Global fossil fuel subsidies exceeded $1.5 trillion in 2023, as G7 nations fall behind on promises to phase out inefficient subsidies by 2025
Fossil fuel subsidies amounted to an estimated $1.5 trillion in 2023, according to the International Institute for Sustainable Development (IISD). While this figure shows a slight decline from 2022’s record high, the reduction is far from sufficient to align with the Paris Agreement’s goal of limiting global warming to 1.5°C.
The IISD report highlights a significant disconnect between current financial flows and the low-carbon, resilient development required to address the climate crisis. “There is a tremendous opportunity to redirect these funds for the benefit of people and the planet,” analysts note.
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A Closer Look at 2023 Fossil Fuel Subsidies
A large portion—$1.1 trillion—of fossil fuel subsidies supported energy consumption. These measures, introduced in 2021 and 2022 to alleviate high energy costs, remain substantial despite falling oil and gas prices. The 2023 subsidies for consumption are nearly double the levels seen in 2019 and three times those of 2020, even with a 35% decline compared to 2022.
Government investments through state-owned enterprises reached a historic $368 billion, exceeding the $324 billion spent in 2022. These investments vastly overshadow the $300 billion in annual climate finance pledged by advanced economies to assist vulnerable nations in transitioning toward sustainability.
Additionally, international public financing for fossil fuels totaled $29 billion in 2023.
G7 Triples Fossil Fuel Subsidies in Four Years
Despite commitments to phase out “inefficient” subsidies by 2025, G7 nations have been increasing their support for fossil fuels. In 2023, the G7 provided a combined $282 billion in fossil fuel subsidies—three times the amount allocated in 2020.
A significant portion of this funding backs the expansion of new fossil fuel infrastructure, which the International Energy Agency (IEA) warns is incompatible with achieving the 1.5°C climate target.
According to IISD, approximately one-third of all subsidies—$447 billion—were directed toward new fossil fuel production. This includes:
- $36 billion in subsidies.
- $368 billion in capital expenditures by state-owned enterprises.
- $29 billion in international public financing.
The G7’s failure to curb support for fossil energy underscores the gap between promises and actions. IISD emphasizes that financial flows must shift dramatically from fossil fuels to clean energy—a critical topic that will likely dominate the climate negotiations at COP30 in Belem, Brazil, in 2025.
