Using the trade regime to phase out fossil fuel subsidies

Harro van Asselt, Tom Moerenhout and Cleo Verkuijl

Chapter 12 in Handbook on Trade Policy and Climate Change, 2022, pp 180-201 from Edward Elgar Publishing

Abstract: Fossil fuel subsidies constitute a burden for public finances and contribute to climate change and air pollution. Fossil fuel subsidies also distort trade, highlighting a possible role for international trade agreements in promoting fossil fuel subsidy reform. This chapter explores the extent to which WTO subsidy rules can be used to address fossil fuel subsidies. It first discusses the ways in which fossil fuel subsidies may impact on international trade. It then continues to analyse how fossil fuel subsidies are disciplined under WTO subsidy rules, focusing on the Agreement on Subsidies and Countervailing Measures. Finding that existing rules largely fail to capture fossil fuel subsidies due to legal and political barriers, the chapter discusses several options for WTO Members to better align subsidy rules with the clean energy transition, including strengthening transparency and creating new rules at the WTO, and tackling fossil fuel subsidies through plurilateral and regional trade agreements.

Keywords: Business and Management; Economics and Finance; Environment; Politics and Public Policy (search for similar items in EconPapers)
Date: 2022
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