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Lower the cost of energy generation through preferential tax treatments and direct financial transfers (grants to producers and preferential loans), favored in industrial countries.

Phasing Out Fossil Fuel Subsidies



Production subsidies

Lower the price for energy users, usually through tax breaks or underpriced government energy services, favored in developing countries.



Consumption subsidies

Accelerating the phaseout of fossil fuel subsidies would reduce CO2 emissions by 360 million tons(12% in total) in 2020, prevent 2 °C increase in temperature.

Estimated Global Energy Consumption Subsidies for Fossil Fuels and Renewables in Industrial and Developing Countries , 2008–11

Source: IEA, OECD

Share % of Fossil Fuel Subsidies Received by the Poorest 20 % of the Population, by Fuel, in 11 Surveyed Countries , 2010

Source: IEA

Key takeaways

Subsidy estimation needs to be scaled up and consolidated Increase transparency in governments' reports of fossil fuel subsidies Communication campaigns and compensating welfare programs can alleviate resistance and actually provide the benefits