ECONOMIC ASPECTS OF FOSSIL FUEL SOCIAL COSTS. WHY DO WE SUBSIDIZE AND MEDIATE THE CLIAMTE CHANGE PROCESS?

Nowadays, humanity is in a position to choose carefully every step it makes in order to ensure economic development without compromising the welfare of future generations who will need a social and ecological climate as favorable it could be. On the other hand, the conventional energy production is achieved taking the risks of the Earth overheating and its aggregate economic consequences, actually this climatic changes already appear in a more and more aggressive way, including on global economies. Over the past few years international organizations such as OECD, the IMF, the IEA, the World Bank are focusing their attention on the fossil fuel subsidies impacts over the energy production and consumption, quantifying the economic and social impacts of fossil fuel reform. The reason this study had to be done is the disadvantageous position of renewable energy industry compared with the fossil fuel's industry situation which lies actually in the adopted subsidy strategy and the lack of measures for internalizing externalities on the sector, which are considered by IMF also a type of fossil fuel subsidy. So, this study presents an updated overlook on the fossil fuel externality problem, revises the identified literature linked to the”externality” notion, outlines the identified trends and polices of internalizing the fossil fuels externalities, and tries to review the estimations of the potential costs of the global warming as a consequence of too high social costs of the fossil fuel installed technologies. In this purpose there are on their way of implementation different systemic methods of research, including scientific abstraction, deduction, analysis and synthesis and quantitative analysis in order to outline the current situation of fossil fuel externality problem and its potential impact over the economic welfare.