Remove fossil fuel incentives and increase fuel taxation
Higher fuel prices are correlated with lower fuel consumption. European countries, as well as Japan and Korea – where high fuel taxes are levied – have the world’s lowest specific fuel consumption.
In comparison, low fuel taxes in Canada, Australia and the United States correspond with above-average fuel consumption. Higher fuel taxes could therefore encourage the uptake of fuel-efficient vehicles in these countries and support alignment with the NZE Scenario. Importantly, to ensure that fuel taxes are not a form of regressive taxation, targeted measures could be devised to offset impacts for disproportionately affected groups. Furthermore, all governments must move towards eliminating fossil fuel subsidies.