WTO members share tools and insights to advance fossil fuel subsidy reform

New Zealand, the coordinator of the FFSR initiative, noted the sustained interest of members in experience-sharing on pathways to reform, and welcomed presentations on the theme from several stakeholders.

The United Nations Development Programme (UNDP) shared information on its work supporting public finance reforms for climate action, including through reforming fossil fuels subsidies. A common thread running through several country examples shared was the importance of integrating fossil fuel subsidy reform within broader development and reform programmes, as well as strong stakeholder engagement, communication and depoliticization of the process to ensure reforms are sustained. Reallocation of fiscal savings to social protection interventions enables fossil fuel subsidy reforms to strengthen the underlying social contract of countries, it was noted.

The Global Environment Facility (GEF) briefed members on its projects in various countries that address fossil fuels subsidy reforms, along with other country-determined environmental priorities. These included redirecting subsidies originally allocated for diesel buses to cover the incremental costs of electric buses, revamping a country's energy sector to achieve 100% renewable electricity generation, and addressing another country's dependence on fossil fuel production through a national transition towards a net-zero, nature-positive economy.

The Organisation for Economic Co-operation and Development (OECD) made a presentation on its analysis of below-market energy inputs, covering a sample of the world's largest companies in high-emissions sectors like steel, aluminium, cement and chemicals. The provision of energy to companies on below market terms – often by state-owned energy providers – creates trade distortions and environmental harm. There are data gaps and complexities in quantifying below-market energy inputs, the OECD noted, since this is often in the context of contracts or transactions between state-owned and other enterprises which are not part of a specific policy. Discussion took place on improving transparency on below-market energy, and how to address it in a cross-cutting manner.

The consultancy Eunomia and the Quaker United Nations Office (QUNO) provided an overview on their joint project assessing the level of subsidization of the primary plastic polymer industry (PPP), including those related to fossil fuel subsidies. In this context, price support for chemical feedstocks and process energy for both was highlighted. The discussion highlighted the importance of considering the plastics sector and the linkages of this work to the WTO's Dialogue on Plastic Pollution.

The FFSR initiative also took stock of its work since the 13th Ministerial Conference (MC13) in early 2024 on "enhanced transparency" and "crisis-support measures" (under pillar one and two of the initiative). The work to date, including enhancing information on fossil fuel subsidies and their reform in Trade Policy Reviews, as well as developing guidelines to help ensure that crisis-support measures remain targeted, transparent and temporary, were highlighted as stepping stones towards the 14th Ministerial Conference (MC14) in early 2026.

The FFSR initiative seeks to achieve the rationalization, phasing-out or elimination of harmful fossil fuel subsidies through the use of existing mechanisms or the development of new pathways to reform. It encourages WTO members to share information and experiences to advance discussions at the WTO. Forty-eight members are currently participating in the initiative as co-sponsors.

More information about the FFSR initiative is available here.