World Trade Organization (WTO) members last week agreed to push ahead with reforms to fossil fuel subsidies, which reached record highs of over US$1.4tn in 2022 during the global energy crisis.

At the WTO ministerial conference in Abu Dhabi, members unveiled plans to “achieve the rationalisation, phase out or elimination of harmful fossil fuel subsidies” via greater transparency, measures to rollback temporary fossil fuel support and the identification of the most damaging subsidies.

The 48-strong Fossil Fuel Subsidy Reform initiative (FFSRI) is co-ordinated by New Zealand and counts Chile, Colombia, the EU and the UK among its members.

Fossil fuel subsidy reform represents a vital means of meeting the Paris Agreement objectives and freeing up government funds that can support the green transition, the initiative says in a statement.

“Subsidies that artificially lower the price of fossil fuels, such as oil, gas, and coal, exacerbate climate change, cause toxic air pollution, are often not well targeted at the most vulnerable, and represent a sizeable fiscal burden for governments,” it says.

Members agreed to improve the exchange of information on fossil fuel subsidies and on subsidy reform efforts, including drafting sample questions members can include in their trade policy reviews.

Oil, gas and coal subsidies soared in response to the energy crisis, almost doubling in 2022 as governments strove to shore up energy provisions in the wake of Russia’s invasion of Ukraine.

The initiative says it will put together a paper on the review, evolution and removal of such crisis support measures, as well as identify subsidies most harmful to trade and the environment.

“Fossil fuel subsidies distort global trade in ways that are unfair and unsustainable,” Todd McClay, New Zealand minister for trade, said at a press event for the FFSRI.

“We want to find a way to tackle these distortions to ensure that the benefits of trade are spread fairly while improving our prospects of mitigating climate change.”