Paris—30th November 2015—Today, the Paris climate change talks saw an unprecedented movement of leaders supporting the need to end the billions of dollars spent every year on subsidizing fossil fuels. Almost 40 countries have stood behind a communiqué to this end, launched in the spring of this year, spearheaded by the  Friends of Fossil Fuel Subsidy Reform, the United States and France, and supported by the Global Subsidies Initiative.

At the handover of the communiqué to the United Nations Framework Convention on Climate Change (UNFCCC), Stefan Löfven, the Prime Minister of Sweden, welcomed a packed audience and the world’s media, reminding them of the documents' words on the need to "increase efforts to phase out subsidies to fossil fuels through three key principles: policy transparency, ambitious reform and targeted support for the poorest."

Erna Solberg, Prime Minister of Norway, suggested "the OECD commitment to mobilize US$ 100 billion by 2020 should be followed by a joint endeavor to phase out all fossil fuel subsidies". She explained "the question now, seems to be, how can we afford not to remove fossil fuel subsidies?", adding, "All countries, developed and developing, including Norway, should regularly explore opportunities to reduce fossil fuel subsidies."

Lars Løkke Rasmussen, Prime Minister of Denmark, explained how his country, a supporter of the Global Subsidies Initiative, was impressed with the increased attention that fossil-fuel subsidy reform has gained in a short space of time. He noted Denmark's own contribution to this, having "promoted the agenda with leading international organizations... engaged civil society, and key decision makers and... supported concrete reforms in developing countries". He stated Denmark's commitment to continuing to support the issue in coming years.

The Friends of Fossil Fuel Subsidy Reform and the GSI have consistently raised fossil-fuel subsidy reform as an issue within the UNFCCC since the Durban CoP17 back in 2011, then again in Doha, in Warsaw, and in Lima. Throughout 2015 the Friends group has worked tirelessly in a diplomatic, country-to-country, peer-to-peer process of bringing signatories to the communiqué on board, one by one and face to face through the efforts of brilliant government representatives such as Jo Tyndall, Catherine McIntosh and Tim Breese (New Zealand), Roger Sedin (Sweden), Hans Jakob Eriksen (Denmark), Maria Vuorelma (Finland) and Dr Tewolde (Ethiopia). This has helped to build serious momentum on this issue the likes of which have not been seen during previous years, including text within both financing for development and sustainable development goals.

Furthermore, this year the Global Subsidies Initiative, supported through the Nordic Council of Ministers, undertook new research to quantify national emissions reductions from the phase out of fossil fuel subsidies, subsequently holding workshops for UNFCCC negotiators in Geneva in the winter and Bonn in the summer and the autumn to discuss with negotiators the inclusion of this fiscal instrument within their Intended Nationally Determined Contributions (INDCs). Thirteen countries have since included mention of fossil fuel subsidies within their INDCs (IISD/GIZ forthcoming) which is a good start. So it rather does feel like that this year is the year of the beginning of the end of fossil fuel subsidies. 

Despite all this, two detrimental myths were raised in the conference that are still to be put to rest once and for all. Myth number one: fossil fuel subsidies help the poor. Upon receiving the communiqué, Christiana Figueres, Executive Secretary of the UNFCCC, pointed out that "when you really look at the numbers, you see that it is those of the highest consumption of fuels—which is not the poorest—who are actually benefiting the most. We need to puncture that balloon once and for all."

She is right. In developing countries the rich do benefit disproportionately from fossil-fuel subsidies. IMF research finds that "over 97 out of every 100 dollars of gasoline subsidy ‘leaks’ to the top four quintiles" and that "on average, the top income quintile received about six times more in subsidies that the bottom quintile." Angel Gurría, OECD Secretary-General, noted the significant opportunity costs of this, emphasizing that situations where countries are spending more on fossil fuel subsidies than education are a "total misallocation of resources".

Myth number two: fossil-fuel subsidies are only made up of subsidies for fuel consumption. Figueres addressed by this cautioning against the temptation to "increase subsidies again to make up for the losses" caused by the current low world oil price. She argued that we are at a "crucial moment of either increasing subsidies and locking ourselves in, or freeing ourselves."

Again, she is right. There is mounting economic pressure within oil exporting countries to maintain their subsidies domestically, and there are also demands from fossil producers on governments to maintain and increase industry subsidies in face of the low world oil price.  Gurría concurred, explaining that developed countries still support fossil fuels to the tune of US$ 200 billion annually.  OECD research finds over "800 creative subsidies to production and consumption and it’s up to everybody to change their ways." There is still a long way to go.

But, if this is the beginning of the end, what’s next? How to turn this momentum and these statements into action? First, more countries should join the call for change and endorse the communiqué. Second, developed countries should create inventories of their own tax breaks, infrastructure investments and other incentives for fossil fuel producers and remove them—especially for oil and coal, where even small nominal subsidies could have big climate impacts. Third, emerging economies need to phase out fossil fuel subsidies to consumers, taking advantage of the window of opportunity created by the low oil price. Fourth, all countries need to reinvest subsidy reform savings into sustainable energy and development.

Easier said than done. But, in the words of the Norwegian Prime Minister: "As a politician I know that this is difficult when people are accustomed to a low price on something. It is difficult to change it, we know it can be challenging, but we also know it’s possible. Braver nations have led the way."

If one general theme from the climate talks is the important role of policy decided at the country level, the message from this conference was different. John Key, Prime Minister of New Zealand said "We have one message: the time for action, global action, on fossil fuel subsidies is now", explaining that countries should remove subsidies "immediately or phase them out" and "move towards a lower carbon footprint with subsidies towards renewables and stopping subsidies to those activities that are polluting".

The GSI also believes that developed countries must act and lead the way. Civil society will be critical  to encourage countries forward, push them into action and to hold them to account on issues such as transparency, back-sliding and the reallocation of subsidy savings. While there is now momentum for change, it is still going to take a big push to turn these words into action and tangible subsidy and emissions reductions.

But this is just the beginning. And it’s the beginning of the end for subsidies to fossil fuels.

To join the Friends of Fossil Fuel Subsidy Reform Communiqué go to www.fffsr.org

Attend an event on Fossil Fuel Subsidies at CoP 21: Monday 7th December 11.30-13.00, Observer Room 2, Le Bourget, Fossil Fuel Subsidies and Climate Change: National Action and international phase out with Ministers, IEA, NCE, GSI-IISD and business speakers.

To read more about the link between fossil fuel subsidies and climate change read the joint GSI and Nordic report ‘Tackling Fossil Fuel Subsidies and Climate Change, Levelling the Energy Playing Field’.

Photos from Leaders Day

Rachel Kyte, World Bank and Peter Wooders, Group Director Energy,GSI and IISD

Peter Wooders, Group Director, Energy, GSI and IISD and Tim Breese, New Zealand

John Key and Jo Tyndall, New Zealand


Roger Sedin and Anna Lindstedt, Sweden

Ian Parry, IMF

Peter Wooders, IISD and Jesus R.S. Domingo, Assistant Secretary (Director General), Office of the United Nations and International Organisations, Department of Foreign Affairs, The Philippines

The Audience


Photo call for the many countries, individuals and organizations involved in building the communiqué

From policies to practice…