Increasing the Momentum of Fossil-Fuel Subsidy Reform

This report analyzes potential international frameworks for reforming fossil-fuel subsidies, evaluating the roles of the World Trade Organization (WTO), the United Nations Framework Convention on Climate Change (UNFCCC), and the G-20. It argues that while a formally negotiated agreement is the long-term goal, the immediate path requires a multi-forum approach leveraging the political leadership of the G-20 and the technical capacities of various international organizations.

• Fossil-fuel subsidies impose significant global costs, with consumer subsidies estimated at US$400 billion per year and producer subsidies adding at least another $100 billion per year. Removing consumption subsidies in the 20 largest developing countries over a decade could reduce global greenhouse gas emissions by at least 10 per cent by 2050.
• The WTO's Agreement on Subsidies and Countervailing Measures (SCM Agreement) provides a legal framework for addressing subsidies, but its effectiveness is hindered by low reporting rates and a lack of sanctions for non-compliance. While the SCM Agreement can address 'specific' subsidies, many consumer fossil-fuel subsidies are widely available and thus difficult to classify as specific.
• The UNFCCC and its Kyoto Protocol mention the reduction of subsidies, but the organization has traditionally avoided prescribing national policies due to the principle of national sovereignty. Legally binding commitments to subsidy reform through the UNFCCC are considered unlikely in the medium term, though the framework could support voluntary efforts or Nationally Appropriate Mitigation Actions (NAMAs) for developing countries.
• The G-20 provided significant political momentum in September 2009 by committing to 'rationalize and phase out over the medium term inefficient fossil-fuel subsidies that encourage wasteful consumption.' However, the G-20 lacks a formal secretariat and must delegate technical tasks—such as data generation and impact analysis—to other international organizations.
• No single international organization currently possesses all the necessary functions to serve as a full secretariat for fossil-fuel subsidy reform. The IEA and OECD have strong research and modeling capacities, the World Bank and IMF can provide financial and technical assistance to developing countries, and UNEP offers a broad membership network for dissemination and capacity building.
• The report proposes a phased Roadmap for international cooperation: the short term (next 12 months) focuses on strengthening political leadership and coordinating research; the medium term (1-3 years) aims to include more countries (especially energy exporters) and build a negotiating mandate; and the long term targets a formally negotiated agreement with a dedicated secretariat.

APA

Lang, K., Wooders, P., & Kulovesi, K. (2010). Increasing the Momentum of Fossil-Fuel Subsidy Reform. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/increasing_momentum.pdf

Chicago

Lang, Kerryn, Peter Wooders, and Kati Kulovesi. Increasing the Momentum of Fossil-Fuel Subsidy Reform. International Institute for Sustainable Development, 2010. https://www.iisd.org/system/files/publications/increasing_momentum.pdf.

Wikipedia

{{cite report |last1=Lang |first1=Kerryn |last2=Wooders |first2=Peter |last3=Kulovesi |first3=Kati |title=Increasing the Momentum of Fossil-Fuel Subsidy Reform |publisher=International Institute for Sustainable Development |date=June 2010 |url=https://www.iisd.org/system/files/publications/increasing_momentum.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lang2010increasing, author = {Lang, Kerryn and Wooders, Peter and Kulovesi, Kati}, title = {{Increasing the Momentum of Fossil-Fuel Subsidy Reform}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = jun, url = {https://www.iisd.org/system/files/publications/increasing_momentum.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }