In 2023, developed countries spent $378 billion subsidizing fossil fuels, a sum greater than the $300 billion they have collectively pledged to provide annually by 2035 to help the developing world address climate change, according to recent data. An analysis by the International Institute for Sustainable Development (IISD) revealed that government support for fossil fuels amounted to at least $1.5 trillion in 2023, marking the second-highest total on record after 2022, when the Russia-Ukraine war sparked a global fossil fuel price crisis.

The ten largest subsidizers of fossil fuels in 2023 included Russia, Germany, Iran, China, Japan, India, Saudi Arabia, the Netherlands, France, and Indonesia.

The data indicated that 23 developed nations (Annex II countries), which are obligated under the UN climate convention to provide climate finance to developing countries, spent $378 billion on fossil fuel subsidies. At the UN climate conference in Baku, Azerbaijan, last month, these nations committed to providing $300 billion to developing countries by 2035 to support their efforts against climate change. This commitment was significantly lower than the $1.3 trillion that the Global South requires annually to cope with the rapidly warming world.

India, Bolivia, Nigeria, and Malawi, speaking on behalf of 45 least developed countries (LDCs), sharply criticised the new climate finance package for developing nations. India argued that $300 billion was insufficient to fulfill the ambitious Nationally Determined Contributions (NDCs) of these countries and noted that, when adjusted for inflation, it fell short of the previous $100 billion target set in 2009.

IISD researchers pointed out that the $378 billion spent by developed countries on fossil fuel subsidies demonstrates that public funds are available but are being "directed in the wrong direction." They suggested that the fiscal space created by reforming fossil fuel subsidies could be redirected to meet climate finance commitments.

Fossil fuels—coal, oil, and gas—are the largest contributors to climate change, responsible for more than 75 per cent of global greenhouse gas emissions and nearly 90 per cent of all carbon dioxide emissions.