INF/TE/FFSR/R/1  
 
14 February 2023  
(23-1069) Page: 1/5 
 Original: English  
 
FOSSIL FUEL SUBSIDY REFORM (FFSR)  
MEETING HELD ON 3  OCTOBER 2022  
Aide-Mémoire by the Coordinator1 
The first meeting of the Fossil Fuel Subsidies Reform ( FFSR) initiative under the High-Level Work 
Plan WT/MIN(22)/8  for the year s 2022-23 was held  on 3 October 2022 . The meeting was chaired by 
New Zealand (coordinator of the initiative).  The agenda for the meeting was contained in WTO 
document INF/TE/FFSR/CN/1 , circulat ed on 28 September  2022. All WTO Members were invited to 
attend the meeting . 
The meeting  had the following objectives:  (i) undertake a stocktake of current activities related to 
FFSR by WTO Members and international bodies relevant for further discussion u nder the WTO ; 
(ii) assess some  of the existing evidence of environmental harms from fossil fuel subsidies and gaps 
in the evidence base; and (iii)  consider co -sponsoring Members' updates on priorities under the 
initiative and opportunities for future work and collaboration . 
1  INTRODUCTORY REMARKS BY THE COORDINATOR  
1.1.  New Zealand  welcomed participants , explained the purpose and structure of the meeting  and 
set the di scussion in the context of wider efforts in this area.  This included  recall ing the shared 
ambition  to tackle inefficient fossil fuel subsidies  (FFS)  that had been affirmed in a range of 
international fora, including  in the Sustainable Development Goals  (SDGs), under the Glasgow 
Climate Pact, as well as by a number of economies within the G20, G7 , and the Asia-Pacific Economic 
Cooperation Committee (APEC) . The FFSR initiative at the WTO aimed to help shift that ambition 
into action, recogni zing the role the WTO could  play in achieving ambitious and effective multilateral 
disciplines , as well as to support co-sponsor s' own domestic reform efforts.  
1.2.  The coordinator recognized the difficulties arising from the loomi ng energy crisis  but cautioned 
that it was important not to lose sight of shared objectives – and ambition – longer term . Rising 
fossil fuel prices served to reinforce the need to accelerate the transition away from fossil fuels 
towards clean, green energy  systems . Temporary relief measures put in place in response to the 
crisis should not be allowed to become embedded , if the increasingly urgent goals set out in the 
Paris Agreement were to be met. New Zealand encouraged co-sponsor s to continue their excell ent 
work in supporting the momentum behind the initiative  and welcomed ongoing advocacy to 
encourage new co-sponsor s to join in this effort .  
2  STOCKTAKE OF CURRENT ACTIVITIES RELATED TO FFSR BY WTO MEMBERS AND 
INTERNATIONAL BODIES RELEVANT FOR FURTHER DISCUSSION UNDER THE WTO, 
INCLUDING ON DEFINITIONS AND UNDERSTANDING  OF RELEVANT CONCEPTS  
2.1.  The International Institute for Sustainable Development ( IISD)  introduce d its Policy Brief and 
Stocktake of International Efforts Related to FFSR . The policy brief summariz ed and highlight ed the 
efforts that had gone into FFS research up to the present moment. It addressed questions, such as: 
(i) what was subsidized; (ii)  estimates of fossil fuel subsidies; (iii)  environmental impacts of fossil 
fuel subsidies; (iv)  types of international cooperation developed to sup port the reform; (v)  impact 
 
1 This aide -mémoire is being shared to provide delegations with a brief overview of the discussions and 
assist t hem in reporting back to their capitals. It provides a non -exhaustive, illustrative review of the issues 
addressed by Members  and Stakeholders  at the meeting.  INF/TE/FFSR/R/1  
 
