Go to target 12.b
Target 12.c: Remove market distortions that encourage wasteful consumption
Rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions, in accordance with national circumstances, including by restructuring taxation and phasing out those harmful subsidies, where they exist, to reflect their environmental impacts, taking fully into account the specific needs and conditions of developing countries and minimizing the possible adverse impacts on their development in a manner that protects the poor and the affected Communities.
Indicators
12.c.1: Fossil-fuel subsidies
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Definition
The indicator follows the UN definition and calculates subsidies for fossil fuels as a share of GDP. The indicator primarily includes free allocation of CO₂ allowances under the EU ETS. The value of these is calculated based on the CO₂ emission tax, the amount of free allowances allocated and the companies’ total quota purchase requirement. The CO₂ emission tax reflects the state’s income from the sale of allowances. The quota purchase requirement is calculated as the difference between the companies’ quota-covered emissions and their total free allowances. It is assumed that unused free allowances are used by other companies before there is a need to purchase allowances from the state. The amount of free allowances is decreasing over time in line with stricter climate targets. This increases the economic value of the free allowances allocated, as the supply is reduced.
Source: UN website on sustainable development goals data.