In 2023, developed countries spent $ 378 billion subsidising fossil fuels, surpassing their $300 billion climate finance commitment, highlighting the misdirection of funds amid climate challenges.

New Delhi: Developed countries spent $378 billion subsidising fossil fuels in 2023, surpassing the $ 300 billion they have collectively committed to provide annually to the developing world by 2035 to tackle climate change, according to the latest data.

An analysis by the International Institute for Sustainable Development (IISD) showed that government support for fossil fuels reached at least $ 1.5 trillion in 2023, the second-highest annual total on record, after 2022 when the Russia-Ukraine war triggered a global fossil fuel price crisis.

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The 10 largest subsidisers of fossil fuels in 2023 included Russia, Germany, Iran, China, Japan, India, Saudi Arabia, the Netherlands, France, and Indonesia.

The data revealed that 23 developed nations (Annex II countries) — mandated under the UN climate convention to provide climate finance to the developing world — spent $ 378 billion on fossil fuel subsidies.

At the UN climate conference in Baku, Azerbaijan, last month, these nations committed to providing $ 300 billion to developing countries by 2035 to help them tackle climate change — a far cry from the $1.3 trillion that the Global South needs annually to cope with the rapidly warming world.

India, Bolivia, Nigeria, and Malawi, speaking on behalf of a group of 45 least developed countries (LDCs), severely criticised the new climate finance package for the developing world.

India argued that $ 300 billion is insufficient to implement ambitious national climate plans known as Nationally Determined Contributions (NDCs) and pointed out that when adjusted for inflation, it falls short of the previous $ 100 billion goal agreed in 2009.

IISD researchers said developed countries spending $ 378 billion on fossil fuel subsidies shows that public funds are available but are being “directed in the wrong direction”.

They suggested that fiscal space freed up through fossil fuel subsidy reforms could be redirected to meet climate finance commitments.

Fossil fuels — coal, oil, and gas — are the largest contributors to climate change, accounting for over 75 per cent of global greenhouse gas emissions and nearly 90 per cent of all carbon dioxide emissions.

Although many governments have taken steps to reduce the carbon intensity of their economies, certain policies still encourage fossil fuel production and consumption.

Fossil fuel subsidies are a prime example of such policies.

A fossil fuel subsidy refers to a government intervention that provides benefits or preferences for fossil fuel production or consumption relative to alternatives.