Reducing Coal Subsidies and Trade Barriers: Their Contribution to Greenhouse Gas Abatement

International negotiations for an agreement to reduce the emission of greenhouse gases are unlikely to produce concrete and comprehensive policies for effective emission reductions in the near term, not least because the policy measures being considered are economically very costly to major industries in rich countries and are unlikely to prevent 'leakage' through a re-location of carbon-intensive activities to poorer countries. An alternative or supplementary approach that is more likely to achieve carbon and methane emission reductions, and at the same time generate national and global economic benefits rather than costs, involves lowering coal subsidies and trade barriers. Past coal policies which encouraged excessive production of coal in a number of industrial countries and excessive coal consumption in numerous developing and transition economies are currently under review and in some cases are being reformed. This paper documents those distortions and outlines the circumstances under which their reform could not only improve the economy but also lower greenhouse gas emissions globally.