Fossil fuel consumption subsidies soared to an all-time high in 2022, as governments sought to temper record energy prices, preliminary data from energy watchdog the IEA show.
Global fossil fuel consumption subsidies reached $1.097 trillion in 2022, the IEA estimated — double on the year and a 46pc increase on the amount in 2012, previously the highest on record. The watchdog's preliminary data show that in 2022, subsidies worth $399bn were spent on electricity and $346bn on natural gas — respectively double and more than double on the year. Oil subsidies accounted for $343bn, which remained lower than oil subsidies in 2012 and 2013. But coal subsidies totalled $9bn, the highest on since IEA records began in 2010.
Many interventions to limit the effects of energy price volatility in advanced economies did not meet the IEA's definition of fossil fuel consumption subsidies, the organisation said, given that average end-user prices held above market values. More than $500bn in extra spending in advanced economies was committed to bring down energy bills, in addition to the subsidies, the IEA said.
The Glasgow Climate Pact, signed at the UN Cop 26 climate summit in 2021, called on countries to "phase-out… inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable". Also at Cop 26, more than 20 countries, including most G7 nations, pledged to phase out public financing of unabated coal, oil and gas projects abroad by the end of 2022.
Concerns mounted ahead of Cop 27 that Russia's war in Ukraine and subsequent fears over energy security could overshadow the pledge. The UK, Denmark, Sweden, Finland and France have "almost completely ended their international support for fossil energy projects", with no exceptions for gas or LNG infrastructure, non-governmental organisation Oil Change International said. Canada has also taken measures to halt overseas funding for fossil fuels.
