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Fossil Fuel Subsidies & Social Safety Nets

Richer parts of society receive the lion’s share of benefits from fossil fuel subsidies. Governments that undergo subsidy reforms have the opportunity to better target subsidies to poorer sections of society for example via cash and other transfers through the development of more sophisticated social safety nets and measures to mitigate negative impacts reform

Reports: Chapter 4, Indonesia: Pricing Reforms, Social Assistance, and the Importance of Perceptions, The Political Economy of Energy Subsidy Reform

This World Bank book, edited by by Gabriela Inchauste and David G. Victor, brings together detailed chapters on the political economy of subsidy reform in four countries—the Dominican Republic, Ghana, Indonesia and Jordan —and draws overall lessons from their experiences. IISD's Global Subsidies Initiative (GSI) contributed Chapter 4, "Indonesia: Pricing Reforms, Social Assistance and the Importance of Perceptions," on Indonesia's experiences with overcoming political obstacles to gasoline and diesel subsidy reforms. The chapter begins by reviewing the economic, fiscal and political context surrounding these subsidies. It then places them in their historical context, outlining the history surrounding their creation as well as the six major reform attempts since the 1997—98 Asian Financial Crisis.

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High-Level Event on Fossil Fuel Subsidies and the Link to Clean and Affordable Energy

It is ever clearer that fossil fuel subsidies are detrimental to sustainable development. However, in a time of historic low oil prices, the gap between international oil prices and consumer energy prices has narrowed dramatically, thus offering countries a huge window of opportunity to phase-out these subsidies. For this and many other reasons, the elimination of these subsidies continue to make global headlines.

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Blog: Country Update: Assessing Egypt's Energy Subsidy Reforms

In early-July 2014, the Egyptian Government announced sweeping measures to significantly increase most of the energy prices paid by businesses and households. ‘Big bang’ reform of this kind is a bold break from the past: energy prices in Egypt have changed little over several decades. According to the government, the reforms represent a decisive first step in reducing the burden of energy subsidies on Egypt’s public finances.

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