Members Call for WTO to Play a Central Role in Ending Inefficient Fossil Fuel Subsidies

Buenos Aires, December 11, 2017—A coalition of 12 World Trade Organization (WTO) members is urging the WTO today to advance the discussion on fossil fuel subsidies, asking for transparency and reform of inefficient fossil fuel subsidies that encourage wasteful consumption.

The announcement took place during the WTO Eleventh Ministerial Conference (MC11) in Buenos Aires, where the participating economies released a Ministerial Statement calling on the WTO to “achieve ambitious and effective disciplines on inefficient fossil fuel subsidies that encourage wasteful consumption including through enhanced WTO transparency and reporting that will enable the evaluation of the trade and resource effects of fossil fuel subsidies programmes.” The Ministerial Statement also notes that any efforts to phase out fossil fuels must take into account the needs of the poor. The endorsing WTO members also encouraged the international community to follow their lead. This is the first time the WTO has accepted a Ministerial Statement specifically targeting fossil fuel subsidy reform.

“Fossil fuel subsidy reform shows how trade can help the environment. Huge and inefficient subsidies harm the environment, adding to smog and worsening climate change. Subsidies also undermine much needed investment in the renewable sector. The US$425 billion that governments spend each year subsidizing fossil fuels could be redirected to health, education or other development priorities. This is an issue that deserves the attention of all WTO Members,” said Hon David Parker, New Zealand Minister for Trade and Export Growth.

Supported by the Friends of the Fossil Fuel Subsidy Reform, the WTO members who have signed onto the statement include Chile; Costa Rica; Iceland; Liechtenstein; Mexico; the Republic of Moldova; New Zealand; Norway; Samoa; Switzerland; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; and Uruguay.

“Fossil fuel subsidies—to coal mines, infrastructure and power plants; in tax breaks to oil and gas; and to consumers—are major contributors to climate change and local pollution, but their reform is a cause of serious concern on trade and competitiveness for countries. The WTO has a key role to play in building a common understanding of the scale and impacts of these subsidies and supporting its members to move forward together with reform,” said Peter Wooders, Director of the Energy Program at the International Institute for Sustainable Development (IISD). 

In 2015, research from IISD’s Global Subsidies Initiative revealed that subsidies for fossil fuels were estimated at USD 425 billion, including production and consumption subsidies. Fossil fuel subsidies amounted to 20 per cent of the value of internationally traded fuels. A phase-out of fossil fuel subsidies would contribute to the global target of keeping temperatures from rising 1.5°C above pre-industrial levels, and would also help release funds for other development priorities.

For media inquiries please contact:

Lourdes Sanchez: lsanchez@iisd.org

Ziona Eyob: zeyob@iisd.org