There is a strong consensus that fossil fuel subsidies (FS) obstruct the attainment of multiple sustainable development goals (SDGs) including poverty eradication (SDG1), global health (SDG3), gender equality (SDG5) and transition to affordable, reliable energy (SDG7) and sustainable consumption and production (SDG12).

Consequently, international organizations, NGOs, policymakers and academics are increasingly calling for the phase-out of inefficient FS as a critical part of efforts to meet ambitious global climate targets. Yet despite a recent increase in demand and the success of multiple countries at subsidy reform, FS have increased in many countries, including some of the world’s wealthiest and most advanced democracies. Globally, FS accounted for 6.8 percent of world GDP in 2020 and is expected to continue rising.

In particular, it is well documented that FS are detrimental for SDG 4: in general, countries that devote a large share of national income to FS tend to perform poorly in a range of educational outputs and outcomes. Part of the reason behind the negative relationship is that FS spending uses up resources that could be spent on education. Yet this incompatibility also reflects a lack of incentives for policymakers in fossil-rich countries to invest in skills development to support the growth of alternative – including greener and more productive – sectors to fossil industries.