Berlin, Germany – The G7 group of industrialised nations has overshot self-imposed targets to reduce carbon emissions by 2025, instead subsidising climate-damaging fossil fuels by record amounts, a new report shows.[1]
The G7, which includes Canada, France, Germany, Italy, Japan, the UK and the US plus the EU, pledged in 2016 that it would reduce harmful fossil fuel subsidies by 2025 – but tax subsidies for coal, oil and gas in these countries have increased by 15 percent since, to a total of 1.36 trillion US dollars in 2023, according to an analysis of International Monetary Fund (IMF) figures.[2]
The report, commissioned by Greenpeace Germany and carried out by the Forum for an Ecological and Social Market Economy (FöS) shows Italy as the worst offender, raising its subsidies by 166% in the period from 2016 to 2023. Germany was second, rising by 49%.
Greenpeace International Climate & Energy Programme Lead Virag Kaufer said:
"The G7 countries, some of the richest and most powerful nations on Earth, gave themselves almost a decade to take steps towards the 'elimination' of fossil fuel subsidies by 2025. It's now 2025 – the year has started with devastating climate calamities – and they aren't just missing that target; they've increased the public spending on climate-wrecking fuels.
"With this year already bringing record fire damage in the USA, other climate-driven disasters, and the latest slew of multi-billion profits for fossil fuel corporations, governments need to get a grip on public spending and urgently divert it from fossil fuel incentives towards a just and sustainable transition."
Of the seven nations, only Canada has slightly reduced its fossil fuel subsidies since 2016 (minus 11%). All other countries have increased their climate-damaging subsidies. According to the analysis based on IMF figures, the total amount spent on fossil fuel subsidies in 2023 was highest in the USA ($790 billion), followed by Japan ($269 billion) and Germany ($114 billion).
The rise in energy prices following the Russian invasion of Ukraine has significantly increased subsidies for coal, oil and gas in most G7 countries. In Germany, measures such as gas and electricity price freezes, lower VAT rates on gas and far-reaching relief for industry accounted for 38% of the total fossil fuel subsidies in 2023 , according to the IMF. Some of these measures, originally announced as temporary, are still in place today.
Greenpeace Germany energy expert Sophia van Vügt said:
"Germany can no longer afford to squander billions in tax revenue to subsidise company cars and air travel. We need these funds now to modernise the country in a socially just way for everyone.
"With its fossil-based subsidy policy, the German government is creating false incentives that are harmful to the climate. The world's third-largest economy would be better off relieving the burden on people with a socially staggered climate tax instead of financing climate-damaging behaviour with further energy subsidies."
The extremely climate-damaging expansion of liquefied natural gas (LNG) plants was not taken into account in the study due to a lack of data.
