New OECD and International Energy Agency (IEA) data, published in the OECD Inventory of Support Measures for Fossil Fuels: Policy Trends up to 2025, show that the global cost of support measures for fossil fuels fell from USD 1 031 billion in 2023 to USD 916 billion in 2024. This decline in government support reflects a reduction in the emergency support measures introduced in 2022–23 to offset high energy prices, which also eased from record highs in 2022. However, despite pledges to phase out inefficient fossil fuel subsidies and scale up climate action, many measures that support the production and consumption of fossil fuels remain in place, leaving the overall fiscal cost of these measures above historical averages.
In 2024, most government support for fossil fuels continued to go to consumption, accounting for 84% of the total fiscal cost. Support generally declined across sectors, except for support for fossil fuel use in transport, which increased slightly from USD 112 billion in 2023 to USD 114 billion in 2024. Support for the residential sector, including household use of fossil fuels, recorded the largest decline, falling from USD 118 billion to USD 84 billion, yet it remained the second largest among all sectors. Across the board, most consumption-related measures still lacked systematic targeting towards those most in need, raising both equity and efficiency concerns.
Economic incentives to decarbonise also weakened. Net Effective Carbon Rate (net ECR), a measure of the price applied to greenhouse gas emissions through fuel taxes, carbon taxes, emissions trading systems and support measures that reduce fossil fuel prices, fell from EUR 19 per tonne of CO₂ equivalent in 2021 to EUR 15 in 2023, indicating that the cost of emitting carbon has declined. The share of emissions covered a positive net ECR – emissions that are effectively discouraged rather than subsidised – has also shown limited evolution since 2021. 45% of global greenhouse gas emissions faced a positive net ECR in 2023, and 30% of these were covered by explicit carbon prices such as carbon taxes or emissions trading systems.
The OECD and IEA produce complementary databases that provide estimates of different forms of government support for fossil fuels, helping policymakers track trends, understand the fiscal implications and identify where reforms are most needed. The current OECD–IEA combined estimates cover 82 major economies, spanning the OECD, G20 and 33 other major energy-producing and energy-consuming economies, representing around 85% of the world’s total energy supply.
The high cost of support measures for fossil fuels and weakening carbon price highlights the challenges in ensuring the effective and efficient use of public resources to support well-functioning energy markets and meet public policy goals in the face of economic and geopolitical pressures. Reforming fossil fuel support by better targeting assistance to those most in need, phasing out inefficient measures and redirecting resources towards more efficient energy solutions can improve the use of public funds, strengthen energy markets, accelerate the clean energy transition and ensure that fiscal policy is better aligned with broader public policy and climate objectives.
Read more at: https://www.oecd.org/en/topics/sub-issues/fossil-fuel-support.html and https://www.iea.org/topics/energy-subsidies.
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