OECD-IEA Analysis of Fossil Fuels Support

The combustion of fossil fuels in power plants, vehicles, machinery, and dwellings continues to be a leading contributor to global man-made greenhouse-gas emissions. Although many governments have already taken steps to reduce the carbon intensity of their economies, some policies remain in place that encourage more production and use of fossil fuels than would otherwise be the case. Fossil-fuel subsidies are one such policy.

Not only do fossil-fuel subsidies undermine global efforts to mitigate climate change, but they also aggravate local pollution problems, causing further damage to human health and the environment. They represent a considerable strain on public budgets as well, draining scarce fiscal resources that could be put to better use, such as strategic investment in the education, skills, and physical infrastructure that people value most in the 21st century. Last, fossil-fuel subsidies distort the costs and prices that inform the decisions of many producers, investors, and consumers, thereby perpetuating older technologies and energy-intensive modes of production.

Many governments, including members of the G20 and of the Asia-Pacific Economic Cooperation (APEC) forum, have already recognised the problems that fossil-fuel subsidies cause at home and abroad. This led them both in 2009 to commit to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” A number of countries have since translated those commitments into concrete policy actions and removed some of the subsidies they had in place. However, lack of information about the scope, magnitude, and effects of fossil-fuel subsidies remains an important obstacle to current and future reform efforts.

To assist governments in their reform efforts, this site brings together the estimates of subsidies and other forms of support for fossil fuels that the OECD and the IEA regularly produce for a great number of countries around the world.