Subsidy Reform
Subsidy reforms could free revenues worth approximately 3.6% of global GDP while drastically reducing global carbon dioxide emissions.
2030 Goals
- Eliminate explicit and implicit subsidies for fossil fuel production and consumption.
- Leverage savings to bolster public funding for mitigation and adaptation.
- Utilize advanced public financial management and financial inclusion technologies to enhance the social safety net without incentivizing fossil fuel use.
StatusNo progress
No progress
- According to the IMF, global fossil fuel subsidies were USD 7 trillion, or 7.1% of GDP, in 2022, reflecting a USD 2 trillion increase since 2020 due to government support from surging energy prices. More than 80% of fossil fuel subsidies were implicit subsidies, which occur when the retail price fails to include external costs of fossil fuel production and consumption. This is a huge concern, particularly as many governments have committed to phase out inefficient fossil fuel subsidies: G20 in 2009, and all parties to the UNFCCC in the Glasgow Climate Pact in 2021 (reaffirmed at COP27). There is a need for concrete options to move from talk to action.
- There have also been efforts to address implicit subsidies through introducing new carbon pricing measures, but carbon pricing adoption has slowed down globally with the exception of some middle-income countries. A significant implementation gap remains in subsidy reform; total fossil fuel subsidies are projected to continue growing.
Relevant Actors & Audiences
Multilateral Development Banks
All
International Organizations
International Monetary Fund, United Nations Development Programme, United Nations Environment Programme, World Trade Organization, International Energy Agency, Organization for Economic Co-operation and Development , Coalition of Finance Ministers for Climate Action
Governments
New Zealand Ministry of Foreign Affairs and Trade, Ministries of Energy & Transportation
Leading Countries and Alliances
New Zealand , Netherlands , Costa Rica, Denmark, Ethiopia, Finland, Norway, Sweden, Switzerland, Uruguay, Friends of Fossil Fuel Subsidy Reform
Supportive Stakeholders
International Renewable Energy Agency, International Maritime Organization, International Civil Aviation Organization
Milestones
The below events contain milestones related to Subsidy Reform.
October
G20 Finance Ministers and Central Bank Governors Meeting Oct 2025
Milestones
Subsidy Reform
G20 governments agree to a concrete timeline for subsidy reform, linking carbon pricing expansion to subsidy phase-outs.
November
UNFCCC COP30
Milestones
Subsidy Reform
New members of the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS) to publish national inventories on fossil fuel subsidies, and original members of COFFIS present national phase-out plans.
Resources
The below resources all pertain to the topic of Subsidy Reform.
What's wrong with fossil fuel subsidies?
Concessional Finance , Subsidy Reform
The Fossil Fuel Subsidy Reform (FFSR) Initiative led by New Zealand.
IMF Climate Change| Fossil Fuel Subsidies
Concessional Finance , Subsidy Reform
The IMF's Fossil Fuel Subsidies page examines the economic, environmental, and social impacts of energy subsidies, highlighting their contribution to climate change, fiscal burdens, and inefficient resource allocation
IEA: Fossil Fuel Subsidies Database
Concessional Finance , Subsidy Reform
Fossil fuel consumption subsidies database for selected countries, 2010-2022
Track fossil-fuel subsidies and other support measures with our interactive database
Concessional Finance , Subsidy Reform
The Fossil Fuel Subsidy Tracker is a collaboration between the OECD and the International Institute for Sustainable Development (IISD) to track global estimate s on fossil fuels