Here, the term “subsidy” refers to financial contributions or support provided to produce, process, sell, or consume fossil fuels.
The G7 and G20 countries are politically committed to phasing out national subsidies for fossil fuels. In 2016, at their summit in Japan, the G7 countries agreed to eliminate all inefficient fossil fuel subsidies by 2025. These efforts are related to sustainability and the climate protection initiatives of the leading industrialized countries and are relevant in the context of the emission reduction commitments made under the Paris Agreement. Most recently, countries also committed to phasing out inefficient fossil fuel subsidies at the 2021 United Nations Climate Change Conference in Glasgow (COP26). While state subsidies for fossil fuels should generally be considered inefficient in terms of achieving the agreed-upon climate goals, the lack of a unified definition makes international subsidy reduction challenging.
According to the Fossil Fuel Subsidy Tracker of the Organization for Economic Co-operation and Development (OECD) and the International Institute for Sustainable Development (IISD), fossil fuel subsidies in the G7 countries have remained relatively stable, totaling around $50 billion to $60 billion per year.