A new UNDP report indicates that global fossil fuel subsidies will likely top $1 trillion in 2024, as nations exhaust fiscal resources to combat the ongoing energy price shock.
The United Nations Development Programme report highlights that current energy prices are driving global fossil fuel subsidies to exceed $1 trillion, indicating sustained high demand and price levels. The report warns that governments are reaching a fiscal breaking point, which may force a reduction in price caps or tax relief, potentially increasing the volatility of crude oil prices as market mechanisms are allowed to function more freely.
Subsidies are rising due to the recent oil price shock, forcing governments to spend more to shield populations from energy and food price hikes.
The primary risk is that many governments are running out of fiscal resources to sustain current fuel tax reductions and price caps.
The United Nations warns that global fossil fuel subsidies could surpass $1 trillion this year as energy prices remain elevated. Many governments are nearing a fiscal breaking point, struggling to maintain price caps and tax reductions designed to shield vulnerable populations from inflation.
Subsidies are rising as governments attempt to shield consumers from the impact of the current global oil price shock and broader energy inflation.
The UN warns that many governments are running out of fiscal space to sustain these subsidies, potentially leading to a breaking point in social protection efforts.