Unlocking the Potential to Phase Out Fossil Fuels

Photo by Galen Crout on Unsplash

In a world grappling with the urgent need to combat climate change, a startling statistic has emerged: just 36 fossil fuel companies are responsible for more than half of global greenhouse gas emissions. A recent study reveals that these corporations, many of them state-owned, continue to drive the climate crisis with little accountability.

While governments and individuals make efforts to cut emissions, the overwhelming influence of a few major players underscores the structural challenges in achieving meaningful climate action.

A Small Club with a Massive Impact

The Carbon Majors Database 2023 update highlights the disproportionate role of a few corporations in global emissions. Among the biggest polluters are companies like Saudi Aramco, ExxonMobil, and China’s state-owned enterprises.

In fact, state-owned entities dominate this group, with many of the top emitters controlled by governments. This concentration of emissions among a few players emphasises the need for targeted interventions at the corporate level to achieve meaningful climate action.

Action points for membership organisations:

• Transition away from fossil fuel reliance: Develop and implement strategies to prioritising renewable and low-carbon energy options.

• Adopt science-based emission reduction targets: Align organisational goals with frameworks like the Science Based Targets initiative (SBTi) for credible, measurable progress.

• Mitigate undue corporate influence: For organisations within the oil and gas sector, establish policies and governance frameworks to limit the sway of major corporations over your agenda to curb excessive lobbying.

The Financial Engine Behind Fossil Fuel Emissions

Despite global recognition of the climate crisis, fossil fuel subsidies remain alarmingly high. A 2025 analysis by Dr. Christiaan De Beukelaer reveals that when accounting for both direct subsidies and unpriced externalities, global fossil fuel subsidies amount to approximately $7 trillion annually ($1.5 trillion in explicit subsidies) - roughly equating to $190 per tonne of CO₂ emitted ($38 in explicit subsidies). This figure stands in stark contrast to the European Union’s carbon pricing, which is around €80 per tonne and falling.

These subsidies are a combination taxpayer-funded incentives  that keep fossil fuel prices artificially low, making it harder for clean energy sources to compete, and what the International Monetary Fund refers to as "implicit subsidies" which are the financial costs associated to fossil fuel use.

As a result, industries and consumers continue to rely on coal, oil, and gas - even when greener alternatives are available - thus perpetuating a destructive cycle.

The $190 per tonne figure is staggering - but once again, it includes externalities (social and environmental costs that are not always directly borne by governments in budgetary terms), not just explicit subsidies. Of this $190 per tonne, roughly 20% would actually be explicit subsidies according to the IMF - roughly $38 per tCO2e are actually spent in taxpayer money.

This still is a high price, and reveals a stark economic paradox - we are spending at least a quarter of what it would require to solve our problem, to create it in the first place. Talk about inefficiency!

Why a quarter? Well, if $1.5 trillion explicitly spent on subsidies were redirected to direct carbon removal for instance, it could remove a quarter of all annual global fossil fuel emissions - which are estimated to be in the range of 36–37 billion tonnes - using a low-cost (but high quality) technology such as biochar which costs $150/tCO2 (this example serves the purpose of illustration but it is important to note that such technologies cannot scale indefinitely or at any pace).

Even more importantly, a study by Glenk, Meier & Reichelstein shows that in the EU, the average cost for decarbonisation is likely in the 120€-146€/tCO2e (up to $158) range due to a carbon price of 146€ being enough to incentivise total decarbonisation in industry - $38 is just about a quarter of $158.

In other terms, for $1 spent to avoid or remove a tCO2e (with taxpayer or private money), we're spending at least $0.25 of taxpayer money to emit it.

This means that not only we're not spending that extra $0.25 on the solution - we're funding the problem with that $0.25, which is a double loss that is likely to end up costing a total of $0.50 per dollar spent.

And remember that we haven't included externalities in this calculation, nor have we included private investments.

Although this is a simplified calculation that doesn’t capture all technological and market complexities, it serves to illustrate the massive opportunity cost: every dollar used to subsidise fossil fuels is a dollar is spent on worsening the problem, rather than solving it.

Action points for membership organisations:

• Advocate for subsidy reform: Engage in policy dialogues to eliminate fossil fuel subsidies and promote the reallocation of funds toward sustainable energy initiatives and consumer subsidies for low carbon energy (heat pumps, low carbon electricity...). You can lobby for decarbonisation subsidies for the businesses you represent or the individuals you represent are involved with, and partner with other membership organisations in doing so.

• Support robust carbon pricing mechanisms: Lobby for carbon pricing policies that truly reflect the social and environmental costs of emissions, ensuring that funds are available for mitigation and removal efforts.

The Case for Fossil Fuel Reform

Implementing levies and taxes on major polluters presents a viable pathway to curbing emissions. De Beukelaer argues that, for instance, a shipping levy on greenhouse gas emissions could be a breakthrough measure, holding this largely untaxed sector accountable for its environmental impact.

With support from over fifty countries - representing 66% of the global shipping fleet - such measures could pave the way for broader fossil fuel subsidy reforms.

However, challenges remain, including legal obstacles like investor-state dispute settlement (ISDS) provisions that often deter governments from enacting stricter environmental policies.

Action points for membership organisations:

• Join global initiatives: Support frameworks such as the Fossil Fuel Non-Proliferation Treaty to collectively phase out fossil fuels and promote a just transition to renewables.

A Global Approach to Climate Justice

Ensuring a just transition away from fossil fuels requires a coordinated global effort. The 2025 report "If It’s Not Global, It’s Not Just" emphasises the need for global climate finance mechanisms that provide developing nations with the support necessary to transition to cleaner energy sources.

The reason behind that is that most subsidies are directed at consumers to help them afford energy, and many individuals in particular are at risk of fuel poverty. To tackle this challenge requires a global coordination of funding reallocation.

Wealthy, high-emission countries must shoulder a greater share of the responsibility, both in reducing emissions and in funding mitigation efforts worldwide, supporting the development of cheap and low-carbon energy sources and infrastructure as the only ones - ultimately keeping fossil fuels in the ground.

Action points for membership organisations:

• Support international treaties: Actively participate in and promote efforts like the Fossil Fuel Treaty that seek to create a fair, enforceable framework for reducing emissions globally.

• Advocate for equitable global climate finance: Engage with international platforms to secure fair support for developing nations.

• Coordinate with other membership bodies to ensure sector-wide and global collaboration to support cheap low carbon infrastructure.

The Road Ahead: Ending Fossil Fuel Dependence

The science is clear: continued fossil fuel production and use will push the planet beyond safe climate limits. While individuals and communities are making efforts to reduce their carbon footprints, the real power to change the course of climate change lies with the corporations and governments that control fossil fuel production.

Phasing out fossil fuel subsidies, implementing carbon levies, and holding major polluters accountable must be top priorities.

The misallocation of resources - where billions are spent subsidising emissions rather than mitigating them - exemplifies an economic and moral failure. Redirecting these funds could accelerate the transition to renewable energy and significantly slow global warming.

The fossil fuel era is coming to an end; the only question is whether we act swiftly enough to avert the worst consequences of climate change.

Action points for membership organisations:

• Set ambitious net zero goals: Commit to a fossil-free future and develop clear roadmaps for achieving these targets.

• Build advocacy coalitions: Form alliances that amplify your voice in demanding rapid policy and market reforms.

• Hold policymakers accountable: Monitor and challenge government actions to ensure they align with robust climate commitments.

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