INF/TE/FFSR/R/2  
 
22 January 2024  
(24-0473) Page: 1/5 
  
 
 
FOSSIL FUEL SUBSIDY REFORM (FFSR)  
MEETING HELD ON 24 NOVEMBER 2023  
Summary Report1 
The fourth meeting of the Fossil Fuel Subsidy Reform ( FFSR) initiative under the  Ministerial 
Statement and associated High -Level Work Plan WT/MIN(22)/8  for the year s 2022-23 was held  on 
24 November  2023. The meeting was chaired by New Zealand ( as coordinator ). The agenda for the 
meeting was contained in WTO document INF/TE/FFSR/CN/4 . All WTO Members were invited to 
attend the meeting.  
The objective of the meeting was to build on the productive discussions during the three previous 
meetings in 2022 and 2023 and to look ahead to next steps under the initiative. In particular, the  
focus was on the three main pillars of work identified to date : (i) enhancing transparency, including 
through use of existing WTO mechanisms; (ii) ensuring temporary crisis measures are targ eted, 
transparent and temporary; and (iii) identifying the types of fossil fuel subsidies that were most 
problematic from a trade and environment perspective and considering pathways to address them . 
1  INTRODUCTORY REMARKS BY THE COORDINATOR  
1.1.  New Zealand  welcomed participants and recap ped the group's work to date. At the first meeting 
in October 2022, participants had undertaken an overall stocktake of international efforts on FFSR 
and heard expert presentations on reform initiatives related to fossil fuel sub sidies. They also heard 
evidence of the environmental and economic harms from fossil fuel subsidies, learnt more about the 
need for further information on those harms and discussed the value of enhanc ing transparency. At 
the February 2023 meeting, particip ants had examined in more depth some of the development and 
social issues associated with reform of fossil fuel subsidies. The Ministerial Statement contained clear 
recognition that reform needed to take account of the specific needs and conditions of deve loping 
countries and minimise possible adverse impacts on development. During the discussion, 
participants heard both about the challenges facing Members as they undertook reform and the 
associated opportunities, including the way in which the transition t o clean energy could unlock 
fiscal, developmental, social, and environmental gains.  
1.2.  At the initiative's third meeting in July 2023, co -chaired by New Zealand and Switzerland, 
participants  had focused on the three  areas identified for further work. First, WTO mechanisms to 
enhance transparency,  including particularly the use of Trade Policy Reviews  (TPRs)  to provide 
information on fossil fuel subsidies and FFSR. Second,  approaches to limit and phase out temporary 
fossil fuel support measures . In this context, some useful lessons had been  drawn from previous 
energy crises, as well as from more recent Member experience. This had demonstrated a  clear trend, 
over time, away from an initial reliance on price-based measur es (with limited targeting and a heavy 
fiscal burden) to narrower, more targeted (often income -based) approaches. Third, categorisation 
of different kinds of subsidies . In this area,  participants had pointed  to the need for further work to 
better understan d the impacts of fossil fuel subsidies and welcomed more analytical work to identify 
and categorize support measures from a trade distorting and environmental harm perspective.  Some 
participants had also drawn attention to the importance of  not losing sight of the extremely high 
 
1 This summary report is being shared to provide delegations with a brief overview of the discussions and 
assist them in reporting back to their capitals. It provides a non -exhaustive, illustrative review of the issues 
discussed at the meeting.  INF/TE/FFSR/R/2  
 
- 2 - 
 
  overall levels of fossil fuel subsidies and had highlighted  the size of the gap between current levels 
of fossil fuel subsidies and funds supporting the green transition.  
2  UPDATE REPORTS  
2.1.  The Organisation for Economic Cooperation and Development  (OECD) provided a high -
level overview of work currently  under way to update its Inventory of Fossil Fuel Support Measures.2 
The Inventory identifie d, document ed, and estimate d the fiscal cost of government support 
measures that encourage d fossil-fuel production or consumption . The latest edition of the Inventory 
include d 1,654 support measures in 51 OECD, G20, and EU Eastern Partnership economies.  It was 
based on a bottom -up approach that collect ed detailed information from official government sources 
(e.g. budget reports) for individual support measure for fossil fuels.  In 2022, 162 new measures had 
been introduced by governments and recorded in the Inventory.  The fiscal cost of global support for 
fossil fuels had almost doubled with increases in all categories of fuels – coal, oil, gas, and electricity.  
The main driver behind this trend  was the emergency support measures that had been  introduced 
by governments to protect households and firms agains t unusually high energy costs in 2022.  Most 
of these  measures translated into support for the production or consumption of fossil fuels.  Some 
other emergency measures , however,  demonstrated that alternative policies were feasible, as they 
had been  designed  not to encourage the production or consumption of fossil fuels.  
2.2.  Furthermore,  it appeared most of the emergency measures introduced in 2022 had not been 
targeted on the basis of  need. This raise d fiscal, distributional, and environmental concerns.  The 
fiscal cost of non-targeted support measures was large.  Non-targeted measures also tended  to 
disproportionately benefit better -off households, who consume d more energy.  In addition, they 
distort ed price signals and therefore contribute d to the continued consum ption of fossil fuels.  These 
results underlined the case for  reform of support measures . While the new energy context made  
reforms challenging , there were ways to better target interventions and mov e away from large -scale 
support which tend ed to disproportionately  benefit users who d id not need it.  Phase out of existing 
support to fossil fuels would also free up much needed fiscal resources to accelerate the deployment 
of non -fossil technologies and i mprove energy efficiency.   
2.3.  The International Institute for Sustainable Development (IISD) provided  an overview of 
its recent "Fanning the Flames"  paper. The 2022 energy price crisis had catapulted public financial 
support for fossil fuels to new levels. G20 governments had been quick to cushion the effects of 
peaking fossil fuel prices and bolster energy supplies, providing a  massive  USD 1.4 trillion , in the 
form of subsidies (USD 1 trillion), investments by state -owned enterprises (USD 322 billio n), and 
lending from public financial institutions (USD 50 trillion). Production subsidies  had remained mostly 
unchanged, with a major  part of this additional support  going to  consum ption subsidies. 
Nevertheless , around one third (USD 440 billion) had been  driving investment in new fossil fuel 
production.  
2.4.  That support perpetuated reliance on fossil fuels and risked further  energy crises due to market 
volatility and geopolitical risks. It also severely hampered  the possibilities of achieving climate 
objectiv es set by the Paris Agreement by incentivizing fossil fuel use  while undermining the cost -
competitiveness of clean energy . Many of the measures taken to reduce fossil fuel energy costs had 
been temporary,  but not all had been  targeted.  Helping households a nd businesses during an energy 
crisis was understandable and necessary, but there were better ways to do it than subsidizing fossil 
fuels. Such subsidies  kept consumers locked into emissions -intensive, polluting, and price -volatile 
energy sources , where more targeted support measures decoupled from fossil fuel consumption , 
such as increased family welfare payments and one -off cash transfers to vulnerable groups , were 
available . 
2.5.  The Forum on Trade, Environment & the SDGs  (TESS) gave a preview of an upcoming 
paper it was working on called "Fossil Fuel Subsidy Reform: Options for Inclusive, Collective Action 
of the WTO". The paper provided an overview of the bigges t subsidies , and the ones that mattered  
most, as well as the key categories that collective action could best support. It broke down  the 
category of consumer subsidies, with 30% of the total going to transport fuels , and  25% to 
residential consumers  for ar eas such as electricity, household heating fuels, cooking fuels, etc. For 
 
2 The latest edition of the Inventory was subsequently publi shed on 01 December 2023  and can be found 
here. It finds that the fiscal cost of govern ment support for fossil fuels almost doubled in 2022 to reach more 
than USD 1.4 trillion . INF/TE/ FFSR/R/2  
 
