15 December 2021
Ministerial Statement Seeks to Phase out Fossil Fuel Subsidies
Photo Credit: Ehud Neuhaus on Unsplash
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The statement recognizes that the WTO can play a central role in addressing inefficient fossil fuel subsidies, which lead to “wasteful consumption” and put renewable energy and investment in energy efficiency at a disadvantage.

The statements’ proponents will develop “concrete options to advance this issue” at the WTO ahead of MC13.

A group of 15 World Trade Organization (WTO) members – Chile, Costa Rica, the EU, Fiji, Iceland, Liechtenstein, Moldova, Montenegro, New Zealand, Norway, Switzerland, Tonga, the UK, Uruguay, and Vanuatu – issued a ministerial statement on fossil fuel subsidies. The statement highlights the “shared understandings” the group reached with regard to efforts to achieve “effective disciplines on inefficient fossil fuel subsidies.”

The launch of the statement was delayed after the WTO’s Twelfth Ministerial Conference (MC 12), due to start on 30 November, was postponed because of travel restrictions linked to the COVID-19 pandemic. This is one of the three ministerial statements launched on 15 December, along with statements on trade and environmental sustainability and plastics pollution and environmentally sustainable plastics trade. 

The statement (JOB/GC/264/Rev.3), circulated among the WTO membership on 18 November 2021, recognizes that the WTO can play a central role in addressing inefficient fossil fuel subsidies, which lead to “wasteful consumption” and put renewable energy and investment in energy efficiency at a disadvantage. The statement notes that disciplining such subsidies will result in socioeconomic, trade, and environmental benefits, and enable a COVID-19 recovery that is green and climate-resilient.

The statement highlights SDG target 12.C, which aims to “[r]ationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions.” It acknowledges WTO members that have made related pledges under the Paris Agreement on climate change and the Addis Ababa Action Agenda (AAAA) on Financing for Development (FfD), as well as in various international fora, such as the Group of 20 (G20), the Group of 7 (G7), the Asia-Pacific Economic Cooperation (APEC), and the Vulnerable 20 (V20).

The document notes that in 2019, fossil fuel subsidies were estimated at around USD 500 billion, and that “diverting funding from such subsidies will support a just transition towards a green, sustainable economy,” contribute to the temperature goal of the Paris Agreement, and reduce climate risks globally.

Among the “shared understandings,” the statement highlights that the 15 members:

  • Seek to rationalize and phase out inefficient fossil fuel subsidies “along a clear timeline,” and urge other WTO members to join these efforts;
  • Recognize developing countries’ specific conditions and the need to “minimize the possible adverse impacts on their development in a manner that protects the poor and the affected communities”;
  • Will share information and experiences to advance discussions on disciplining inefficient fossil fuel subsidies in the WTO, including through enhanced transparency and reporting; and
  • Will develop “concrete options to advance this issue” at the WTO ahead of MC13.

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