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  of fossil fuel subsidies on international trade; (vi) why the WTO was well suited for the conversation 
on FFSR.  IISD underscored  that several  different international fora had recognized the importance 
of reforming FFS . In particular,  commitments were made in the context of the G7, G20, SDG 12.c  
of the 2030 Agenda , Article 2 of the Paris Agreement , ACCTS  negotiation , and WTO FFSR Joint 
Ministerial Statement . Pledge s included  rationaliz ing and/or phase -out of inefficient foss il fuel 
subsidies leading to  wasteful consumption , while providing targeted support to the poorest and most 
vulnerable. IISD highlighted the FFSR M inisterial Statement as well as the work undertaken under  
the Trade and Environmental Sustainability Structured Discussions  (TESSD), aiming for ambitious 
and effective disciplines, including through enhanced WTO transparency and reporting.  This was an 
excellent moment to evaluate how the WTO efforts could complement existing initiatives.  
2.2.  In response to a question  by a delegation , IISD noted that the "carbon club " established under 
the G20 could  add value to the FFSR discussions by bringing  more political attention  to the issue  
and understanding about the need to act. Other  international  process es could  also bring in their 
experience on the subject and  data, e.g. collected from peer review processes . For its part , the WTO 
could contribute with  more understanding on the definition of subsidies, and with experience from 
the recent Fisheries  Subsidies  Agreement  driven by environmental concerns .  
2.3.  The WTO Secretariat provided an overview of a recent joint report by the WTO,  the 
International Monetary Fund (I MF), the World Bank , and the Organisation for Economic Co -operation 
and Development (OECD) titled Subsidies, Trade and International Cooperatio n. The report 
recognized that there were sound rationales for some subsidies, but that design mattered as well . 
Addressing new challenges , such as climate change and digitali zation,  require d a clear sense of the 
positive and negative aspects of existing subsidies  and a  better understanding of the current 
landscape of subsidies in the global economy . Current  discerni ble patterns  showed that  subsidies 
were the most frequent form of government intervention post financial crisis . Subsidies were not a 
single -country or single -region "issue" despite the existence of  high concentration . Many sectors 
appear ed to benefit from subsidies  which took different forms  (grants, preferential loans, tax 
incentives), with variation across countries , and s ub-central government entities account ing for the 
vast majority of subsidy program mes. As compared to subsidies in oth er sectors, FFS remained high. 
Existing  WTO rules provided a strong basis, but longstanding and more recently exposed  gaps 
remain ed. Therefore, the report found that i mproved transparency, analysis and consultation around 
subsidies could  improve the applic ation of existing rules and norms and inform their further 
development.  Finally, t he report  highlighted  that not all subsidies were problematic . Working out 
which was which was key. The WTO could help with that through : (i) transparency and analysis : by 
improving measurement and access to information, as well as understanding subsidies' impacts; (ii) 
consultation and dialogue: by cooperation that would encourage and inform reform in different fora, 
including WTO committe es; and (iii) rules and norms: by developing effective and balanced new 
rules and improving the operation  of existing ones . 
2.4.  On the question of poor compliance with subsidy notification requirements, the WTO Secretariat 
noted that they had  been looking at d ifferent ways to improve compliance by using electronic 
notifications  and providing technical cooperation to countries facing difficulties . However , there was 
an issue with incentives that was difficult to tackle. The role that notification s would  play in improving 
transparency in the coming years was unclear and different approaches had to be adopted to improve  
the quality and quantity of information received.  
2.5.  The APEC Committee on Trade and Investment ( CTI) provided an overview of the APEC FFSR 
Transparency Template and Voluntary Standstill Mechanism . APEC CTI explained that, in 2009, APEC 
Leaders committed to rationali ze, and phase out over the medium term , FFS that le d to wasteful 
consumption, while recognizing the importance of providing those  in need with essential energy 
services. The main focus area s in this regard had been peer reviews  and capacity building. Currently, 
APEC was continuing work on the design of the  voluntary standstill  on inefficient FFS, e.g. whether 
it should be inventory -based, value -based, or a mixture  of the two . Another  main focus had been 
the development and implementation of a transparency mechanism  with the goal for economies to 
voluntarily report on current inefficient FFS. The mechanism includ ed information on the description 
of the measure and its rationale, beneficiaries, the standstill or reform commitment applied to the 
measure, timeframes, and fiscal value. It allowed  for economies to individually determine what an 
inefficient FFS might be. APEC CTI concluded b y highlighting the  varying level s of transparency on 
subsidies  and the need for more work, but also noted the ongoing momentum  on this topic . INF/TE/FFSR/R/1  
 