- 3 - 
 
  production subsidies, by far the largest category was support for oil and gas production , amounting 
to 15 -20% in a typical year.  The vast majority of that was given to increase domes tic production 
and was not targeted  towards improving security of supply or post -production liability. Those three 
categories represented together 70% of total global fossil fuel subsidies.  
2.6.  The paper also examined which  categories of subsidies had the most important environmental 
impact. While there was evidence of which were the most polluting subsidies,  the paper found that  
there w ere different costs and benefits between subsidies. This suggested that  breaking down the 
problem int o categories would be helpful. For example, it was clear that s ubsidies to coal had 
outsized adverse impact s as compared to  their expected benefits  and should be a priority for a 
reform . Finally, the paper analysed how to undertake reform by looking at the  problem through  the 
lens of  these key categories. Recommendations were to follow as the paper was finalised.  
2.7.  In response to a question  from a delegation , the OECD noted that it was too early to analyse 
how many of the measures introduced in 2022 had buil t into their design a path for their reduction 
or removal in response to changes in circumstances . There were a lot of measures introduced in late 
2021, some continued in 2023 , but it seem ed that a large number of them w ould end in 2023. The 
question then was whether energy prices w ould remain high in 2024 and if  so, how  governments 
would  decide to respond to this.   
3  PROGESS ON DEVELOPMENT OF CONCRETE OPTIONS  
3.1.  As foreshadowed in the June 2022 Ministerial Statement , co-sponsors had been working to 
build on the  discussions during the first three meetings to elaborate concrete options to advance 
fossil fuel subsidy reform at the WTO.  These efforts had grouped next steps under the three pillars 
that had been the focus arising from  the FFSR Initiative 's High Level Work Plan to date. These were 
(i) enhanced transparency;  (ii) temporary crisis measures; and  (iii) categorisation of the most 
harmful fossil fuel subsidies – to underpin subsequent identification of pathways to address the se 
categories . Inter-woven within the specific steps under consideration to advance work under the 
three pillars were the important social and development considerations also highlighted as part of 
the High -Level Work Plan.  
3.2.  The next steps on these  concrete  options  were broken down into two stages:  (i) a small number 
of actions  for possible delivery by the 13th WTO Ministerial Conference (MC13) , taking into account 
the short time now remaining until MC13, and  (ii) setting out a post -MC13 work programme to 
support more advanced outcomes by MC14.   
3.3.  First, on enhanced transparency , there were three main ideas for the next steps:  
1. Steps  co-sponsors and other interested Members could  take collectively and individually 
to make fuller use of the Trade Policy Review  mechanism  to enhance transparency with 
regard to fossil fuel support measures. These include d: 
a. developing a short list of questions for regular use in Trade Policy Reviews;  
b. looking to take a lead through the kind of information include d in their ow n Trade 
Policy Review reports; and  
c. championing inclusion of such information in Trade Policy Review documentation when 
the TPR mechanism is next reviewed;  
2. Advocating  a fuller examination of fossil fuel subsidy issues as part of the programme of 
re-invigoration of the Committee on Trade and Environment , including in upcoming 
CTE thematic discussions . 
3. Extending  the analysis already undertaken to identify the kind of information on fossil fuel 
subsidies and fossil fuel subsidy reform available through Member Trade Policy Reviews to 
other WTO sources , including notifications and monitoring reports, and from other 
international processes , including the UN FCCC, UNEP and the OECD.  
3.4.  Second, on crisis support measures , there were also three main ideas:  INF/TE/FFSR/R/2  
 
