Geneva Trade Week Session: Tackling Fossil Fuel Subsidies for a Greener Future: Is the WTO up to the Task?

Despite fossil fuels’ widely recognised responsibility for causing global climate change, many governments continue to massively support their production and consumption. Fossil fuel subsidies were estimated at almost US$ 500 billion in 2019. Recent research has also shown that in the context of recovery plans from the Covid-19 pandemic, twice as much money is being spent on activities that produce or are heavy users of fossil fuels than on clean energy. Detailed information on fossil fuel subsidies still exists only for less than one-third of the world’s countries, which makes discussing their reform harder than it need be.

This situation is all the more concerning when considering that on top of their well-known environmental impacts, fossil fuel subsidies can also have far-reaching social, economic, and trade consequences. They constitute a considerable burden on often scarce public funds, and can significantly distort competition in the market for renewable energy, thwarting the much-needed energy transition.

In light of its experience in negotiating and establishing multilateral rules on subsidies in different areas, the World Trade Organization would appear to be the forum of choice to tackle fossil fuel support measures. With an absence of WTO disputes on the issue and a notoriously low record of compliance with subsidy notification requirements, however, it currently remains unclear how useful a forum the WTO could be in fostering better transparency and effectively constraining government support to fossil fuels. Is the WTO up to this timely and essential task?

Building on recent research in this area, this session will bring together perspectives from academia, civil society, government and intergovernmental organizations. It will be articulated around the following questions: Can WTO rules be used, or reformed, to address fossil fuel subsidies more effectively? On what existing types of data could possible discussions on new disciplines rely, and how can potential data gaps be filled in? Are there efforts underway to ensure subsidy rules, including at the WTO, are aligned with the need to transition to cleaner energy systems? 

This Geneva Trade Week session has been co-organized by the University of Eastern Finland and the International Institute for Sustainable Development (IISD).