Phasing out fossil fuel subsidies in Colombia: a crucial step towards a just energy transition

Despite strong climate ambition and national plans, Colombia’s transition to a climate-compatible future is not yet on track. In the context of the global energy transition – the shift from fossil fuels to renewables – Colombia’s prospects as a major exporter of hydrocarbons are diminishing, with major importers of Colombian coal committing to phase-out coal-fired power and oil demand significantly fluctuating.

The Colombian government continues to support the production and consumption of fossil fuels, including through Ecopetrol, the majority publicly-owned national oil company which is responsible for over 60% of fossil fuel production in the country.

This latest paper by ODI, with support from Transforma and based on data from the Organisation for Economic Co-operation and Development, shows that the Colombian government provided at least 5,610 billion pesos (around USD 1.7 billion) in subsidies to fossil fuel production and consumption in 2019, with around 60% of these directed to petroleum.

Fossil fuel subsidies in Colombia, by subsidy measure

Key Messages

Despite its ambitious climate targets, the Colombian government continues to support the production and consumption of fossil fuels.
Investing in new oil and gas infrastructure increases the country’s exposure to transition risks through building assets that are likely to be uneconomical and ‘stranded’ in years to come.
Alternative revenue sources and employment opportunities in the green sector are emerging, and there are glimmers of hope within Colombia’s recent plans and initiatives, such as the National Just Transition Strategy launched by The Ministry of Labour.
A just transition in Colombia entails avoiding further financing for and lock-in to carbon assets, channelling of fossil fuel subsidies towards development and sustainability priorities, supporting the regions, workers and livelihoods that will be affected by the shift away from hydrocarbon sectors, and ensuring an inclusive transition process that amplifies the voices and addresses the needs of diverse stakeholders.