Fossil fuel subsidies constitute a burden for public finances and contribute to climate change and air pollution. Fossil fuel subsidies also distort trade, highlighting a possible role for international trade agreements in promoting fossil fuel subsidy reform. This chapter explores the extent to which WTO subsidy rules can be used to address fossil fuel subsidies. It first discusses the ways in which fossil fuel subsidies may impact on international trade. It then continues to analyse how fossil fuel subsidies are disciplined under WTO subsidy rules, focusing on the Agreement on Subsidies and Countervailing Measures. Finding that existing rules largely fail to capture fossil fuel subsidies due to legal and political barriers, the chapter discusses several options for WTO Members to better align subsidy rules with the clean energy transition, including strengthening transparency and creating new rules at the WTO, and tackling fossil fuel subsidies through plurilateral and regional trade agreements.
A significant gap exists globally between the financing needed and the current level of spending to meet net-zero goals.
Latin American and Caribbean (LAC) countries are among the most vulnerable in the world to climate change, experiencing at least one extreme weather-related event per country, on average, every three years over the past two decades.
The Renewable Fuel Standard (RFS) mandates the blending of biofuels into the US transportation fuel mix.