State subsidies and regulations may be driving a sizable share of global CO2 emissions
Research by economist Vincent Geloso shows that government subsidies for fossil fuels keep prices artificially low, prompting higher consumption and adding to global carbon emissions.
Vincent Geloso of George Mason University compiled evidence that state support for fossil-fuel fuels lowers retail prices, leading to greater use and higher CO2 output. A World Bank assessment linked the removal of subsidies to a 7% emissions drop, and subsequent calculations by economists Burniaux and Chateau raised the possible impact to around 10% by mid-century. The International Energy Agency reports that consumers in subsidizing countries pay about 78% of the true market price for energy.
Major economies such as China, India, Russia, Iran, Nigeria, Venezuela, Indonesia and Mexico have extensive subsidy programmes. Beyond boosting emissions, these subsidies generate large economic losses and act regressively, with wealthier households capturing most of the benefit. Geloso also highlights other public interventions—low electricity tariffs, agricultural subsidies, and transport regulations—that can indirectly raise emissions. He introduces the term “estatogénico” to describe climate impact that originates from state policy choices.
Why it matters
Understanding how government subsidies inflate emissions helps policymakers target reforms that could cut carbon output and improve economic efficiency.
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