In 2023, developed nations allocated $378 billion to fossil fuel subsidies, far exceeding their climate finance promises to developing countries. This disparity highlights a critical gap between climate pledges and action, according to recent data.
The International Institute for Sustainable Development (IISD) revealed that global fossilfuel subsidies reached $1.5 trillion in 2023, marking the second-highest amount in history. Only 2022, influenced by the Russia-Ukraine war, surpassed it due to a spike in fossil fuel prices.
Despite global commitments to combat climate change, government support for fossilfuels remains staggeringly high. Developed countries are mandated to lead the climate fight. They spent $378 billion on subsidies. This spending significantly overshadows their $300 billion climate finance pledge for 2035.
TOP FOSSIL FUEL SUBSIDISERS: WHO LEADS THE LIST?
In 2023, the top 10 fossilfuel subsidisers included Russia, Germany, and Iran. They also included China, Japan, and India. Saudi Arabia, the Netherlands, France, and Indonesia were major subsidisers too. These nations collectively drive policies that sustain fossilfuel production and consumption.
CLIMATE FINANCE PLEDGES: FALLING SHORT OF COMMITMENTS
At the UN climate conference in Baku, Azerbaijan, developed nations committed $300 billion to aid the Global South by 2035. Yet, this pledge falls drastically short of the $1.3 trillion developing nations need annually to address the impacts of climate change.
India and other least developed countries (LDCs) criticized the package. They highlighted its inadequacy for implementing Nationally Determined Contributions (NDCs). It also fell short in combating global warming despite the high fossilfuel subsidies still in place.
DEVELOPING NATIONS’ CRITICISM OF CLIMATE FUNDING
India argued that the $300 billion pledge fails to account for inflation. It is less than the $100 billion annual goal set in 2009. Bolivia, Nigeria, and Malawi echoed this criticism, emphasizing the urgent financial needs of developing countries.
REDIRECTING FOSSIL FUEL SUBSIDIES TO CLIMATE ACTION
IISD researchers suggest that the fiscal space created by reforming fossilfuel subsidies could fund critical climate initiatives. The $378 billion spent by developed countries on subsidies demonstrates that resources exist but are misdirected.
THE ENVIRONMENTAL COST OF FOSSIL FUEL SUBSIDIES
Fossil fuels—coal, oil, and gas—are responsible for over 75% of global greenhouse gas emissions. They contribute nearly 90% of carbon dioxide emissions. Subsidies for fossil fuel usage encourage their continued use, undermining global efforts to transition to cleaner energy sources.
FOSSIL FUEL SUBSIDIES: WHAT ARE THEY AND WHY DO THEY PERSIST?
Fossil fuel subsidies are government interventions that favor fossilfuel production and consumption over sustainable alternatives. These policies persist despite their significant contribution to climate change.
Many governments have adopted measures to reduce carbon emissions, but fossil fuel subsidies remain a barrier to progress. Reforming these subsidies is crucial to aligning financial priorities with climate goals.
