year.
• More money is spent in subsidising consumption of fossil fuel and less, as much as 16% of these fossil fuel subsidies, on achieving the target agreed in Paris climate deal.
• Limited effectiveness of initiative to reduce the use of polluting fuels.
• Surging demand for energy and expensive renewable energy alternatives.

Must read Article:

Subsidy

https://www.iasgyan.in/daily-current-affairs/subsidy

Way Ahead

• The study suggests that instead of giving these to bail out economies, they should be diverted to finance and support other sustainable activities. For instance–
  • For transitioning to green economy and energy activities
• To Provide a better quality of life for people.
• To ensure Availability, accessibility and affordability of clean energy.
• Focus also should be on transfer of energy technology and related information.
• To enhance capacity building for a green economy.
• To change behavioural component and promoting the clean energy through various campaigns.

Positives of removing subsidies

• It will not harm the people in bottom these subsidies mainly help already wealthy farmers, not poors.
  • For Example, in Malawi and Tanzania, top pay US$5 to the top 20% are paid 5 times more than the bottom 20%.
• Can promote a green and just transition for a sustainable living.
• Help in focusing and improving on health, education, employment and other living conditions for poor.
• Help in keeping the pollution in check,
• Help in flourishing biodiversity and related ecology.
• Increasing price of fossil fuel may lead to decrease in concentration of polluting substance PM 2.5.
  • For eg. US$0.10 per liter increase may lead to decrease of PM 2.5 in capital cities, to the tune of 2.2 μg/m3 annually.

Must read Article:

Sustainable development

https://www.iasgyan.in/daily-current-affairs/sustainable-development

Air Pollution

https://www.iasgyan.in/daily-current-affairs/air-pollution

PRACTICE QUESTION Highlighting the Agriculture, Fishing and Fosil fuel subsidy burden of India and world. Discuss its implications for environment and suggest measures to curb the negative consequences. (250 words)

https://www.downtoearth.org.in/news/climate-change/subsidies-don-t-help-fight-climate-change-world-bank-report-finds-90064