OECD urges Lithuania to cut fossil fuel subsidies, introduce carbon tax

The Organization for Economic Cooperation and Development (OECD) has called on Lithuania to reduce fossil fuel subsidies and introduce a carbon tax to green its economy.

“This policy should be tightened, reducing fossil fuel subsidies,” OECD Secretary-General Angel Gurria told an online news conference on Monday.    

“Sometimes we get the impression that we are working very hard to save or get a few extra euros to save nature, but at the same time we are spending a lot of money to subsidize fossil fuels that are harmful to the environment,” he said. 

The secretary-general criticized countries that make commitments to reduce CO2 emissions and ratify the Paris Agreement, but later fail to tax CO2 emissions.  In its latest Economic Survey of Lithuania released on Monday, the organization recommends that the country introduce a carbon tax in sectors not covered by the European emission trading system.

According to Gurria, a carbon tax is necessary to change attitudes. “We need a big, fat price on carbon. That means a tax on carbon. Why? Because if you have a higher price for emissions, you will try to avoid producing emissions,” he said. 

Lithuania’s fossil fuel subsidies are among the highest in the OECD, according to the report.  The country must reduce emissions in the transport sector, the biggest sources of emissions with 28 percent, the OECD said.  “The large share of transport emissions will require a deep restructuring if the 2030 targets are to be met,” the organization said. Lithuania’s energy policy should focus on the development of cleaner renewable energy, despite low fossil fuel prices, it said. 

Note: This news is a re-post of the original posted on The Baltic Times website.