WTO Members Discuss New
Approaches, Share Experiences on Reforming Fossil Fuel Subsidies
At a meeting on 16 February, WTO
members participating in the Fossil Fuel Subsidy Reform (FFSR) initiative
continued exploring new approaches to reforming fossil fuel subsidies and
examining the effects of subsidies provided to emissions-intensive sectors.
Members reaffirmed the importance of enhancing transparency through greater
information and experience sharing.
WTO Fossil Fuel Subsidy Reform
Discussions (Feb 2026)
Key Highlights
·
Meeting held on 16 Feb 2026 under the FFSR initiative.
·
Focus: new approaches to reforming fossil fuel subsidies, especially in emissions-intensive
sectors.
·
Members reaffirmed importance of transparency, information sharing,
and reform pathways.
Progress Review
·
Coordinator (New Zealand) reviewed progress since MC13 (2024) across three
pillars:
o Transparency via Trade Policy Review.
o Tools for scaling down crisis-support
measures.
o Addressing harmful subsidies
with reform guidelines.
National Experiences
·
Colombia: Gradual reduction of fossil fuel funding while maintaining fiscal
stability.
o Introduced clean energy incentives.
o Reported fiscal savings and reduced
structural imbalances.
Upcoming Conference
·
Santa Marta, Colombia (24–29 April 2026): First Conference on Transitioning
Away from Fossil Fuels.
o Aim: mobilize high-level engagement,
accelerate multilateral efforts.
o Participants: governments, private
sector, think tanks, NGOs.
o Focus: enabling pathways, policy
options, finance incentives, cooperation.
Legal & Moral Dimensions
·
Vanuatu: Referenced ICJ Advisory Opinion on climate obligations.
o Argued subsidies distort markets and
drive emissions.
o Called for rapid, transparent,
equitable phase-out.
Research & Frameworks
·
IISD study: G20 phase-out framework with:
o Time-bound national plans.
o Categorization: quick removals,
sequenced reforms, limited exemptions.
o Sequencing approach shown effective in
selected G20 cases.
WTO Secretariat Analysis
·
Updated overview of subsidies in steel, aluminium, cement, chemicals,
plastics.
·
Highlighted negative spillovers:
o Overcapacity.
o Market distortions.
o Reduced incentives for green
transition.
Next Steps
·
New Zealand: thanked members, noted preparations for MC14 in Cameroon (March
2026).
·
Ministerial statement and deliverables under consideration.
Initiative Overview
·
FFSR seeks rationalization, phasing-out, or elimination of
harmful fossil fuel subsidies.
·
Encourages information sharing and reform pathways.
·
Currently 48 members participating as co-sponsors.
[ABS News Service/19.02.2026]
New Zealand, the coordinator
of the FFSR initiative, took stock of the progress made over the past two years
across the three pillars of the
FFSR work programme identified at the last
Ministerial Conference (MC13) in 2024. These include enhancing transparency
through the continued Trade Policy Review exercise, sharing tools and methods
on effectively scaling down crisis-support measures, and addressing the most harmful
fossil fuel subsidies with a view to developing reform guidelines. The
coordinator stressed the need to continue sharing insights on pathways to
reform, in particular regarding subsidies that are provided to
emissions-intensive sectors.
Colombia shared its national
experience in structurally reducing public funding for fossil fuels through
gradual steps while maintaining macroeconomic stability and fiscal
sustainability. The country has also introduced multiple policy incentives to
help industries and the public transition from fossil fuels to clean energy.
Colombia reported measurable fiscal savings and a substantial reduction in
structural imbalances.
The Netherlands - on behalf of
the European Union - and Colombia outlined preparations for the upcoming
"First Conference on Transitioning Away from Fossil Fuels," scheduled
for 24-29 April 2026 in Santa Marta, Colombia. The conference aims to mobilize
high-level engagement and accelerate the implementation of existing
multilateral efforts on fossil fuel subsidy reform, including the FFSR
initiative at the WTO. It will bring together public and private sector actors,
think tanks and NGOs to identify "enabling pathways" for fossil fuel
subsidy reform, providing practical options on policy, finance incentives and
cooperation that can be implemented to advance the energy transition.
Vanuatu made a
statement on the new International Court of Justice (ICJ)'s Advisory
Opinion on "Obligations of States in respect of Climate Change",
focusing on the fossil fuel subsidy reform aspects of the ICJ Opinion.
Vanuatu argued that fossil fuel subsidies not only distort markets, but
also drive emissions, raising serious legal and moral concerns, particularly
for vulnerable states facing existential climate impacts such as rises in sea
level and intensifying storms. It called on WTO members to commit to a rapid,
transparent and equitable phase-out of fossil fuel subsidies.
The International Institute
for Sustainable Development (IISD) presented its
study on how G20 countries can best
implement the proposed framework to successfully phase out fossil fuel
subsidies. The framework calls for time-bound national phase-out plans that
categorize subsidies into quick removals, strategically sequenced reforms, and
limited exemptions for narrowly targeted sectors, helping governments move from
pledges to practical action. Studies of selected G20 countries show that a
sequencing approach with tailored timelines can effectively deliver on reform
commitments.
The WTO Secretariat provided
an updated
analytical overview of fossil fuel subsidies in
high-emitting, energy-intensive sectors to support discussions under the FFSR
initiative, in line with the MC13 Ministerial Statement on fossil fuel
subsidies. The paper compiles existing studies (such as those by the Organisation
for Economic Co-operation and Development and Eunomia) to examine how subsidies
benefit high-emitting sectors - particularly steel, aluminium, cement,
chemicals and plastics - and assesses their trade and environmental impacts.
The negative spillovers highlighted include overcapacity, market distortions,
and reduced incentives for the green transition.
New Zealand thanked members
and stakeholders for the rich discussion. Looking ahead, it noted that the
co-sponsors of the FFSR initiative are finalizing preparations for the upcoming
14th Ministerial Conference in March in Cameroon, with a ministerial statement
and selected deliverables under consideration.
The FFSR initiative seeks to
achieve the rationalization, phasing-out or elimination of harmful fossil fuel
subsidies through the use of existing mechanisms or the development of new
pathways to reform. It encourages WTO members to share information and experiences
to advance discussions at the WTO. Forty-eight members are currently
participating in the initiative as co-sponsors.