43 Governments Expanded Fossil Fuel Subsidies During the 2026 Energy Crisis, New Tracker Shows

Forty-three governments have introduced or expanded fossil fuel subsidies since the 2026 global energy crisis began, according to real-time data from the International Energy Agency’s policy response tracker. At the same time, 30 governments have rolled out emergency energy conservation measures.

The numbers point to a sharp contradiction: many of the same nations cutting fuel taxes and capping energy prices are also asking citizens to turn off air conditioning and work from home.

A Crisis Rooted in Fossil Fuel Dependence

The crisis was triggered by the effective closure of the Strait of Hormuz beginning in late February 2026, following military conflict in the Middle East. The waterway normally carries roughly 20 percent of the world’s seaborne oil trade and 20 percent of global LNG shipments.

The disruption sent oil prices surging to a peak of $126 per barrel, faster than any other recent conflict in history. Energy-importing nations across Europe and Asia scrambled for immediate fixes.

Subsidies Flow as Prices Spike

Governments moved quickly to soften the blow for consumers and businesses. Brazil cut federal diesel taxes to zero. Malaysia increased petrol subsidy spending to approximately $510 million. Japan capped pump prices and released oil from strategic reserves. South Korea lifted national caps on coal-fired power generation.

Several European nations introduced price caps and direct consumer support programs. Italy pushed back its coal phase-out deadline to 2038, and Germany began reviewing whether reserve coal plants should be reactivated.

These moves contradict climate commitments. The European Union has a stated goal of climate neutrality by 2050, yet member states have been reversing clean energy policies in the middle of the crisis.

Governments Ask Citizens to Cut Back

Alongside the subsidy surge, 30 governments launched conservation programs of varying intensity. Some were symbolic. Others were mandatory.

Thailand told civil servants to take the stairs and wear short-sleeved shirts to reduce cooling costs. The Philippines shifted public offices to a four-day workweek and capped air conditioning at 24°C, aiming to cut government energy use by one-fifth. Bangladesh limited vehicle fuel supplies and promoted public transport. Slovenia and Sri Lanka introduced formal fuel rationing programs.

A handful of governments used the crisis to push longer-term solutions. Egypt announced plans to fast-track solar projects. The United Kingdom’s Business Secretary said the crisis justified faster offshore wind and solar deployment. European Council President António Costa called it an argument for accelerating home-grown energy production.

A Costly and Contradictory Strategy

Energy analysts warn the dual approach, subsidizing supply while restricting demand, addresses symptoms without fixing the underlying problem.

The European Central Bank noted in an April 2026 blog post that Europe’s heavy reliance on imported fossil fuels directly transmitted energy price shocks into domestic inflation, both during the 2022 Ukraine crisis and again now. A shift toward domestically produced renewables, the ECB argued, would weaken that link.

The fiscal cost is also significant. The IMF has documented that fossil fuel subsidies largely benefit higher-income consumers, while vulnerable households gain less. Targeted cash transfers would protect those most at risk at a lower public cost, yet most governments opted for blanket price suppression instead.

Meanwhile, Great Britain recorded wind and solar output of 11 terawatt-hours in March 2026 alone, offsetting roughly £1 billion in gas import costs. The contrast with subsidy-dependent nations is direct.

What Comes Next

Whether these crisis policies become permanent is now the central question. The IEA tracker continues to monitor changes in real time as the situation in the Strait of Hormuz remains unresolved.

If historical patterns hold, many temporary subsidy measures risk becoming structural fixtures long after energy markets stabilize, locking in fossil fuel dependence for years ahead.

References:

• IEA 2026 Energy Crisis Policy Response Tracker
• ECB Blog: Europe’s fossil fuel dependence poses risks to price stability
• CFR: Governments Declare Emergency Energy Policies in Response to Iran War