• The Netherlands, Germany, and France are among the top 10 fossil fuel subsidisers in 2023.
• Untargeted fuel subsidies disproportionately benefit wealthy individuals, who consume more energy.

According to a recent study by the International Institute for Sustainable Development (IISD), governments globally allocated $1.5 trillion to support fossil fuels.

This figure is the second-highest on record, following 2022, when global fuel prices spiked due to geopolitical tensions, including Russia's invasion of Ukraine.

This spending conflicts with efforts to transition to low-carbon energy and address climate change. It includes investments by state-owned enterprises, international financing, and subsidies for consumers and producers.

The top largest fossil fuel subsidisers in 2023 are the Russian Federation (in first position), followed by Germany, Iran, China (People's Republic of), Japan, India, Saudi Arabia, the Netherlands, France, and Indonesia, respectively.

How much was spent on fossil fuel subsidies in 2023?

Consumer Subsidies ($1 trillion)

A lot of money went towards subsidising fuel for consumers to relieve them of the burden of high energy costs. These subsidies are intended to help households and businesses but disproportionately benefit the rich, who consume more energy. Although they provided relief, these subsidies hindered the progress of clean energy adoption and increased inequality.

State-Owned Enterprises ($368 billion)

Governments pumped hundreds of billions into fossil fuel production through state-owned energy companies, increasing reliance on fossil fuels and preventing investments in green energy.

International Public Finance ($29 billion)

A relatively smaller portion of the money is also allocated to support projects overseas. This has resulted in continued global dependency on these non-renewable sources of energy.

Other major findings

• $447 billion allocated to support new fossil fuel projects.
• Germany has significantly increased its subsidies to protect its economy from surging gas prices.
• G7 members vowed to eliminate subsidies by 2025 but ended up spending $282 billion on fossil fuels in 2023, which is 3 times the 2020 amount.
• India, though 6th on the fossil fuel subsidizers' list, reduced oil and gas subsidies by 76% between 2014 and 2017 and increased support for green energy sixfold.

What needs to be done?

The study concludes that the international community should act as soon as possible to break this trend and divert more money into renewable energy production. It calls for ending subsidies for new fossil fuel projects and prioritising social programmes to support people during the transition.

Upcoming climate talks, particularly COP30 in Brazil, should firm up actions on these efforts.

To learn more about the study, click here.

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Source: IISD