Fossil Fuel Subsidy Reform in Aviation and Shipping

This briefing note from the International Institute for Sustainable Development outlines the barriers to phasing out fossil fuel subsidies in international aviation and maritime shipping and provides recommendations for taxation and emissions levies to reduce greenhouse gas emissions and create a level playing field across transport modes.

• Fossil fuel subsidies in aviation and shipping are maintained due to industry pressure, global competition, and international agreements, resulting in increased greenhouse gas emissions and an unequal tax burden. To address this, the document recommends that countries tax aviation fuel for domestic flights and reform legal barriers—such as the Energy Taxation Directive in Europe and various air service agreements—that currently prevent the taxation of international aviation fuel.
• The document advocates for the adoption of international emissions levies through global bodies. It suggests that countries work with the International Civil Aviation Organization to implement a levy more stringent than the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), and support the International Maritime Organization in establishing a shipping emissions levy exceeding USD 100 per tonne of carbon dioxide.
• In the shipping sector, domestic and regional legislation must be reformed to enable fuel taxes. Internationally, the International Maritime Organization is expected to establish an emissions levy later in the year, as ports currently avoid taxing fuel to remain competitive. The proposed levy of over USD 100 per tonne of CO2 could fund climate finance for the Global South, lower-emission fuels, and ship efficiency improvements.

APA

Wendenburg,, E. P. C. (2025). Fossil Fuel Subsidy Reform in Aviation and Shipping. International Institute for Sustainable Development. https://www.iisd.org/publications/report/fossil-fuel-subsidy-reform-aviation-shipping

Chicago

Wendenburg,, Eduardo Posada,Vance Culbert,Anne. Fossil Fuel Subsidy Reform in Aviation and Shipping. International Institute for Sustainable Development, 2025. https://www.iisd.org/publications/report/fossil-fuel-subsidy-reform-aviation-shipping.

Wikipedia

{{cite report |last1=Wendenburg, |first1=Eduardo Posada,Vance Culbert,Anne |title=Fossil Fuel Subsidy Reform in Aviation and Shipping |publisher=International Institute for Sustainable Development |date=10 February 2025 |url=https://www.iisd.org/publications/report/fossil-fuel-subsidy-reform-aviation-shipping |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wendenburg2025fossil, author = {Wendenburg,, Eduardo Posada,Vance Culbert,Anne}, title = {{Fossil Fuel Subsidy Reform in Aviation and Shipping}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = feb, url = {https://www.iisd.org/publications/report/fossil-fuel-subsidy-reform-aviation-shipping}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }