This swift increase was driven by the price volatility and energy crisis caused by Russia’s war in Ukraine. European and other advanced economies spent about $500 billion to try to reduce consumer energy bills. The IEA has warned that not all of these expenditures are necessarily factored into their 2022 data on fossil fuel subsidies, as consumers paid rates close to the market value. Unless there’s a gap between the retail price and the market price, the IEA does not count it as a subsidy, regardless of what governments paid out. As a result, the total subsidies in 2022 could be even higher if those expenditures are factored in.


The IEA also warned that the subsidies were often not targeted to benefit the poor, who are hit hardest by high energy bills. The increase in subsidies in 2022, according to the IEA, fed into the same dynamics as previous years. Subsidies benefited richer segments of the population, even as they diminished incentives to use energy efficiently or switch away from fossil fuels.

Aside from subsidies directed towards consumers, the IEA tracked considerable government spending for producers—on recapitalization, debt suspension, and support for energy companies or carbon-intensive industries. Peru extended $1 billion to its state-owned oil company Petroperú. Several EU countries, including France, Italy and the Netherlands, announced plans to restart coal plants, and Germany extended credit lines to Uniper, a gas importer. Other long-standing subsidies include the Indian government’s support of the coal industry (pdf), Saudi Arabia’s investments (pdf) in state-owned Saudi Aramco, as well subsidies for the Canadian, US and European oil industries.


One way that countries are trying to ignore subsidies is by deleting mentions of it in climate change-related documents. During Saudi Arabia’s G20 presidency in 2020, it requested that all mentions of subsidies be removed (pdf) from briefings and policy proposals, according to the International Institute of Sustainable Development. And after the release of the IPCC report this week, the climate journalist Ajit Naranjan pointed out on Twitter that China, Saudi Arabia, Iran, and Egypt—some of the world’s top subsidizers—called for mentions of “subsidies” to be deleted from discussions of how to reduce consumption-based emissions.

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