Publications

Fossil fuel subsidy reforms: state of play and ways forward

BACKGROUND:

Fossil fuel subsidies are incompatible with the low carbon energy transition

 

SUMMARY:

Promoting the production and consumption of fossil fuels through subsidies is incompatible with the Paris Agreement on climate change.

While G20 countries have committed to phase out “inefficient fossil fuel subsidies that encourage wasteful consumption” since 2009, the progress towards reform has been mixed. The G20 countries still provide about USD 70 billion in production fossil fuel subsidies, while the total global consumption subsidies are estimated to be in the range of USD 320 billion to USD 5 trillion per year.

Recent examples demonstrate that subsidy reforms, combined with compensation mechanisms, are feasible. While there is no silver bullet to tackle the fossil fuel subsidy issue – and some of them are actually necessary –, the next steps towards a sounder and more efficient approach to fossil fuel subsidies may include:

 

  • Establish clear action roadmaps for the reform of fossil fuel subsidies;
  • Work within existing platforms such as the WTO to refine existing definitions in the specific case of fossil fuel subsidies;
  • Reinforce existing peer-review processes and extend them through international cooperation platforms such as the UNFCCC;
  • Use transparency frameworks to improve the national and international reporting on fossil fuel subsidies and their reform;
  • Reinforce international initiatives that allow for transnational research, such as the Global Subsidy Initiative and the OECD/IEA works, and efforts such as the World Bank’s of IMF’s that foster capacity building on these issues.
Fossil fuel subsidy reforms: state of play and ways forward Download
I4CE Contacts
Dr. Sébastien POSTIC
Dr. Sébastien POSTIC
Chercheur – Finances publiques, Développement Email
Sébastien POSTIC, Phd
Sébastien POSTIC, Phd
Research Fellow – Public finance, Development Email
To learn more
  • 04/22/2025 Blog post
    Planning for the cost of climate action: a practical guide for local governments

    Local authorities play a leading role in ecological planning. As major contributors to public investment they have core responsibilities that can significantly accelerate the transition, such as expanding public transport networks or retrofitting public buildings for energy efficiency. According to I4CE, in France, local authorities in France need to double their investments in decarbonization by 2030 -without even accounting for future adaptation costs.

  • 04/10/2025
    Transition plans and remuneration policies: what are the challenges for financial actors?

    Integrating climate indicators into variable remuneration is a burning issue. Although it was removed at the last minute from negotiations on the Corporate Sustainability Due Diligence Directive (CSDDD), the proposal is still very much alive in the policy debate . While the topic is becoming increasingly central to remuneration in large companies, it still appears to be a taboo within the banking sector. This requirement was already included in the European Central Bank’s supervisory guidelines as early as 2020, yet it appears to have been largely neglected by banks.

  • 03/28/2025 Hors série
    The pathway for climate investments in turbulent times – annual report 2024

    We are witnessing a withdrawal of commitments to climate action. In the US, President Donald Trump does not hide his hostility to what he calls the ‘climate hoax’. In Europe and in France, new narratives around competitiveness, strategic autonomy and security are gaining ground, reflecting a new political reality. If there is still a broad consensus on the long-term objective of climate neutrality, how to get there is increasingly challenged, generating uncertainty. The scarcity of fiscal resources impacts the willingness to embark on the green transition.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer