Global gov’t support for fossil fuels almost doubled to $697.2b in 2021

Consumption subsidies for fossil fuels will increase more this year.

Government support for fossil fuels in 51 countries reached $697.2b in 2021 from $362.4b in 2020 as they prevent households from bearing the brunt of rising energy prices alongside the recovery of the global economy. 

Russia’s aggression against Ukraine caused the surge in energy prices, compromising energy security, said Mathia Cormann, secretary-general of the Organisation for Economic Co-operation and Development (OECD).

“Significant increases in fossil fuel subsidies encourage wasteful consumption though, while not necessarily reaching low-income households,” he said.

READ MORE: Asia’s elevated LNG spot prices will remain for longer period: report

The growth of support for fossil fuels slows the progress in achieving international climate goals,  according to a joint statement by OECD and the International Energy Agency (IEA).

Fatih Birol, executive director of the IEA, said the high and volatile fuel prices emphasised the difficulty faced by governments to remove fossil fuel subsidies.

Measures protecting consumers from the impacts of “shifting market and geopolitical forces” should be adopted, which will keep markets on track with their carbon neutrality goals and ensure energy security and affordability, Cronmann said.

Birol, meanwhile, said that increasing investment in clean energy technologies and infrastructure “is the only lasting solution” for the global energy crisis.

The OECD-IEA analysis expects consumption subsidies to increase further in 2022 due to higher fuel prices and energy use.