Reforming Environmentally Harmful Subsidies

The document argues that environmentally harmful subsidies (EHS) exceed USD 2 trillion annually, creating perverse incentives that drive biodiversity loss and climate change. It proposes a theory of change based on the 'Multiple Streams and Policy Windows Framework'—defining the problem, identifying solutions, and creating political support—to catalyze reform. The playbook outlines 25 specific opportunities for philanthropic engagement, ranging from independent national assessments and technical support for Global South governments to the creation of 'first-mover clubs' of governments. It emphasizes that transparency alone is insufficient and that durable reform requires the co-development of repurposing strategies to support vulnerable groups and businesses transitioning away from harmful subsidies.

• Environmentally harmful subsidies (EHS) are estimated to exceed USD 2 trillion annually, a sum that significantly outweighs current public financing goals for biodiversity (USD 30 billion by 2030) and climate (USD 300 billion per year by 2035).
• The largest volumes of EHS are concentrated in the fossil fuel, agricultural, and water sectors, with fossil fuel subsidies alone estimated between USD 1.1 trillion and 1.7 trillion per year.
• Subsidies often exacerbate social and economic inequalities, frequently benefiting larger businesses and wealthier households over small enterprises and vulnerable groups.
• National EHS reforms can have international spillovers, such as US livestock subsidies driving soybean demand and habitat loss in Latin America, or EU biodiesel subsidies driving land conversion in Indonesia, Malaysia, and Argentina.
• Transparency and quantitative data on subsidies are necessary but insufficient for reform; durable change requires the co-development of repurposing strategies and the mapping of impacts on jobs, income, and competitiveness.
• The document identifies a 'Multiple Streams and Policy Windows Framework' for reform, which requires the convergence of a clearly defined problem, an actionable solution, and sufficient political support.
• To prevent backsliding and overcome competitiveness concerns, the document advocates for internationally coordinated change through 'first-mover clubs' and binding agreements like the WTO Agreement on Fisheries Subsidies.
• The playbook proposes 25 specific opportunities for action, including independent national EHS assessments, technical support for Global South governments, and the engagement of agri-food businesses and utilities as reform champions.

APA

Gerasimchuk, I., Doan, D., McConnell, C., Urazova, I., Ullah, F., Laan, T., Tipping, A., & Morra, F. (2025). Reforming Environmentally Harmful Subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform.pdf

Chicago

Gerasimchuk, Ivetta, Darcie Doan, Claire McConnell, Indira Urazova, Farooq Ullah, Tara Laan, Alice Tipping, and Fernando Morra. Reforming Environmentally Harmful Subsidies. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform.pdf.

Wikipedia

{{cite report |last1=Gerasimchuk |first1=Ivetta |last2=Doan |first2=Darcie |last3=McConnell |first3=Claire |last4=Urazova |first4=Indira |last5=Ullah |first5=Farooq |last6=Laan |first6=Tara |last7=Tipping |first7=Alice |last8=Morra |first8=Fernando |title=Reforming Environmentally Harmful Subsidies |publisher=International Institute for Sustainable Development |date=February 2025 |url=https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gerasimchuk2025reforming, author = {Gerasimchuk, Ivetta and Doan, Darcie and McConnell, Claire and Urazova, Indira and Ullah, Farooq and Laan, Tara and Tipping, Alice and Morra, Fernando}, title = {{Reforming Environmentally Harmful Subsidies}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = feb, url = {https://www.iisd.org/system/files/2025-02/environmentally-harmful-subsidies-reform.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }