Reforming Environmentally Harmful Subsidies

This guide, published by the International Institute for Sustainable Development (IISD) and Porticus, provides a strategic framework for philanthropic organizations to advance the reform of environmentally harmful subsidies (EHS). It argues that redirecting a portion of the USD 2 trillion annually spent on EHS could significantly fund biodiversity and climate goals. The document outlines a theory of change based on defining problems, identifying solutions, and creating political support to open 'policy windows' for reform.

• Environmentally harmful subsidies (EHS) are estimated to exceed USD 2 trillion annually, a sum that far surpasses 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.
• EHS often exacerbate social and economic inequalities, frequently benefiting large businesses and wealthy consumers over small enterprises and vulnerable groups; for example, in 32 developing countries between 2005 and 2014, the top 20% of households benefited six times more from fossil fuel subsidies than the poorest 20%.
• The document proposes a 'Multiple Streams and Policy Windows Framework' for reform, which requires the convergence of three elements: defining the problem, identifying actionable solutions, and creating sufficient political support.
• Successful and durable EHS reforms typically involve 'repurposing' rather than simple 'phaseout,' often by reinvesting savings into public services such as education, health, or cash transfers to maintain public support.
• National EHS reforms can have international spillovers; for instance, livestock subsidies in the United States increase demand for soybean-based animal feed, driving habitat loss in Latin America, particularly Argentina.
• The guide identifies 25 specific opportunities for philanthropic engagement, ranging from supporting independent national EHS assessments and audits by supreme audit institutions to creating 'first-mover clubs' of governments to prevent competitiveness losses during reform.
• International cooperation is deemed essential to prevent the backsliding of national reforms and to address the reluctance of governments to act unilaterally due to fears of losing international competitiveness.

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} }