- 4 - 
 
  1. Consolidating and expanding on information presented at earlier FFSR meetings to compile  
information on recent Member experience  with the design, review, adjustment 
and roll -back of temporary fossil fuel support measures  to address energy crises . 
2. Undertaking periodic reviews  of this compilation of temporary crisis measures to track 
progress on and encourage efforts to reform, reduce and remove  such measures . 
3. Drawing on this experience to develop a set of practical guidelines  to help Members 
ensure such crisis support measures are targeted, transparent and temporary . 
3.5.  Third, on addressing most harmful fossil fuel subsidies , the next steps being looked at 
were:  
1. Examining  information and analysis of current forms of fossil fuel subsidies to identify 
the characteristics  of fossil fuel subsidies that are most harmful to the environment 
and to trade ; and working to develop a broader understanding of the particular types of 
subsidies of most concern, including through focused workshops  on particular types of 
subsidies next year . 
2. Undertaking dedicated sessions to share experience  on approaches to fo ssil fuel 
subsidy reform, including complementary strategies to address the needs of 
vulnerable social groups and wider development objectives . 
3. Identify ing existing and additional new pathways  to reform fossil fuel subsidies 
identified as most harmful a nd consider possible timetables for phased reduction 
and elimination , as well as the link to facilitating green transition objectives . 
3.6.  In the ensuing discussion, participants  supported the need for enhanced transparency , 
including the use of  TPRs in a more  strategic manner. The re was support for developing some 
standard questions for TPRs, discussing the structure of the Secretariat report at the next review  of 
the Trade Policy Review Mechanism , and leading by example by including a dedicated section on FFS  
and FFSR in government reports. One delegation  referred to the need to mainstream the issue in 
multilateral WTO work and pointed to  the Committee on Trade and Environment  as a logical forum 
for further thematic discussions, as well as to normalise the sha ring of information on FFS  and FFSR  
at the WTO. Participants  encouraged the use of other available WTO mechanisms to increase 
transparency . They supported preparing a compilation of fossil fuel subsidies  already notified as a 
starting point and encouraged collaboration among international organisations (WTO, OECD, IMF 
and WB) to assist with this, including through the further development of the joint Subsidy Platform.  
3.7.  On temporary support measures , participants saw value in the idea of a compilation of best 
practices on how the objectives of transparent, targeted and temporary measures could be achieved  
in practice, building on the earlier Secretariat paper.  One delegation  pointed out that review 
procedures should be an integ ral part of domestic regulatory frameworks and would also be very 
useful at the multilateral level provided all major subsidisers took part.  
3.8.  Participants  also supported  the idea of work on identification of the most harmful fossil fuel 
subsidies . One dele gation  also saw a need for further  analytical work to examine  the possible 
positive impacts of certain support measures on the environment, such as subsidies for public 
transport, or those addressing energy poverty and assisting vulnerable groups.  
3.9.  Co-sponsors were also keen to build more support for  the FFSR Initiative . One delegation  
suggested that the conclusion of the Agreement on Climate Change, Trade and Sustainability 
(ACCTS) negotiations could serve as a benchmark for the work of the Initiative. Another delegation  
referred to the need for more thematic work, e.g., on vulnerable social groups and development or 
on subsidies for production or the use of a particular fossil fuel .  
4  NEXT STEPS ON FFSR AT MC13 AND BEYOND   
4.1.  Three outputs were being worked on ahead of MC13. These were: (i) an updated Ministerial 
Statement; to which it was planned to attach, (ii) a finalised "Next Steps on Concrete Options" work INF/TE/ FFSR/R/2  
 
- 5 - 
 
  programme; and (iii) a short set of standard questions on fossil f uel subsidies and fossil fuel subsidy 
reform for use in Trade Policy Reviews.  
4.2.  During 2024, it was planned to hold  a combination of meetings and dedicated  workshops on 
the areas of focus referred to above (and outlined in the work programme), like the most  problematic 
subsidies , sectors and situations  in which subsidies were being provided ; as well as  strategies and 
approaches to undertaking reform that incorporated  the social and development dimensions  of 
concern to participants . 
4.3.  One delegation referred to  the WTO Secretariat's publication "Trade Policy Tools for Climate 
Action" and proposed developing  an analysis of the  different trade policy options , with  FFSR as one 
of those options , including to estimate the environmental value these trade policy option s could 
deliver.  A similar analysis was envisaged by the APEC Business  Advisory Council , with work like this 
at the WTO also helping to  demonstrate that the trade community was engaged on the se issues.   
__________