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Raising Ambition On Fossil Fuel Subsidy Reform In G20 Countries

Indira Urazova (International Institute for Sustainable Development), Tara Laan (International Institute for Sustainable Development (IISD)), Christopher Beaton, Farooq Ullah (IISD (Canada)), Jonas Kuehl (IISD (Canada)), Alessandra Cardoso (Institute of Socioeconomic Studies INESC (Brazil)), Julia Levin (National Climate)

Abstract

During the recent energy crisis, fossil fuel subsidies in G20 countries soared to over USD 850 billion in 2022 in response to record high energy prices. Even before the energy crisis, there has been little systemic progress since the first G20 pledge to phase out inefficient fossil fuel subsidies from 2009. Aside from a few major reforms in large emerging economies-the gains of which have been threatened by the reemergence of subsidies since 2022-changes in subsidy expenditure have been driven by fluctuating international prices for fossil fuels rather than policy. There is increasing scrutiny on the G7 and G20 given looming deadlines to phase out “inefficient” fossil fuel subsidies, such as that in the G7 by 2025 and that for all UN members by 2030 (under SDG Target 12.1(c)). The G20 spearheaded commitments to phase out fossil fuel subsidies in 2009 and now needs to lead implementation via detailed national roadmaps for reform, with firm deadlines for action. In this policy brief, we provide specific recommendations for the G20 on the implementation of fossil fuel subsidy reform. The intention is to inform G20 advisers and decision-makers about the evidence-based pathways for eliminating fossil fuel subsidies. The brief provides strategies based on successful case studies of subsidy phase-out for overcoming the challenges of reform. We have international commitments, and we have the solutions: G20 leaders need to show how and when they will take action.

Authors

Indira Urazova (International Institute for Sustainable Development), Tara Laan (International Institute for Sustainable Development (IISD)), Christopher Beaton, Farooq Ullah (IISD (Canada)), Jonas Kuehl (IISD (Canada)), Alessandra Cardoso (Institute of Socioeconomic Studies INESC (Brazil)), Julia Levin (National Climate)

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