Options for International Agreements on Fossil Fuel Subsidies

The report provides a comprehensive framework for negotiating international agreements on fossil fuel subsidies (FFS), detailing six key building blocks: objectives, scope, disciplines, carve-outs/exceptions, special and differential treatment (SDT), and enforcement. It analyzes various legal approaches, including those based on the WTO's Agreement on Subsidies and Countervailing Measures (SCM) and the Agreement on Agriculture (AoA), and highlights the Agreement on Climate Change, Trade and Sustainability (ACCTS) as a primary precedent for specific FFS disciplines.

• The global value of fossil fuel subsidies was estimated at approximately USD 1.4 trillion in 2022, while associated environmental and social costs could increase the total to around USD 7 trillion.
• Negotiators can define the scope of an FFS agreement using three primary approaches: an SCM-based approach using WTO definitions of 'subsidy' and 'specificity', an AoA-based approach using a broad, open-ended definition of support, or a stand-alone approach using positive/negative lists or party-specific schedules.
• Four types of substantive disciplines are identified for FFS: prohibitions (the most ambitious), reduction commitments (flexible but less ambitious), effects-based obligations (subject to defined harmful outcomes), and standstill requirements (preventing new or increased subsidies).
• A hybrid approach allows parties to combine different disciplines, such as prohibiting the most harmful subsidies while applying reduction commitments or standstill requirements to others, which can facilitate consensus and allow for staggered implementation.
• The Agreement on Climate Change, Trade and Sustainability (ACCTS), signed by Costa Rica, Iceland, New Zealand, and Switzerland, is the first international agreement to include a specific definition of and detailed disciplines on FFS.
• Procedural obligations, specifically notifications, are essential for monitoring compliance and increasing transparency, though their effectiveness depends on the scope of information required and the consequences for non-notification.
• Special and Differential Treatment (SDT) can be implemented through non-application of disciplines, transition periods, grace periods, lower ambition levels for reduction commitments, or the provision of technical assistance and capacity building.
• Enforcement mechanisms range from 'soft' options like self-reporting and review procedures to 'hard' options such as binding, independent dispute settlement and the imposition of remedial actions.

APA

Baršauskaitė, I., Coppens, D., Lau, C., Vincent, A., & Wooders, P. (2025). Options for International Agreements on Fossil Fuel Subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-04/options-international-agreements-fossil-fuel-subsidies.pdf

Chicago

Baršauskaitė, Ieva, Dominic Coppens, Christian Lau, Ariane Vincent, and Peter Wooders. Options for International Agreements on Fossil Fuel Subsidies. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-04/options-international-agreements-fossil-fuel-subsidies.pdf.

Wikipedia

{{cite report |last1=Baršauskaitė |first1=Ieva |last2=Coppens |first2=Dominic |last3=Lau |first3=Christian |last4=Vincent |first4=Ariane |last5=Wooders |first5=Peter |title=Options for International Agreements on Fossil Fuel Subsidies |publisher=International Institute for Sustainable Development |date=April 2025 |url=https://www.iisd.org/system/files/2025-04/options-international-agreements-fossil-fuel-subsidies.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{barauskait2025options, author = {Baršauskaitė, Ieva and Coppens, Dominic and Lau, Christian and Vincent, Ariane and Wooders, Peter}, title = {{Options for International Agreements on Fossil Fuel Subsidies}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = apr, url = {https://www.iisd.org/system/files/2025-04/options-international-agreements-fossil-fuel-subsidies.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }