STOP Fossil Fuel SUBSIDIES

➡️ SUBSIDISING OUR OWN DESTRUCTION – End the Billion Pound Fossil Fuel Crutch

The UK fossil fuel industry has received substantial government support and tax breaks for decades. Recent estimates put the value of UK subsidies to prop up oil, gas, and coal production at approximately £17.5 billion per year. Financial support is at its highest level since 2016.

During the COP29 climate conference in 2024, the UK joined the Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS). Not only has this initiative failed to make any progress, but in a testament to its lack of commitment, UK subsidies have actually increased.

Governmental support for the fossil fuel industry completely undermines net-zero targets, the energy transition, the Sustainable Development Goals, and the best interests of the British public.

Jump straight to our resources on ➡️ Fossil Fuel Subsidies

Explore our comprehensive guides on -

• The Fossil Fuel Industry

• Fossil Fuel Divestment

• The Climate Crisis

It is no secret that the UK, compared with major European nations, spends the least on low-carbon energy and climate action.

Research by the Climate Change Committee estimates that, for the UK to reach Net Zero by 2050, the cost would be less than 1% of GDP annually – an amount significantly lower than the cost of subsidising our costly, dirty, and deadly fossil fuel industry.

Not only is UK climate action weak, but they are actively stalling it by propping up industries that cause the largest greenhouse gas emissions. By increasing subsidies year on year, we are heading in the total wrong direction.

"For every $1 spent to support renewable energy, another $6 are spent on fossil fuel subsidy and only 8 per cent of the money spent on fossil-fuel consumption subsidies reaches the poorest 20 per cent." - IEA, World Energy Outlook 2015.

Subsidies Cannot Solve the Energy Crisis

In 2022, global fossil fuel subsidies reached $7 trillion, equivalent to 7.1% of GDP. Following the rise in energy prices due to the Russian invasion of Ukraine, subsidies have been on an upward trend to compensate for the increasingly inefficient industry. The 2022 figure is a $2 trillion increase since 2020. Without serious reform, subsidies are expected to reach to $8.2 trillion by 2030.

Subsidies come in two forms – explicit and implicit. Explicit subsidies occur when the retail price to consumers is below the production cost, including infrastructure and distribution costs. In the case of oil, which can be sold internationally, explicit subsidies also cover the costs of consuming the product domestically rather than selling it abroad.

Implicit subsidies occur when the retail price fails to reflect external costs, such as the industry's contribution to climate change through greenhouse gas emissions, health impacts, air pollution, the release of harmful pollutants, and even traffic congestion.

The social, environmental, and production costs of fossil fuels are always far higher than the cost at which they can be sold, making the whole fossil fuel industry little more than a farce.

Due to escalating costs, subsidies protect consumers by artificially keeping the price of coal, oil, and gas low, but they carry a heavy toll -

• Overconsumption: Lowering the price of coal, oil, and gas encourages wasteful consumption, driving up emissions and accelerating climate change.

• Drains government budgets: Vast amounts of taxpayer money are diverted from social services such as healthcare, education, social care, and infrastructure.

• Skewing of the market: With the availability of cheap fossil fuels, investment into the renewable sector is diminished.

• Energy Insecurity: Subsidies promote fossil fuel dependence, locking us into an unsustainable future.

• Ecological damage and climate consequences: Funding fossil fuel exploration, production, and distribution is in direct opposition to global climate goals.

Benefits of Scrapping Fossil Fuel Subsidies

Removing subsidies would directly reduce global CO2 emissions by an estimated 5% by 2030. Without them, the artificial price of fossil fuels would no longer exist, and renewable energies such as wind and solar power would become much more attractive options to investors and consumers.

In the UK, many oil and gas projects would become economically unviable, and the North Sea industry decline would be accelerated dramatically reducing our contribution to global emissions.

The billions of pounds saved could be redirected towards clean energy technologies and infrastructure, and also supporting the most vulnerable during the transition, especially those struggling with their energy bills.

The controversial Rosebank oil field, located 80 miles west of the Shetland Islands, is the UK's biggest undeveloped oil and gas field. It is estimated to hold 300 to 500 million barrels of oil. If it gets the greenlight, billions in taxpayer subsidies would be handed over in tax breaks to its owners, the Norwegian giant Equinor. As the oil will be exported, it will not lower UK fuel bills or help to safeguard energy security.

The "emissions from this one UK field would be more than those created by the 700 million people in the world's poorest countries in a year" - Stop Rosebank

If these subsidies were scrapped, developers would most likely halt development as they would have to cover the remaining 91% of development costs, making the project completely unviable.

Other benefits of a fossil fuel subsidy phaseout include:

• Improved public health

• Enhanced energy security

• Long-term job creation and economic growth

• More equitable distribution of costs and benefits across society

• Increased competition and innovation in the renewable sector

The Path to Subsidy Reform & Phaseout

"The UK has the biggest fossil fuel subsidies of the whole of the EU" - European Commission report, 2019

If we have any chance of hitting our net-zero goals, securing our energy future, improving public health, and funding our social sectors, we simply must commit to a phaseout of fossil fuel industry subsidies, tax relief, and the closure of all loopholes in overseas finance supporting the industry.

Several countries have already removed explicit subsidies and begun implementing taxes and other measures to cover external costs. Indonesia has introduced three reforms since 1997, resulting in a 10.6% saving in public expenditures. India has slashed subsidies by 85% since 2013 and has since tripled public investments in renewable energy.

Additionally, Morocco, Saudi Arabia, and Ukraine have phased out explicit subsidies and Bangladesh and Sri Lanka have both introduced plans for a gradual phaseout.

In the latest round of National Determined Contributions (NDCs), which were announced in 2024/25, only 9 countries included subsidy reduction or reform. Of all the G7 and G20 countries, not one mentioned subsidies at all.

We must hold the UK accountable to the Glasgow Climate Pact, the Paris Agreement, the G7 and G20 Commitments, COFFIS, and Friends of Fossil Fuel Subsidy Reform. Signatures don't mean anything without meaningful action.

The G7 countries, disregarding even their own targets to eliminate inefficient subsidies, continue to siphon record amounts of money into them. Tax subsidies for coal, oil and gas in the G7 have increased by 15% since they first set this goal. This phenomenon is not just a UK issue.

The main obstacle is political.

There must be a clear pathway to end negative financial flows into fossil fuels, one that incorporates tax reliefs, subsidies, loopholes, and investments. Choosing not to tax something equates to subsidising it; convincing us otherwise is just clever greenwashing propaganda.

UK energy industry profits surge past £125 billion, while 12 million households live in fuel poverty.

The subsidies must end.

Fossil fuel products must be priced accordingly. Big Oil must pay for the damage it is causing to people, the planet, and the fragile balance of our ecosystems and biodiversity. The government must end its complicity.

Author: Rachael Mellor, 26.01.26 licensed under CC BY-SA 4.0

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