Rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions, in accordance with national circumstances, including by restructuring taxation and phasing out those harmful subsidies, where they exist, to reflect their environmental impacts, taking fully into account the specific needs and conditions of developing countries and minimizing the possible adverse impacts on their development in a manner that protects the poor and the affected communities.
Amount of fossil-fuel subsidies per unit of GDP (production and consumption) and as a proportion of total national expenditure on fossil fuels.
SDG 12.c.1 measures the amount of fossil-fuel subsidies at the national, regional, and global level. The 2030 Agenda outlines bold, transformative steps to shift the world onto a sustainable and resilient path. Inefficient fossil fuel subsidies undermine the ability of governments to achieve key goals, such as reducing poverty, improving health, reaching gender equality, providing access to energy, and addressing climate change. While fossil fuel subsidies are sometimes advocated as a poverty-fighting measure, they often disproportionately benefit wealthier segments of the population. Reallocating fossil fuel subsidies effectively to other development strategies and social supports can help governments reach the SDGs. As a global and national indicator of fossil fuel subsidies, SDG 12.c.1 will enable comprehensive tracking of consumer and produce subsidy trends and serve as a guide for energy interventions that reinforce the 2030 Agenda.
To measure fossil fuel subsidies at the national, regional, and global level, UNEP recommends three sub-indicators for reporting on this indicator:
- Direct transfer of government funds;
- Induced transfers (i.e. price support);
- Tax expenditure, other revenue foregone, and underpricing of goods and services.
Countries should gradually phase out global datasets and develop national datasets that cover these sub-indicators, building on existing domestic statistical systems as much as possible. Nationally reported data would collectively provide a dataset that is grounded in national realities and allows for policy analysis at the national level. The SDG monitoring of fossil fuel subsidies will help catalyze fossil fuel subsidy removal and facilitate movement towards a sustainable future.