Practical first steps towards comprehensive subsidy reform

The authors call for a coordinated effort by the WTO, OECD, IMF, and World Bank to create a robust analytical base to identify and eliminate 'bad subsidies'—those that distort trade and harm the environment—while promoting 'good subsidies' that address market failures. The text highlights the high costs of fossil fuel and agricultural subsidies and the carbon footprint of state support in the aluminium sector, advocating for a socially responsible, progressive transition to sustainable government support.

• To be effective, government support must be transparent, time-limited, non-discriminatory, proportionate to the desired outcome, and targeted to explicit beneficiaries, with a focus on actual implementation impacts rather than just stated objectives.
• The authors propose that the WTO, OECD, IMF, and World Bank Group should collaborate to define 'good subsidies' (those achieving aims at reasonable cost without negative impacts) versus 'bad subsidies' (those least likely to perform as intended) to inform the modernization of the WTO's Agreement on Subsidies and Countervailing Measures (SCM Agreement).
• Fossil fuel subsidies provided by 45 G20 or OECD members totaled approximately $1.3 trillion in 2022, following a decade where annual support ranged between just under $400 billion and $800 billion.
• Global agricultural support averages over $851 billion annually, with $456 billion directly tied to output quantities and farm input use, which are identified as environmentally harmful and trade-distorting.
• Pervasive state support in the aluminium sector has encouraged high GHG emitting production systems and discouraged innovation by unsubsidized firms, which is critical as aluminium demand for the energy transition is projected to grow 80% by 2050.
• Subsidy reform should be progressive and include adjustment assistance for individuals, families, and firms unable to transition independently from the current industry structures supported by trade protection and subsidies.

APA

Ash, K., Cox, A., & Draper, P. (2024). Practical first steps towards comprehensive subsidy reform. Forum on Trade, Environment, & the SDGs. https://tessforum.org/latest/practical-first-steps-towards-comprehensive-subsidy-reform

Chicago

Ash, Ken, Anthony Cox, and Peter Draper. Practical first steps towards comprehensive subsidy reform. Forum on Trade, Environment, & the SDGs, 2024. https://tessforum.org/latest/practical-first-steps-towards-comprehensive-subsidy-reform.

Wikipedia

{{cite press release |last1=Ash |first1=Ken |last2=Cox |first2=Anthony |last3=Draper |first3=Peter |title=Practical first steps towards comprehensive subsidy reform |publisher=Forum on Trade, Environment, & the SDGs |date=29 May 2024 |url=https://tessforum.org/latest/practical-first-steps-towards-comprehensive-subsidy-reform |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{ash2024practical, author = {Ash, Ken and Cox, Anthony and Draper, Peter}, title = {{Practical first steps towards comprehensive subsidy reform}}, publisher = {Forum on Trade, Environment, \& the SDGs}, year = {2024}, month = may, url = {https://tessforum.org/latest/practical-first-steps-towards-comprehensive-subsidy-reform}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }