Fossil fuel subsidy reform: from rhetoric to reality

Research reports and studies
November 2015
Shelagh Whitley and Laurie van der Burg
This report examines a subset of energy subsidies, related to the production and consumption of fossil fuels (oil, gas and coal), and outlines opportunities and processes to support their reform. 

The analysis focuses on fossil fuel subsidies because their economic, social and environmental costs have recently received significant attention – including through high-level calls to reform and phase them out from organisations including the World Bank, the International Monetary Fund and the International Energy Agency. Far less attention, however, has been paid to providing guidance for those seeking to undertake or to support such reforms.

In a recent report, the Global Commission on the Economy and Climate suggests that the G20 countries have an opportunity to build upon their 2009 commitment to phase out fossil fuel subsidies by setting criteria and clear timelines for reporting, and through eliminating fossil fuel subsidies by no later than 2025.

In order to support governments and other stakeholders that are seeking to understand the potential for fossil fuel subsidy reform, or are planning to undertake or provide financial assistance for wider programmes of energy subsidy reform, this report outlines:

  • The current scope and scale of subsidies for fossil fuels.
  • The economic, social and environmental costs of fossil fuel subsidies.
  • Emerging evidence of the global benefits of reforming fossil fuel subsidies.
  • Potential barriers to subsidy reform.
  • Drivers and opportunities for reform.
  • Key principles for national-level reform.
  • Current opportunities to accelerate reforms on fossil fuel subsidies through international supportt