Addressing the upcoming Q4 2026 European Commission framework on phasing out fossil fuel subsidies requires balancing climate ambition with legal feasibility, as measures mandating direct subsidy removal touch national fiscal policy and require unanimous Council approval. Following a previous high-level paper, this discussion paper puts forward two options.
As a highly ambitious benchmark, Option 1, the “Hard Deadline” approach, is proposed. It introduces a dedicated new regulation setting binding Union-wide phase-out timelines alongside targeted amendments to existing governance legislation. While providing maximum policy ambition and clarity, it carries a high risk of political gridlock due to the Council unanimity requirement.
In contrast, Option 2, “Stronger Planning and Reporting,” circumvents unanimity by relying on Qualified Majority Voting (QMV) to amend existing Governance and Implementing Regulations. This approach mandates, among others, the setting of national phase-out deadlines and a distinct tracking for fossil fuel subsidies separately from general energy subsidies.
