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As the war US-Iran escalates again, fresh spikes in oil prices are reviving debates over subsidies across fossil-fuel dependent countries, amidst worsening effects of climate change. In Latin America, amid a strong rise of right-wing and populist governments closely aligned with Donald Trump, concerns over energy security are prompting on how to ensure access to fossil fuels rather than strengthening long-term plans to phase-out and build resilient territories and energy systems.

In a country reliant on fossil fuel imports and vulnerable to inflationary pressures, the new far-right government of José Antonio Kast sparked one of the first heated national discussions over fossil fuel subsidies as soon as it took office in March 2026. Since Kast was elected amid growing concerns over security and organised crime, economic instability, and , the push for subsidising fossil fuels was strongly bound up with wider questions of social justice and deepening inequalities.

Nevertheless, with oil prices already rising, Kast refused to deploy some of the traditional subsidies used to stabilise them, arguing that the Chilean state budget could not stretch to such expenses. Many condemned the move as unjust since higher oil prices are known to hit the most vulnerable population the hardest, and indeed the (canasta básica) rose about 4%, showing how deeply our lives depend on fossil fuels and how urgent it is to implement just transitions.

The decision was, of course, highly political. It expressed the priorities of a government that pleads budgetary constraint while promoting a major reform to , shrink state services, weaken labour protections, and promote projects, regardless of or social concerns. Meanwhile, Colombia offered a pointed contrast, where faced with the same rising prices, Gustavo Petro adopted the policy to rather fertilisers to prevent higher food prices, showing a way to reconcile social needs with transitions away from fossil fuels.

However, in March, the Kast administration took a different approach. Chile has two mechanisms for stabilising fuel prices, both designed to accumulate state revenues when prices are low and use them when prices are high: the Fund to Stabilize Oil Prices or FEPP (Fondo de Estabilización de Precios del Petróleo), which now covers only domestic heating kerosene, and the Mechanism to Stabilise Fuel Prices or MEPCO (Mecanismo de Estabilización de Precios de los Combustibles). One of the first actions of Kast’s government was to work on the “” to increase the FEPP to US$60 million to reduce the price of paraffin - the main fossil fuel source to heat low-income households - to fix public transport fares in the capital, Santiago, and to fund direct support for taxis and school transport services for six months. At the same time, the government modified the MEPCO to avoid using it, thus exposing the most vulnerable with an of 32% in petrol and of 62 % in diesel prices.

With oil prices expected to climb again, rising push to use the MEPCO this time, and against a backdrop of rising inflation and the recent approval of the sweeping reform, the has finally agreed to use the MEPCO subsidy for a few weeks. In a country highly vulnerable to the worsening effects of climate change, amidst during the summer, and currently experiencing the devastating effects of recent , the expensive energy vulnerability offers the space to widen the political debates and strategies to phase-out fossil fuels and foster the implementation of just strategies to build resilient, just fossil-free energy systems and economies.

As key drivers of climate change, the urgency of moving beyond fossil fuels is undeniable. For both producing and non-producing countries, it is now a matter of economic, political, and energy (and literal) survival. Conventional reserves in Latin America are declining, and societies continue to absorb the enormous health and environmental burdens that fossil capital . Indeed, while fossil fuel pollution is already responsible for nearly worldwide, the has estimated that globally, when accounting for unpriced climate and health costs, fossil fuel subsidies reached USD 7 trillion (around 7% of global GDP) in 2022.

In this scenario, and despite Trump and his allies’ agenda to dismissed climate action and social justice concerns, the escalating impacts of climate change demand funding and strategies to help territories around the world adapt and . As a result, states are likely to play an even more prominent role and increasing calls to make them responsible to protect citizens from climate change, as recently affirmed by the - an opinion that Chile itself had jointly requested with Colombia. Since climate change intersect with longstanding challenges in the global South such as poverty, inequality, violence, corruption, fiscal constraints, phasing out fossil fuels have to embed socio-environmental justice if they are to be .

As the Kast administration's resistance has supposedly draw in the stretch state funds, then, the argument cuts the other way: if they are truly preoccupied with the state budget, reducing fossil fuels should be at the core of their long-term strategy, particularly in a country where continues to rise. This will help improving health conditions and eventually redirect funds to restoring socionatural ecosystems, enhancing territorial planning and transport, alongside education or health services. Rather than short term decisions or economic shocks for the most vulnerable populations, this needs well-planned and long-term strategies that consider climate justice as already recognised by the .

Nonetheless, the government’s drive to cut state services and to push through a reform tailored to the elite interests makes it clear that it aligns with others in the region to protect capital accumulation. With fossil fuel interests and the geopolitical agenda advanced by and his allies strongly intertwined, defending the need for just transitions continues to be an imperative task for social movements. As Gustavo Petro stated during the first Conference on Transitioning Away From Fossil fuels held in Santa Marta in April 2026, at current times of impotence we need to go beyond the states and gain power (potencia) and “Power would now imply the unity of peoples, it would imply the brotherhood of cultures, it would imply the building of the human fabric with or without the help of States”. Indeed, social movements, local communities, and civil society will need to play a crucial role in advancing just transitions away from fossil fuels and extractivist economies to rather work towards societies where both human and non-human life can thrive. Recent waves of protests and the reweaving of the social fabric offer reasons for hope.

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