Fossil fuel subsidies

Fossil fuel subsidies are special kinds of help given by governments to make energy from fuels like oil, coal, and natural gas cheaper or easier to get. In 2024, these subsidies were worth between about $725 billion and $6.7 trillion around the world. Most of this help is for oil and natural gas, and it can come in many forms, like lower taxes on heating fuel for homes or tax breaks for searching for new oil.

These subsidies can also mean not having to pay for the bad things that happen when we burn fuels like gasoline or diesel, such as dirty air or changes in our climate. Some subsidies even help keep electricity prices low for power plants that burn coal.

Getting rid of fossil fuel subsidies could make our air cleaner and help stop climate change by cutting down on carbon emissions. However, many countries keep these subsidies because people want them, or because they are worried about keeping enough energy for everyone. Experts say that if done the right way, stopping these subsidies could actually help make sure we have enough energy in the future.

Definition

Fossil fuel subsidies are actions by governments that make fossil fuel energy cheaper to produce, increase the money energy producers receive, or lower the price energy users pay. When we also think about hidden costs like health problems, the total amount of these subsidies becomes much bigger. Different groups, like the International Energy Agency, use different ways to count these subsidies, which can cause disagreements about how much support there really is. For example, in 2021, the UK government said it didn’t support fossil fuels using one method, but others said it did when using a different method.

Measurement

Subsidies are ways that governments help pay for fossil fuels. We can figure out how much money is being spent by looking at government payments, comparing prices in a country to prices around the world, and sometimes adding the cost of damage to health and the environment.

In 2023, the money spent to support fossil fuels was 1.1 trillion USD. Most of this money was for people and businesses that use fossil fuels every day. Experts say that this support often does not go to the people who need it most, which can be unfair and not very helpful for the environment. They also say that governments should work harder to help people use cleaner energy instead of fossil fuels.

Effects

When governments give money to make energy cheaper, it lowers prices for things like gasoline. This can be popular with voters and some leaders say it helps people who have less money.

However, experts agree that the biggest benefits usually go to those who are wealthier, since they own more cars. Removing these subsidies might raise prices for basic goods like food, which can hurt poorer families. Some oil companies worry that higher taxes could lead to job losses and affect a country’s energy safety.

These subsidies can also harm health and the environment. They add to air pollution, which can make people sick. They also encourage using more energy than needed, which can hurt efforts to protect our climate and use money that could go to other important things.

Phase-out

See also: Fossil fuel phase-out § Phase-out of fossil fuel subsidies

Many experts suggest changing support for fossil fuels into direct help for poor families. Deciding the best use for saved money usually needs special studies for each country. However, stopping this support can be very challenging for leaders to manage.

History

Tax breaks for oil and gas exploration have been used since the early 1900s. These special rules help companies find and get oil and gas more easily.

Subsidies by fuel

In 2023, groups that watch countries' money found that coal got help worth about 27.7 billion US dollars, oil got about 400 billion US dollars, and gas got about 343 billion US dollars. This help makes it easier and cheaper to find and use these fuels.

Subsidies by country

See also: Gasoline and diesel usage and pricing § Countries with subsidised gasoline

The International Energy Agency says that in 2022, governments around the world gave about $1 trillion to help people and businesses pay for fossil fuels. In 2009, big economies promised to cut down on these kinds of help over time. Many places have been changing their rules about these costs. For example, Ghana stopped helping with diesel and gasoline costs in July 2014, and Egypt raised diesel prices a lot in the same month.

In 2021, the IMF shared a study showing that the biggest part of helping with fossil fuel costs was about $5.9 trillion in 2020, which was 6.8% of the world's total money from all work and sales. This number is expected to go up.

Canada

Canada’s government helps with costs for looking for and using fossil fuels. Even though Canada said it would stop these kinds of help by 2025, it hasn’t happened yet. Some parts of Canada also help people pay for using fossil fuels, like giving special help to farmers for fuel taxes.

China

China’s plans for energy include using more clean energy, but they also still build places that burn coal for power. Different groups have talked about changing how they help with coal power costs.

India

In 2025, India’s help with fossil fuel costs was about 430 billion rupees, which is 2.3% of the country’s total money from work and sales.

Iran

Iran gives a lot of help to its people for fossil fuel costs. This has caused problems like wasting energy, big money losses for the government, and pollution.

Libya

In 2020, Libya gave the most help compared to how much money it makes from all work and sales, at 17.5%.

Russia

Russia has a lot of natural gas, coal, and oil. The country helps with costs for electricity, natural gas, and oil. Most of this help goes to natural gas. The government also gives special tax rules for oil and gas, but these cost a lot of money.

Saudi Arabia

In Saudi Arabia, most of the help with energy costs is hidden because the price people pay for oil is lower than the world price but higher than what it costs to make. Recent changes in 2018 have removed some of this hidden help.

Turkey

United States

Different groups say how much help the United States gives for fossil fuels. Some say it’s very small, while others say it’s about $29 billion each year. As of 2026 the Environmental Protection Agency is working on ways to measure the health effects of pollution from burning coal and oil.

Venezuela

As of 2026 gasoline costs are helped by the government.