A fiscal opportunity within the green transition
The global shift away from fossil fuels is creating a policy question that reaches far beyond energy: how should the revenues associated with that transition be used? Experts writing in The BMJ’s climate issue argue that a defined share should be directed to universal health coverage in low- and middle-income countries.
The proposal is not simply to spend more public money on health whenever possible. Its authors call for a ring-fenced portion of money generated through reforms to fossil-fuel subsidies, carbon taxes and royalties on critical minerals to support health systems. Their case rests on a direct connection: fossil-fuel dependence and mining activities carry substantial health consequences, while the transition away from those systems can generate major fiscal flows.
That makes health funding a central question in the design of climate and industrial policy, rather than an afterthought once revenues have entered general government budgets.
The gap is smaller than existing fossil-fuel support
The authors point to the scale of existing fossil-fuel subsidies as evidence that public priorities can be reshaped. Globally, fossil-fuel subsidies totalled $733 billion in 2024, according to the article. That figure far exceeds the estimated annual financing gap of $20 billion to $53 billion needed to achieve universal health coverage in low- and middle-income countries.
Reducing subsidies would not automatically solve the financing challenge, and the article does not suggest that every dollar could be redirected. But the comparison illustrates the size of the potential resource pool. Funds released by reform could support domestic public-health programmes if governments ensure that the savings are not absorbed elsewhere.
The argument also highlights a practical risk: revenue is not the same thing as investment. Without explicit rules, money raised through climate-related taxes or resource extraction can flow into general budgets, be reduced by tax avoidance and evasion, or be weakened by investor pressure for lower royalty rates.
Carbon pricing and minerals create additional routes
Subsidy reform is only one potential source of funds. Carbon pricing can produce new revenue while creating incentives to reduce emissions. At the same time, demand for minerals such as lithium and cobalt is expanding as economies deploy batteries and other clean-energy technologies.
The authors say royalties from those minerals could become another important financing stream for health. But the opportunity depends on the terms set now. Carbon-pricing rules, royalty frameworks and the institutions responsible for collecting and allocating funds will determine whether the transition creates durable public-health investment or merely a new set of uneven fiscal gains.
For health ministries, civil-society groups and professional health organisations, the article’s message is that engagement cannot wait until policies are complete. They need to influence revenue rules while they are still being established if they want health budgets to receive a guaranteed share.
Past reforms show why earmarking matters
The authors cite Indonesia and Brazil as examples of reforms that were bold and innovative but did not produce the sustained health-care investments that had been envisaged. The lesson is not that reform is futile. It is that a broad pledge to use new resources for social development may prove insufficient without a durable mechanism that protects health allocations.
Ring-fencing is intended to provide that protection. In practice, it would mean setting aside an agreed minimum share of specified green-transition revenues for health, rather than leaving health spending to annual competition within a general budget.
Such an approach would also make the health rationale visible. Fossil-fuel pollution, climate-related disruption and the impacts of extractive industries affect health directly. A funding model that returns part of the proceeds from reform and mineral extraction to health systems would connect those costs to a response designed to reduce vulnerability.
A fair transition requires international mechanisms
Domestic revenue measures alone will not address the global imbalance identified by the experts. Green-transition revenues are expected to flow disproportionately to higher-income countries, while the largest universal-health-coverage financing gaps are concentrated in lower-income countries.
That mismatch is why the authors call for international mechanisms alongside national policies. They identify debt-for-health swaps as one possible tool to help move resources toward countries with the greatest needs. The broader aim is a fair transition in which the financial benefits of decarbonisation and critical-mineral development are not limited to the countries already best positioned to collect them.
The proposal does not offer a single universal formula for allocating funds. Instead, it frames the transition as a period when fiscal architecture is being built and when health advocates have an opportunity to secure lasting commitments.
Health policy belongs in transition planning
Universal health coverage is often discussed as a challenge of health-sector efficiency, aid or domestic taxation. The BMJ article adds another lens: climate and industrial policy can materially shape the resources available to health systems.
If governments reduce fossil-fuel subsidies, implement carbon pricing or collect royalties from critical minerals, the policy choices around those revenues will determine who benefits. The authors’ central recommendation is that health should receive a protected share, especially in countries where the financing gap remains acute.
As the green transition accelerates, the key question is therefore not only how quickly economies can change their energy systems. It is whether the resulting fiscal flows can help deliver healthier, more equitable societies.
This article is based on reporting by Medical Xpress. Read the original article.
Originally published on medicalxpress.com