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  2.6.  The United Nations Framework Convention on Climate Change (UNFCCC ) updated participants 
on the state of play on FFSR under UNFCCC  following the Glasgow Climate Pact . UNFCC C emphasized 
that the aim under the Paris Agreement could not be reached without addressing the issue of 
subsidies. At COP26 , FFS were mentioned for  the first time in one of the climate agreements. The 
2021 Nationally Determined Contributions ( NDCs ) synthesis report prepared by UNFCCC had also 
shown some GHG reduction scenarios resulting from modelling the commitments that countries ha d 
taken forward . This includ ed fiscal scenarios with phasing out of FFS, taxation on fossil fuels, and 
savings from FFS reforms being  reinvest ed into renewables. While countries'  NDCs did not contain 
a detailed discussion on the policies or actions  to be  put in place , soon the biennial  transparency 
reports (BTRs)  would require  countries to give more details on how commitments had been 
implemented and , in particular , how subsidies had been used to realize those commitments . The 
forum on the implementation of response measures had issued a technical paper in which d ifferent 
types of subsidies ha d been included along with their possible  social, economic , and environmental  
impact s. UNFCCC emphasized that all  three of these aspects ha d to be taken into account in order 
to assess subsidies'  impact. Well-designed policies on reduction of FFS were  important , along with 
carefully crafted complementary policies , such as policies  promoting renewable energy . In addition, 
the G7 and G20 were doing important  work in terms of just transition : forming  partnerships that 
helped developing countries put their governance systems in place in order to move away from fossil 
fuels and towards more clean energy solutions. Going forward,  just transition would be one of t he 
priorities at  COP27 and the main path  moving forward  for the UNFCCC  would be  about  enhancing  
implementation.  
3  STOCKTAKE AND ASSESSMENT OF EXISTING EVIDENCE OF ENVIRONMENTAL HARMS 
FROM FFS AND GAPS IN THE EVIDENCE BASE  
3.1.  The United Nations Environment Progr amme (UNEP ) provided an update on  its data collection 
and reporting  system  under SDG indicator  12.c.1 on the Amount of fossil -fuel subsidies per unit of 
GDP (production and consumption) . UNEP was the custodian of SDG indicator 12.c.1 and was 
therefore responsible for leading the development of an internationally established methodology and 
the design of a data collection and reporting system for SDG  12.c.1. UNEP shared  several challenges 
related to data compilation, including  the need for further capacity -building  efforts  and additional  
intra-governmental coordination . The target for national datasets development was to have a 
reliable, comparable national inv entory on FFS by 2025. While reporting on tax expenditure and 
other revenue foregone remained optional,  due to the complexity of definitions and data available , 
it was worth carrying  this discussion forward , especially given that tax expenditure represent ed the 
largest category of F FS. UNEP concluded by underscoring that  the SDG  12.c.1 indicator methodology 
would continue to evolve based on the lessons learned from initial country reporting, progress in 
data availability, improvem ent of national capacity, and future research on the topic.  
4  FOLLOW -UP DISCUSSION BY DELEGATIONS  
4.1.  Overall, the presentations were  welcomed and spurred engagement among participants. 
Several delegations responded to the guiding questio ns.2 Discussions  under scored the need to 
enhance transparency and reporting on FFS. Several delegations noted that  the WTO was well placed 
to be a central actor in this work.   
4.2.  Delegations  expressed interest in further exploring how to increase the transparency of 
FFS programmes, with many noting that this would  be a first vital step towards closing information 
gaps and achieving reforms. Delegations  recognized opportunities to build on efforts by other 
 
2 The following guiding questions were sent to participants: (i) What cross -government mechanisms are 
used to establish an econo my-wide understanding of support measures relevant to fossil fuel subsidies? What 
tools are available to cosponsors to assess the fiscal and environmental impacts of various measures, and where 
are the information gaps ? (ii) Recalling the commitment in WT/MIN(21)/9/Rev.2  to share information and 
experience to advance discussion in the WTO, what areas of focus and processes for information sharing, 
technical workshops or presentations would assist cosponsors in advancing domestic reform efforts, as well as 
work to advance multi lateral action? (iii) What existing avenues at the WTO can be utilised to better understand 
the trade, economic and environmental impacts of fossil fuel subsidies, and what additional information is needed 
to better evaluate these? For example, could the W TO Secretariat compile examples of questions related to FFS 
raised in the Trade Policy Review Body and the Subsidies and Countervailing Duties Committee for use by 
cosponsors to improve transparency on FFSR via these tools and potential for coordination am ong cosponsors? 
Any other suggestions for use of existing WTO avenues?  (iv) What opportunities exist for collaboration with other 
international processes relevant to FFSR? e.g. UNFCCC, APEC, G20 . INF/TE/FFSR/R/1  
 
