Mar 30, 2013 (LBO) – Cutting energy subsidies will slash carbon emissions while releasing resources for education and health, and helping boost the balance of payments of many countries, the International Monetary Fund has said. An IMF study Energy Subsidy Reform: Lessons and Implications has estimated that direct energy subsidies totaled about 480 billion US dollars or 0.7 percent of global gross domestic product and 2.0 percent of global state revenues.
Eliminating the subsidies would cut Carbon dioxide emission by 1 to 2 percent which could deliver about 15-30 percent of targets set in the Copenhagen Accord.
Other emissions including sulfour dioxide (S02) could also be reduced.
Since rich people consumer more energy than the poor, most of them flowed to richer people.
The study found that on average the richest 20 percent of households in low and middle income countries captured six times the subsidies than the poorest 20 percent.
“As most subsidy benefits are captured by higher-income households, energy subsidies have important distributive consequences that are often not fully understood.
“Even future generations are affected through the reduced availability of key inputs for growth a