Subsidy reforms could free revenues worth approximately 3.6% of global GDP while drastically reducing global carbon dioxide emissions.
Eliminate explicit and implicit subsidies for fossil fuel production and consumption.
Phase out inefficient fossil fuel subsidies create fiscal space for new investments that accelerate the transition toward low-carbon energy systems.
Utilize advanced public financial management and financial inclusion technologies to enhance the social safety net without incentivizing fossil fuel use.
No Progress
OECD reports show fossil fuel subsidies remain substantial in both OECD and non-OECD countries. Transparency has improved, but binding commitments are lacking.
According to the IMF, global fossil fuel subsidies were USD 7 trillion, or 7.1% of GDP, in 2022, reflecting a USD 2 trillion increase since 2020 due to government support from surging energy prices. More than 80% of fossil fuel subsidies were implicit subsidies, which occur when the retail price fails to include external costs of fossil fuel production and consumption. This is a huge concern, particularly as many governments have committed to phase out inefficient fossil fuel subsidies: G20 in 2009, and all parties to the UNFCCC in the Glasgow Climate Pact in 2021 (reaffirmed at COP27). There is a need for concrete options to move from talk to action.
More than 80% of fossil fuel subsidies were implicit subsidies, which occur when the retail price fails to include external costs of fossil fuel production and consumption. This is a huge concern, particularly as many governments have committed to phase out inefficient fossil fuel subsidies: G20 in 2009, and all parties to the UNFCCC in the Glasgow Climate Pact in 2021 (reaffirmed at COP27). There is a need for concrete options to move from talk to action.
There have also been efforts to address implicit subsidies through introducing new carbon pricing measures, but carbon pricing adoption has slowed down globally with the exception of some middle-income countries. A significant implementation gap remains in subsidy reform; total fossil fuel subsidies are projected to continue growing.
Cooperation is required between these actors and audiences to drive progress foward in Subsidy Reform.
Publications and educational material to deepen understanding of Subsidy Reform.
Exploration of a new approach to ensure commitments account for, and help overcome, domestic barriers to fossil fuel subsidy reform that comprise time-bound roadmaps, steps to close existing loopholes, and support for lower-income countries.
The Fossil Fuel Subsidy Tracker is a collaboration between the OECD and the International Institute for Sustainable Development (IISD) to track global estimate s on fossil fuels.