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  international organizations in volving voluntary reporting, experience sharing, and peer reviews. 
They also considered that the current energy crisis made the case for a clean energy transition all 
the more urgent.  
4.3.  Several delegations supported the idea of  the WTO Secretariat  compil ing examples of relevant 
questions related to FFS raised in the Trade Policy Review Body and the Committee on Subsidies 
and Countervailing Measures . Other delegations noted that to improve the transparency of FFS, WTO 
Members could draw on external sources, including databases maintained by the OECD , APEC,  and 
the International Energy Agency (IEA) . One delegation highlighted the importance of addressing 
information gaps, including in relation to state-owned enterprises and the role of government enti ties 
either as recipient s or providers of FFS, as well as the extent of subsidies provided by sub -central 
entities.  
4.4.  Several delegations observed  that FFSR should be seen within a wider range of policy 
instruments, including discussions related to environm ental goods and services and to plastic 
pollution. Some delegations noted  that the production of plastic involved  FFS and, thus, these topics 
could also be discussed together in the WTO Dialogue on Plastic Pollutio n and Environmentally 
Sustainable Plastic Trade (DPP). Some delegations  specified  that discussions could look at the 
proportion of FFS in the plastics value chain and how these subsidies limit ed the competitiveness of 
substitute materials with lower level s of subsidies.  
4.5.  Several other delegation s considered it valuable to engage  the CTE and TESSD  and report  to 
those groups.  One delegation recalled the work undertaken in the TESSD working group on subsidies 
and underscored that a matrix, like the one used by the OECD, could be of great assistance in FFSR's  
work.  One delegation welcomed the WTO Secretariat's holistic and comprehensive approach on the 
impact of  subsidies and considered the need for a general analysis on the impact of subsidies on 
competition, international trade, and the environment. Some other delegations  noted the need to  
identify  criteria for inefficient  subsidies and highlighted  the importan ce of involving  different 
stakeholders to consider countries' specific circumstances , the social dimension of the issue , and 
technical assistance needs.  One delegation underscored  the need for a mechanism to provide 
technical assistance to developing countries and suggested that the WTO Secretariat be approached 
for such support.  
4.6.  Several  delegations  underscored the importance of collaboration and synergies with other 
processes . Some other delegations expressed full su pport for the call by the Glasgow Climate Pact 
to scale up clean power generation and energy efficiency measures and  accelerate the phase -out of 
FFS. One delegation noted that , following COP27, it was important to understand how to encourage 
the incorporation of FFSR measures in countries' NDCs.  
4.7.  One delegation shared its experience with reporting on energy and fossil fuels subsid ies. 
5  INTERVENTIONS BY OTHER STAKEHOLDERS  
5.1.  Other stakeholders, including  representatives o f the Quaker United Nations Office  (QUNO), 
World Economic Forum  (WEF) , and the Forum on Trade, Environment and SDGs (TESS), also 
provided suggestions for work moving forward.   
5.2.  QUNO presented a specific proposal on how the WTO could best support domestic an d 
international efforts to phase out inefficient FF S. The starting point for this proposal was the 2022 
Ministerial Statement on Fossil Fuel Subsidies ( WT/MIN(21)/9/Rev.2 ). The QUNO proposal include d 
the following three -stage process towards an open plurilateral on  FFSR: (i) Stage  1 (until MC13) 
would seek to further explore and identify the specific trade relevance of discussing FFSR in the 
multilateral trading system ; (ii) Stage 2 (after MC13) would involve  discussions led by a coalition on 
various issues relating to scope and definitions ;  and (iii) Stage 3 would be  set for longer term and 
would focus on  deeper discussions aimed at developing disciplines to phase out inefficient FFS. Next, 
QUNO presented several suggestions for a medium -term and longer -term work programme . These 
included  obtaining  clarity on what types of measures qualif ied as "subsidies"  and undertaking an 
analysis to identify and rank the most environmentally harmful and trade -distorting subsidies. QUNO 
underscored that obtaining better data should not be a priority pursuit of th e WTO, but of other 
inter-governmental and non-governmental organi zations . QUNO also suggested the establishment 
of a fund for helping the poorest WTO Members manage the transition . INF/TE/FFSR/R/1  
 
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  5.3.  TESS highlighted the need to consider the concerns of developing countries  and underscored 
the importance of synergies with  TESSD and DPP. TESS encouraged WTO M embers to think  
creatively , including  beyond  the traditional WTO binding  agreement s and to explore  other options , 
such as  soft law  and voluntary pledges , in order  to move  the work on FFSR  forward  and achieve 
tangible results .  
5.4.  WEF underscored that 86% of FFS came in the form of consumption subsidies, often as tax 
exemptions for liquid fuels. As these benefits end ed up mostly with the wealthiest segments of 
society, FFS contribute d to inequality. WEF called on co-sponsors of FFSR  to come up with  concrete 
actions  and suggested improving transparency as a useful step  towards this goal .  
6  NEXT STEPS  
6.1.  The next meeting, whi ch would  focus on development and social issues associated with FFSR, 
would  be held in early 2023.  
 
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