The latest Study on energy subsidies and other government interventions in the European Union (2024) has recently been published. The report covers energy subsidies in the broad sense, including fossil and renewable, in various forms. The Stop Fossil Subsidies campaign notes a marginal improvement in the amount of fossil fuel subsidies (FFS) disbursed in the EU. Despite pledges committing to more transparency by Commissioner Hoekstra, serious transparency issues remain.
Fossil fuel subsidies at €111 billion in 2023
According to the report, FFS more than doubled in 2022, reaching €136 billion, up from an average of €59 billion between 2015 and 2020, mainly due to temporary measures introduced during the cost of living crisis. In 2023, subsidies remained high at over €111 billion, as some of these measures, such as regulated prices and tax reductions, were extended. With the price crisis largely over by August 2024, most temporary subsidies are expected to be phased out by the end of the year. Therefore, the authors expect that a next edition of the report will likely provide clearer insights into long-term FFS trends.
On top of this FFS estimate, the estimated foregone revenue from the free allocation of allowances under the EU ETS amounts to €45.5 billion in 2023.
In 2023, the majority of all energy subsidies (EUR 218 billion or 62% of the total) were assessed as environmentally not harmful. The total amount of environmentally harmful energy subsidies in 2023 amounted to EUR 136 billion (or 38%).
Almost half of fossil fuel subsidies have no phase out date
The authors, naively or at best optimistically, state that as of August 2024, 43% of fossil fuel subsidies (€48 billion) are scheduled to end by 2026, while another 9% (€10 billion) are set to phase out between 2026 and 2030. However, the remaining 48% (€53 billion) either have no specified end date or are planned to continue beyond 2030.
Methodological issues
Despite the WTO explicitly defining degressive tax rates as a form of subsidy, most EU countries do not classify them as fossil fuel subsidies—except for the Netherlands. The report itself acknowledges that these tax mechanisms are excluded from the main subsidy inventory, arguing that they reflect the structure of the tax system rather than a direct subsidy. To the reader this raises a critical question: how can the European Commission claim to adhere to WTO definitions while selectively disregarding them in its assessment of fossil fuel subsidies? Notably, FFS estimates in this report greatly differ from OECD data explicitly based on WTO definitions, which raises serious questions on the validity of the figures reported here.
Transparency remains a serious problem
A recurring challenge the authors say to have encountered is the lack of transparency or, more specifically, the inaccessible presentation of available data. Moreover, they argue that the absence of information on FFS end-dates impedes the ability to assess whether the EU27 is on track with phasing out FFS consistent with the ambition of limiting global warming to 1.5°C, and as mandated by the 8th EAP.
Compared to the previous edition, the Stop Fossil Subsidies campaign appreciates the publication of the country data control and observations and country factsheets. However, we deeply regret to see that the Subsidy Inventory, used as the basis of the study, has once again not been made public. Last year, the Stop Fossil Subsidies campaign sent a successful transparency request to make the inventory and country factsheets fully public. Our campaign will submit yet another transparency request.
We reiterate our questions to the European Commission and Commissioners Hoekstra and Jørgensen on how the EU is expected to phase out FFS when even the most basic transparency steps are not performed.
As detailed in our open letter, we demand the European Commission to:
1. Set a timeline for the phase out of fossil fuel subsidies by 2025
2. Adopt comprehensive methodological guidance for member states
3. Adopt a framework for transparency and accountability
