Rethinking the Concept of International Disciplines on Fossil Fuel Subsidies

The authors argue that voluntary initiatives to reduce fossil fuel subsidies have failed, as evidenced by 2023 subsidies reaching $794 billion. They propose a binding WTO agreement based on the Agreement on Climate Change, Trade and Sustainability (ACCTS) model, which uses the Standardized Carbon Rate Measurement (SCRM) to ensure carbon prices remain above committed levels. The paper suggests that successful subsidy removal depends on a state's ability to transition to green energy and recommends a WTO waiver on local content requirements to support this transition.

• Voluntary and soft-law initiatives to reform fossil fuel subsidies have been largely unsuccessful, with global subsidies in 2023 reaching $794 billion, the second-highest level ever recorded.
• The Agreement on Climate Change, Trade and Sustainability (ACCTS), signed by Costa Rica, Iceland, New Zealand, and Switzerland, provides a model for a binding agreement by banning subsidies for coal-related fuels and all stages of the oil and gas sector.
• The Standardized Carbon Rate Measurement (SCRM) allows countries to permit subsidies as long as they do not lower the net carbon price below a committed level reflecting Paris Agreement goals.
• The IMF projects that removing cash subsidies and tax breaks for fossil fuels could reduce global emissions by 6% below baseline levels by 2035.
• Successful elimination of fossil fuel subsidies is tied to a state's capacity to shift consumption toward affordable green energy alternatives, as seen in the case of Uruguay.
• Current WTO rules prohibiting local content requirements may hinder the political viability of renewable energy transitions; the authors suggest a WTO waiver or 'peace clause' for parties implementing a fossil fuel agreement.

APA

Howse, R., & van Bork, P. (2026). Rethinking the Concept of International Disciplines on Fossil Fuel Subsidies. Forum on Trade, Environment, & the SDGs. https://tessforum.org/latest/rethinking-the-concept-of-international-disciplines-on-fossil-fuel-subsidies

Chicago

Howse, Robert, and Petrus van Bork. Rethinking the Concept of International Disciplines on Fossil Fuel Subsidies. Forum on Trade, Environment, & the SDGs, 2026. https://tessforum.org/latest/rethinking-the-concept-of-international-disciplines-on-fossil-fuel-subsidies.

Wikipedia

{{cite report |last1=Howse |first1=Robert |last2=van Bork |first2=Petrus |title=Rethinking the Concept of International Disciplines on Fossil Fuel Subsidies |publisher=Forum on Trade, Environment, & the SDGs |date=10 April 2026 |url=https://tessforum.org/latest/rethinking-the-concept-of-international-disciplines-on-fossil-fuel-subsidies |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{howse2026rethinking, author = {Howse, Robert and van Bork, Petrus}, title = {{Rethinking the Concept of International Disciplines on Fossil Fuel Subsidies}}, institution = {Forum on Trade, Environment, \& the SDGs}, year = {2026}, month = apr, url = {https://tessforum.org/latest/rethinking-the-concept-of-international-disciplines-on-fossil-fuel-subsidies}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }