Fiscal cost of support measures for fossil fuels almost doubled in 2022

The fiscal cost of support measures for the production and consumption of fossil fuels increased sharply in 2022, as countries struggled to cushion the impact on households and firms of surging energy prices. New OECD and IEA data show that the fiscal and opportunity costs of global support for fossil fuels almost doubled to more than USD 1.4 trillion in 2022, up from USD 769 billion in 2021.

The new analysis also shows a revival of support for coal, which reached USD 36.1 billion in 2022. While still small in absolute terms, the fiscal cost of global support for coal has increased by 60% since 2013. In 2022, various countries introduced new support measures for coal production and consumption to respond to rising oil and gas prices.  

This is despite major economies’ longstanding pledges to phase out inefficient fossil fuel subsidies and ramp up action to address the climate emergency. The OECD and IEA have consistently called for more ambitious climate action, and the phasing out of inefficient fossil fuel support and re-direction of public funding toward the development of low-carbon alternatives, alongside improvements in energy security and energy efficiency.

Governments also need to reform existing support measures to better target those in greatest need, as poorly targeted measures intended to support low-income households often tend to favour wealthier households that use more fuel and energy.

See also: OECD Inventory of support measures for fossil fuels 2023 and IEA Fossil Fuel Subsidies Database.