(08 November 2021) – Countries should resist raising government support for fossil fuels in response to the global surge in energy prices and the economic impacts of the pandemic, according to the OECD and IEA.
Instead, given the existential threat of climate change and the need for a green recovery, they should accelerate investment in sustainable energy infrastructure and the creation of green jobs, as well as meeting the UN Sustainable Development Goals, in particular SDG 7, to ensure access to affordable, reliable, sustainable and modern energy for all.
Despite a 2009 pledge by G20 countries to gradually phase out inefficient fossil fuel subsidies, major economies still support the production and consumption of coal, oil and natural gas with hundreds of billions of US dollars each year, money that would be better spent developing low-carbon alternatives and improving energy efficiency.
As well as encouraging fossil fuel consumption, fossil fuel subsidies are an ineffective way to support low-income households compared to targeted benefits and tend to favour wealthier households that use more fuel and energy. In addition, fiscal burdens of subsidies reduce the room for adequate policy actions.