Alphonce Shiundu And Peter Mwai
26 August 2008
Nairobi — Fuel subsidies should be scrapped, if the fight against the increase in greenhouse emissions is to be won, the United Nations has said.
Speaking in Nairobi during the local launch of a United Nations Environment Programme report titled "Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda", the executive director Achim Steiner, said the move would boost efforts towards renewable energy.
The subsidies, which could be in the form of tax breaks or financial incentives "rarely make economic sense and rarely address poverty," the UNEP boss said.
Dr Steiner called for increased investment in geothermal power projects to reduce the current dependence on electricity.
He asked the Government to take advantage of the high number of Kenyans keen on harnessing solar energy for electricity, especially in areas not currently served by the National Grid.
Kenya, according to the UNEP boss, has the highest per capita concentration of solar energy in Africa.
In the new report launched internationally in Accra, Ghana, UNEP says that scrapping fossil fuel subsidies would reduce green house gas emissions by close to 6 per cent, and at the same time boost the global economy by 0.1 per cent.
The terse report said the incentives normally lead to increased levels of consumption and waste, in effect escalating the harmful effects of energy use on the environment.
Dr Steiner said that fuel subsidies tend to favour the wealthy in society, because they "target those who have vehicles."
He added, "...many fossil fuel subsidies are introduced for political reasons but are simply propping up inefficiencies in the global economy and are part of the market failure that is climate change."
According to the report, the subsidies "divert national funds from more creative forms of pro-poor policies that are likely to have a greater impact" on the society.
"They can place a heavy burden on government finances, weakening the potential for economies to grow and reducing the potential to invest in social equity," the report says.
The global environmental body pegs the annual amount spent on energy subsidies at $300 billion.
But even as UNEP calls for subsidies to be scrapped, it takes into account that some of the mechanisms "can generate social, economic and environmental benefits."
The Government has already formed a task force under the ministry of environment to deal with climate change and its effects on development.
Environment minister John Michuki said the issue of climate change " will be given the national attention it deserves."
The Environment ministry is already working on ways to develop scenarios to inform the Treasury on the impacts of climate change on the economy.
Dr Steiner accused economists and policy makers of ignoring environmental perspectives when developing the economic agenda.
He asked Mr Michuki to use his position as Finance minister to streamline the mess that financial policy has on the environment.
The call to have subsidies scrapped comes less than two years before a climate change convention meeting is held in Copenhagen.
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