The International Energy Agency and the Organization for Economic Cooperation and Development estimate that governments and taxpayers spent roughly $500 billion in 2010 supporting the production and consumption of fossil fuels through subsidies.
OECD Secretary-General Angel Gurria, in a statement, said developing and developed countries need to phase out fossil fuel subsidies if they are to make real gains in meeting their economic, environmental and social goals.
"In a period of persistently high energy prices, subsidies represent a significant economic liability," added IEA Executive Director Maria van der Hoeven.
Van der Hoeven noted that subsidies encourage price volatility on the energy market and advocate the wasteful use of energy rather than promoting economic development or alleviating energy poverty.
The World Bank last month added that leading world economies should end subsidies for fossil fuel use to help developing countries adapt to climate change.
The OECD and IEA note that major economies in 2009 agreed to phase out subsidies that "encourage wasteful consumption."