Fossil fuel subsidies (SDG 12.c.1)

Reducing fossil fuel subsidies is essential for promoting a green economy and reducing carbon emissions. UNEP has developed a methodology to measure fossil fuel subsidies so as to provide guidance to UN member countries reporting on this indicator. In order to measure fossil fuel subsidies at the national, regional and global level, three sub-indicators are recommended for reporting on this indicator: 1) direct transfer of government funds; 2) induced transfers (price support); and as an optional sub-indicator 3) tax expenditure, other revenue foregone, and under-pricing of goods and services. Reducing fossil fuel subsidies facilitates the transition to a circular economy.

UNEP with the IISD Global Subsidies Initiative (GSI) and OECD published a manual on measuring fossil fuels in the context of the SDGs in 2018. Fossil fuels subsidy reform is a key priority for the G8 and for UNEP. The manual was developed through an expert consultation and pilot testing in Zambia, Egypt and India.

It is recommended to follow a phased approach, moving gradually from global to national datasets. This should build as much as possible on existing statistical systems. To facilitate the reporting by national governments and the harmonisation with and integration into existing statistical systems, it is recommended to develop practical guidance notes on how to measure and monitor specific types of subsidies in the existing statistical frameworks.

UNEP is working to collect data on fossil fuel subsidies from countries. Currently only globally available estimates are included in the SDGs.

Contact: UNEP: Joy Kim; GSI: Peter Wooders; OECD: Nathalie Girouard