The year 2015 should prove to be a momentous one in the battle against climate change. Global leaders and policymakers will meet in Paris in December with a social, economic, political, environmental, and moral imperative to reach an ambitious and actionable agreement at COP 21. Meeting the challenge of climate change requires us to achieve zero net emissions from fossil fuels globally by the end of this century. Without zero net CO2 emissions, temperatures will just keep rising.

The combustion of fossil fuels is a leading contributor to climate change, and many countries have already taken steps to reduce their emissions of CO2 and other pollutants. Some policies remain, however, that encourage more production and use of fossil fuels than would otherwise be the case. In so doing, these policies increase emissions and make mitigation more costly than necessary. Fossilfuel subsidies are one such policy.

The discussion in this first chapter sets the stage for better understanding the present report and the associated database. To do this, Section 1.1 looks at the reasons why fossil-fuel subsidies are generally considered to be harmful for the economy and the environment. Section 1.2 then shows how this helps explain the recent emergence of a consensus for reforming fossil-fuel subsidies, and how this growing consensus has led to a number of policy initiatives internationally and domestically. Section 1.3 then concludes by placing the OECD Inventory onto that broader stage, emphasising the important role it plays in ongoing discussions of energy policies and their reform.

This second chapter introduces readers to the new Inventory of support measures for fossil fuels that the OECD has made available on its website in the form of an online database. Section 2.1 briefly sketches the structure of the database and its coverage, including what the OECD considers to be “support”. Section 2.2 explains how the OECD collected the primary data that were then processed and transformed before they were eventually assembled in the database. In particular, the section describes the conceptual framework that the OECD uses to organise the information collected. Last, section 2.3 delves into the caveats that apply to tax-expenditure estimates since these account for more than half of all the measures the database contains.

This final chapter uses the data compiled for the 2015 edition of the OECD Inventory to derive a few results and indicators on the magnitude and nature of support for fossil fuels in OECD countries and the selected partner economies. The first section looks at broad trends in aggregate support and relates the observed evolution to recent policy changes and reforms. Section 3.2 looks at the characteristics of individual support measures to better understand the way support is provided to producers and consumers. Section 3.3 puts consumer support in perspective by assessing it in the broader context of countries’ energy taxation. Finally, section 3.4 concludes by suggesting that further action be taken by policy makers to continue reforming measures that support fossil fuels.