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In 2020, support to fossil fuels fell, due to record-low oil prices and a COVID-induced recession

Driven by a record-low oil price and a lull in fossil-fuel consumption, the combined OECD-IEA estimate of fossil-fuel support in 2020 shows a 30% decrease in overall support. This estimate covers 52 advanced and emerging economies, representing close to 90% of global total energy supply from fossil fuels.

More so a direct result of declining fuel price and consumption than a result of favourable policy change, this historic moment presents itself as an opportunity for recovery measures to ensure that the downward trend continues once economic activity picks up pace.

 

Note: The OECD-IEA combined estimates projected above covers 52 economies, of which 18 are G20 members and 42 are emerging economies, with several overlapping economies between the two sources. The combined estimate of support for fossil fuels is the total resulting from merging IEA price-gap estimates and OECD Inventory estimates for G20 economies.

Source: OECD preliminary Inventory data (2021), IEA Energy Subsidy data (2021).

 

In G20 economies*, preliminary estimations show that government support for the production and consumption of fossil fuels totalled around USD 160 billion, representing a 9% decrease from 2019.

The transport sector witnessed a 12% decrease in support as a direct consequence of the slump in consumption of transport fuels, brought about by mobility restrictions set in place during COVID-19. Indeed, support for petroleum declined by 16%, registering the heaviest decline in support amounts among all fuels.

Based on data available so far, the fossil-fuel production sector has experienced a 10% decrease in support. This downward trend was dictated by countries where support measures relate to the volume of extracted fossil fuels (chiefly oil and natural gas), which in many cases reached its lowest levels since 2011 because of sluggish oil demand due to pandemic-related restrictions and the ensuing OPEC quotas of production in response. However, there were several instances of large government sums devoted to fossil-fuel production support, namely in the form of hefty bailouts to state oil and electricity companies, that may come to offset this mechanical decrease in production support once these measures are officially reported in the governments’ budgets.

 

 

See the 2021 OECD Inventory of Support Measures for Fossil Fuels for an in-depth discussion on trends, including the impact of the pandemic on data collection and figures.

*The G20 economies covered exclude Saudi Arabia.

Data visualisation

OECD Inventory of support measures for fossil fuels - previous estimates

(Next update planned for Q4 2021)

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