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Policy Options: Subsidies

A case study of China's policy to eliminate harmful fossil fuel subsidies

Source: NRDC

Between 1990 and 1997, China dramatically reduced its annual fossil fuel subsidies from $24.5 billion to $10 billion. Because of their energy policy priority to decrease coal use, China cut coal subsidies 40% since 1990. Also, petroleum subsidies fell from 55% in 1990 to 2% in 1995. The state mandated 25,000 coal mines to close and also partially lifted price controls.

By minimizing subsidies, China's coal consumption declined by 411 million short tons since 1996. These reforms have also greatly improved China's energy efficiency, as energy intensity decreased by 30% since 1985. China's economy continues to flourish and grow while their use of renewables increases, fossil fuel subsidies decreased by half and carbon dioxide emissions were cut by 17% since 1997. In order to minimize job losses from the smaller coal industry, China is trying to place solar cell manufacturing sites near the old coal mines.


Natural Resources Defense Council:
1st report
2nd report confirming analysis

US Department of Energy's Statistics