Fossil Fuel Subsidies & Climate Change

Phase-out and reallocation of fossil fuel subsidies (FFS) is a low-hanging fruit for financing and implementing SDGs. First, it has a diverse support base of both sustainable development advocates and “government downsizers.” Second, instead of requiring financing like many sustainable development policies, it could free up hundreds of billions of dollars for implementing multiple SDGs.

The combined impact of fossil fuel subsidy reform (FFSR) and an increase in gasoline and diesel fuel taxation could do three things: save and raise money for governments; reduce emissions; and provide upfront and ongoing domestic resources to fund sustainable development and the sustainable energy transition.

This working paper explains how different production subsidies currently unlock “zombie energy” from fossil fuel deposits that would not be commercially viable to produce without government support.

For decades, the trajectories of fossil fuel subsidies and world trade have been closely interwoven.

16 February 2016—Geneva—The Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD) hosted a webinar on the climate change impacts of USD 500 billion of government subsidies to fossil fuels. The webinar was chaired by Peter Wooders, Group Director, Energy, IISD, who outlined the importance of fiscal instruments and mitigation efforts in light of the UNFCCC agreement and the ambitious efforts of the Friends of Fossil Fuel Subsidy Reform in promoting an international communiqué on the issue.