Fossil Fuel Subsidy Reform 101

About the Event

Fossil fuel subsidies—valued at around USD 916 billion globally in 2024 and expected to rise sharply in 2026 amid the crisis in the Middle East—are among the most trade-distorting interventions in the global economy. By suppressing energy prices, skewing investment decisions, and disadvantaging cleaner alternatives, they distort competition just as directly as tariffs or export incentives. 

Despite repeated efforts by the G7, G20, and Asia–Pacific Economic Cooperation to phase out “inefficient” subsidies, volumes continue to grow rather than shrink. The legal landscape has also sharpened following the 2024 International Court of Justice advisory opinion on states' climate obligations. 

This learning workshop brought together trade delegates and experts to explore the legal grounding, empirical evidence, and multilateral context needed to engage effectively on fossil fuel subsidy reform. Discussions opened with how the FFSR debate is relevant to the current energy crisis before turning to the unique challenges developing countries face in this space. Participants later examined the legal and policy dimensions, covering existing World Trade Organization disciplines and emerging legal questions around fossil fuel subsidies, lessons and building blocks drawn from past reform efforts, and the objectives and priorities driving current multilateral FFSR initiatives.