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WIREs Clim Change
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The politics of fossil fuel subsidies and their reform: Implications for climate change mitigation

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The production and consumption of fossil fuels need to decrease significantly to meet the 2015 Paris Agreement's ambitious climate change goals. However, fossil fuels continue to receive significant amounts of government support. Although reforming fossil fuel subsidies can yield climate change mitigation benefits, the specific international and domestic political context and political economy of fossil fuel subsidies means that such reform is not straightforward and may not be aligned with traditional climate politics. Our objective in this review article is to examine the implications of the politics of fossil fuel subsidies and their reform for climate change mitigation. The first step of examining these implications is to review existing studies on the size and impacts of global fossil fuel subsidies. Subsequently, we discuss the international politics of fossil fuel subsidies, including the emerging norm of fossil fuel subsidy reform, and the respective roles played by the international climate regime and several international economic institutions. Finally, we examine why fossil fuel subsidies are introduced and maintained at the domestic level, how fossil fuel subsidy reform has functioned in practice, and whether and how such reform could be conceived as an instrument for climate policy. This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior Policy and Governance > Private Governance of Climate Change
Production and consumption subsidies in G20 countries in 2016 (million US$). The underlying data presented in this figure have been compiled by the Overseas Development Institute (ODI) for the 2018 Brown to Green report (Climate Transparency, ). It is based on the OECD inventory of support measures for fossil fuels 2017. The original data in the Brown to Green report did not include OECD data for Argentina (as it was unavailable at the time) and the EU (for which the OECD does not compile fossil fuel subsidy data). Instead, it included IEA consumption subsidies estimates for Argentina and Saudi Arabia, which are calculated using a different approach. The figure has been updated using OECD data for Argentina, and removing Saudi Arabia data from the totals. Data in the “Production and Consumption” category is based on the OECD's “General Service Support Estimate.” According to Organisation for Economic Co‐operation and Development (, p. 18): “These are separately itemized in the general services support estimate category and refer mainly to expenditures relating to past production activities (e.g. to compensate victims of mine land subsidence following the underground extraction of coal or hydrocarbons), to research and development not directly relating to production, and to activities such as the funding of strategic stockpiles, the benefits of which are not easily attributable to producers or consumers uniquely”
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The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior
Policy and Governance > Private Governance of Climate Change

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