Global fossil fuel subsidies deepen Africa’s energy vulnerability

The world’s biggest fossil fuel importers spent over US$314billion subsidising fossil fuels in 2024, reinforcing global energy volatility at a time when countries like Ghana are already grappling with rising fuel costs, inflation and currency pressures.

Data compiled by the International Institute for Sustainable Development (IISD) shows that nine of the world’s top fossil fuel importers spent US$313.6billion on subsidies in 2024, more than 2.5 times the US$121.7billion allocated to renewable energy.

China led global fossil fuel subsidies with US$86.7billion followed by the European Union (EU) at US$73billion and India at US$67.5billion, with the top-three accounting for 72 percent of total spending. Japan and the United Kingdom (UK) recorded US$45.1billion and US$23.5billion respectively.

On renewable energy support, the EU led with US$47.7billion though its fossil fuel spending remained nearly two-thirds higher. Japan’s clean energy subsidies of US$40.8billion nearly matched its fossil fuel support, while Mexico recorded the most extreme imbalance with fossil fuels receiving more than 300 times the public support allocated to renewables.

Experts say this imbalance is locking economies into volatile energy systems, amplifying the impact of geopolitical disruptions such as tensions in the Strait of Hormuz and driving up costs for countries with limited control over global pricing.

For African economies, the consequences are immediate. In Ghana, where fuel prices feed directly into transport fares, food costs and inflation, global energy shocks quickly translate into domestic economic pressure – widening the gap between energy transition commitments and economic reality.

In a statement, IISD said fossil fuel subsidies keep economies tied to systems that are “more expensive, risky and volatile” than those based on renewables, batteries and electrification, adding that such dependence is a key driver of recurring energy cost crises.

It warned that while governments often justify subsidies as a form of relief for households, the benefits are disproportionately skewed. In middle-income countries, the top 20 percent of earners receive up to 11 times more in subsidies than the lowest 20 percent.

“Governments are right to act: households are struggling and the need to provide relief is real. But how they respond matters,” the statement noted, advocating targetted cash transfers as a more effective alternative to blanket fuel subsidies.

“The data show these economies are paying twice over – once for the subsidies and again when price shocks hit,” said Natalie Jones, senior policy advisor at IISD, adding that renewables and electrification offer a more stable and cost-effective pathway.

Emerging evidence suggests that sustained investment in clean energy can significantly reduce exposure to such shocks. Countries such as Germany and Türkiye have demonstrated measurable gains from prioritising renewable energy over fossil fuel dependence.

Germany’s long-standing support for renewables delivered an estimated €25billion in avoided gas import costs for 2022, while early 2026 figures indicate continued savings. Türkiye, which directed US$8.5billion to renewables in 2024 – more than three times its fossil fuel subsidies – has also recorded substantial reductions in gas import costs.

According to IISD estimates, Türkiye’s renewable energy programmes saved US$12.9billion in avoided gas imports between 2022 and 2025, with every US$100 of public support generating US$265 in savings at the height of 2022’s energy crisis.

“Countries that prioritised clean energy investment didn’t just advance climate goals – they strengthened their energy security,” said IISD policy advisor Indira Urazova.

As global oil markets remain under pressure following disruptions linked to tensions in the Middle East, analysts warn that continued reliance on fossil fuel subsidies risks perpetuating a familiar cycle of price shocks, emergency interventions and fiscal strain.

For African economies, the stakes are particularly high. Without a shift in both global and domestic spending priorities, countries like Ghana may remain exposed to recurring energy crises driven by decisions beyond their control.