Fossil-fuel subsidy reform as a step towards a just transition: a litmus test for COP31

International efforts to mobilise private capital for low-carbon development coexist with widespread government support for fossil fuels in economies accounting for a large majority of global energy supply. By lowering the cost of producing or consuming fossil energy, this support alters relative returns in favour of carbon-intensive activities. This article assesses the implications of this distortion for implementing Article 2.1(c) of the Paris Agreement, which calls for finance flows to be made consistent with low-emission and climate-resilient development. It argues that fossil-fuel-subsidy reform is therefore not solely a fiscal or energy-policy issue but also a matter of policy coherence in implementing this finance-alignment objective. The evidence reviewed also shows that, in most cases, broad price support is poorly targeted and regressive in distribution: higher-income households obtain larger absolute benefits because they consume more energy. Against this background, the article develops a three-part litmus test for COP31: progressive reform of fossil-fuel support to strengthen policy coherence under Article 2.1(c), transparent disclosure that permits progress to be tracked over time and protection of vulnerable households as part of a just transition. To operationalise these tests, the article proposes that Parties agree at COP31 to prepare nationally determined fossil-fuel-subsidy reform plans, modelled on the Paris Agreement’s nationally determined contributions (NDCs) and submitted alongside successive NDCs.