02/03/2015

Fossil Fuel Subsidies - Lebanon

Despite growing concerns over climate change and energy security, the scale of subsidies given to fossil fuels is increasing globally. Global fossil fuel subsidies amounted to USD 523 billion in 2011, increasing by 20% from 2010 (International Energy Agency, 2013). When compared to subsidies given to the renewable energy sector, these amounted to USD 88 billion in 2011 (IEA, 2013). Some of these subsidies were implemented for social objectives such as regional development, while the majority exists primarily due to successful lobbying by the beneficiary industries (Koplow and Track, 2009).

Fossil fuel subsidies in Lebanon are either in the form of direct subsidies given to oil products for final consumption, or in the form of indirect subsidies, such as treasury transfers to EDL on behalf of consumers who in turn only pay one-third of the recovery rate. Fuel subsidy elimination could be a climate change mitigation policy that is possibly achieved with an overall economic profit rather than a cost, and is therefore particularly worthy of investigation (Holton, 2012). In recognition that inefficient fossil-fuel subsidies distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change, this study evaluates the impact of fossil-fuel subsidies on the Lebanese economy, fiscal balances, and the environment, while accounting for equity and poverty alleviation concerns.

To access the results and full study, click here