A framework for assessing thermal coal production subsidies

While many G20 nations are showing some commitment to tackling climate change, most are also still spending heavily to subsidize the fossil fuel industry. A new study finds that subsidies for thermal coal production in two key supply regions – the Powder River Basin (PRB) in the United States and Australia – are significant, distorting the market, driving up emissions, and acting as a barrier to entry for cleaner energy sources. The paper shows that scrapping subsidies – amounting to nearly $8 per tonne ($2.9 billion/year) in the PRB and $4 per tonne ($1.3 billion/year) in Australia — would materially reduce domestic coal demand and emissions in the United States and pressure demand for Australian thermal seaborne coal exports, where the effect on emissions would be dependent on other exporting nations taking action too.