Govts spent record $1 trillion last year subsidising fossil fuels

The splash of state cash on energy last year followed climate talks in November 2021 when world leaders pledged to end such subsidies.

Oil, Energy
Photo: Bloomberg
Bloomberg
2 min read Last Updated : Feb 17 2023 | 10:43 PM IST
Even as global governments raise their ambitions to cut fossil fuels in the future, they spent a record $1 trillion last year subsidizing energy sources that are the main driver of climate change.

That’s the finding from the International Energy Agency, which estimates that the combined subsidies for oil, natural gas, electricity and coal hit an all-time high in 2022 as soaring energy prices crippled economies. It underlines the challenge for policy makers trying to grapple with the immediate threat of runaway fuel inflation, while still trying to push a shift to low-carbon sources.

The spending by governments in 2022 was more than double total global investment in renewable energy sources, according to figures from BloombergNEF. The splash of state cash on energy last year followed climate talks in November 2021 when world leaders pledged to end such subsidies.


“The Glasgow Climate Pact emphasized that phasing out fossil fuel subsidies is a fundamental step toward a successful clean energy transition,” the IEA said in its report. “However, today’s global energy crisis has also underscored some of the political challenges of doing so.”

The subsidies helped shield consumers from soaring energy prices as many economies were still recovering from the impact of the pandemic. As Russia cut supplies of natural gas following its invasion of Ukraine last year, the European Union spent $349 billion to reduce consumer energy bills.

©2023 Bloomberg L.P.

Great minds don’t just skim the surface, they uncover the full story.

Already subscribed? Log in

Subscribe to read the full story →

Quarterly Starter

₹900

3 Months

₹300/Months

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Months

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 premium stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Climate ChangeInternational Energy AgencyFossil fuel

Next Story