Jeff Erikson, the senior vice president of SustainAbility, states in his blog that for the world to transition from its current state of a high-carbon economy to a low-carbon economy, the economics of energy must change, such that it must become cheaper to both generate and consume energy with a lower greenhouse gas intensity. In order for this mission to be successful, public policies must be set in ways that encourage low-carbon forms of energy and discourage high-carbon forms of energy.
Although there have been some positive outputs from the most recent Rio+20 sustainable development conference regarding low-carbon solutions, one major unresolved issue is the lack of agreement to end fossil fuel subsidies. Ending fossil fuel subsidies would cause turmoil in the market for both the buyers and sellers, especially to those in less developed countries since the commodities that are usually subsidized are necessities and daily goods. In order for the world to be fully transformed into a low-carbon society, fossil fuel subsidies must be terminated so as to discourage the use of high-carbon energy. Although this means leaving the comfort zone of utilizing highly efficient resources with the cost of high carbon emissions in the short run, it will make the world a more environmentally healthy and sustainable place in the long run.
Article Link: http://www.sustainability.com/blog/the-economics-of-energy-ending-fossil-fuel-subsidies#.UKLgKOOe_lk