Energy Subsidies - International

This paper reviews international models of fossil-fuel subsidy reform and greenhouse gas emissions to support parties to the United Nations Framework Convention for Climate Change.

World leaders hailed that the climate change agreement, agreed on Saturday 12 December, was important and significant in terms of setting the framework for government action in the coming years. In this blog, the Global Subsidies Initiative (GSI) examines both the text of the agreement as well as the events and activities that took place throughout COP21 in Paris with regards to fossil fuel subsidy reform and the phased removal of around US$600 billion of government subsidies to fossil fuels. In summary, there was much momentum on the side-lines of the negotiating process. The content of the agreement itself, from the perspective of moving the issue of fossil fuel subsidy reform, is also a very positive step in the right direction for setting the framework and rules of the game on climate action.

On Monday, 7th December 2015, the International Institute for Sustainable Development organized an event on Fossil Fuel Subsidies and Climate Change to put a spotlight on the scale and nature of subsidies to fossil fuels, national and international efforts to reform subsidies and the growing momentum behind the International Communiqué to phase out fossil fuel subsidies.

When it comes to phasing out subsidies to the production of polluting oil, gas and coal—something G-20 leaders have committed to every year since 2009—we’re seeing little progress. In fact, as fossil fuel prices have fallen, some countries have even increased subsidies in response.

The international community reaffirmed commitments on Thursday 16th July 2015, within the Addis Ababa Action Agenda "to rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption ..."  and "phasing out those harmful subsidies". Fossil fuel subsidy removal remains on the agenda and is as important as ever when governments are squeezed for fiscal space and domestic resource mobilisation.

The International Energy Agency (IEA) has released a special report, Energy and Climate Change, as an input to ongoing climate negotiations, highlighting the pivotal role that fossil-fuel subsidy reform can play in reducing greenhouse gases (GHGs).