An event held in the margins of the Paris climate talks has explored how fiscal policies - especially fossil fuel subsidy reform - can unearth funding for green investments and shift behaviour to support climate objectives.

Reforming the subsidies – which were estimated to total USD 5.3 trillion last year – could raise government revenue worth USD 2.9 trillion, reduce CO2 emissions by more than 20 per cent and cut premature deaths due to air pollution by 55 per cent, said Ian Parry, Principal Environmental Fiscal Policy Expert in the Fiscal Affairs Department of the International Monetary Fund, at the event.

Ligia Noronha, Director of UNEP’s Division of Technology, Industry and Economics, opened by setting out how fiscal policy reforms can drive a low carbon, inclusive green economy.

Franzjosef Schafhausen, Director General of Climate Change Policy at the German Ministry of Environment’s Europe and International Affairs department meanwhile presented how his country had phased out subsidies for lignite while coping with social impacts of the reform.

A subsequent panel discussion focused on how countries could better include fiscal policies and fossil subsidy reform in the pledges submitted for climate action at the COP21 talks – which countries such as Morocco and Kenya have already done.

Panelists in the discussion included Andrea Meza, Director of Climate Change at Costa Rica’s Ministry of Environment and Energy; Paul Mbuthi, Principal Renewable Energy Officer of Kenya’s Ministry of Energy and Petroleum; and Laura Merrill, Senior Researcher with the Global Subsidies Initiative of the International Institute for Sustainable Development.

The event, titled ‘Fiscal policies for a low carbon and inclusive green economy: the role of fossil fuel subsidy reform’ was held on 4 December and was attended by around 60 international experts, government representatives and civil society. It was organised by the Green Fiscal Policy Network - a partnership between UNEP, the IMF, Deutsche Gesellschaft für Internationale Zusammenarbeit and the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety.

For further information on UNEP’s work on green fiscal policy, please click here or write an email to chiara.moroni@unep.org