Remove subsidies for fossil fuels and other environmentally harmful practices

An early priority in the efforts to phase out carbon-intensive activities is to remove subsidies for fossil fuels and other environmentally harmful practices. In 2022, G-20 governments and state-owned enterprises provided a record $1.3 trillion in support to coal, natural gas, oil and fossil-fuel power, according to BNEF analysis. Of this amount, 65% went to consumers and the overall sector, while 35% went to producers and power generators, many of which saw their profits skyrocket that year. Support for fossil fuels slows down the climate transition by distorting energy prices and encouraging potentially wasteful use and production of fossil fuels. It also leads to investment in long-lived, emissions-intensive equipment and infrastructure. Even subsidies intended to help low-income households and other vulnerable consumers tend to disproportionately benefit the wealthy because these households tend to consume more fuel per person. Subsidy changes can be contentious, but identifying distortive fossil-fuel support and issuing a reform plan with a clear timeline is a good first step.