How the G7 Can Advance Action on Fossil Fuel Subsidies in 2025

G7 countries are on track to miss their 2025 deadline to phase out inefficient fossil fuel subsidies, with total subsidies reaching a record USD 282 billion in 2023. The surge was primarily driven by consumer subsidies for natural gas and petroleum to mitigate energy price volatility following Russia's invasion of Ukraine. While some members have implemented domestic reforms or joined coalitions like COFFIS and CETP, the author argues that the G7 must now drop the 'inefficient' qualifier, establish national action plans, and prohibit all subsidies to coal and fossil fuel production to align with 1.5°C climate pathways.

• G7 members are failing to meet their 2025 phase-out deadline, with fossil fuel subsidies reaching a record high of USD 282 billion in 2023, a significant increase from USD 71 billion in 2016 (in 2023 real terms).
• The increase in subsidies was largely a response to the energy crisis caused by Russia's invasion of Ukraine, with Germany recording the highest subsidies among G7 members at USD 83 billion in 2023 due to price brakes on gas, heat, and electricity.
• Consumer subsidies dominated G7 spending in 2023, averaging 88% of the total, while producer subsidies were most significant in the United States (30%), Canada (18%), and the United Kingdom (11%).
• Natural gas subsidies were the primary fuel type supported in Germany, France, the United States, Italy, and the United Kingdom, whereas petroleum subsidies dominated in Japan (72%) and Canada (83%).
• Various G7 members have implemented specific reform measures: Canada reformed nine federal subsidies; France mandated a 30% reduction in the ratio of 'unfavourable expenditures'; and Italy eliminated five fossil fuel subsidies in 2021, saving EUR 105.9 million.
• The Clean Energy Transition Partnership (CETP), which includes all G7 countries except Japan, has reduced international public support for fossil fuels by up to USD 13 billion, an 80% reduction from pre-CETP levels.
• The author recommends that the G7 remove the 'inefficient' qualifier from its commitment, require national action plans for phasing out subsidies, and prohibit all subsidies to coal and fossil fuel production.

APA

Do,, N. J. K. G. (2025). How the G7 Can Advance Action on Fossil Fuel Subsidies in 2025. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/how-g7-can-advance-action-fossil-fuel-subsidies-2025

Chicago

Do,, Natalie Jones,Jonas Kuehl,Ivetta Gerasimchuk,Nhat. How the G7 Can Advance Action on Fossil Fuel Subsidies in 2025. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/deep-dive/how-g7-can-advance-action-fossil-fuel-subsidies-2025.

Wikipedia

{{cite report |last1=Do, |first1=Natalie Jones,Jonas Kuehl,Ivetta Gerasimchuk,Nhat |title=How the G7 Can Advance Action on Fossil Fuel Subsidies in 2025 |publisher=International Institute for Sustainable Development |date=8 April 2025 |url=https://www.iisd.org/articles/deep-dive/how-g7-can-advance-action-fossil-fuel-subsidies-2025 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{do2025how, author = {Do,, Natalie Jones,Jonas Kuehl,Ivetta Gerasimchuk,Nhat}, title = {{How the G7 Can Advance Action on Fossil Fuel Subsidies in 2025}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = apr, url = {https://www.iisd.org/articles/deep-dive/how-g7-can-advance-action-fossil-fuel-subsidies-2025}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }