The Effects of Fossil-Fuel Subsidy Reform: A review of modelling and empirical studies

Understanding the complex trade-offs between the economic, environmental and social impacts of subsidy reform is a challenge for any government considering phasing out fossil-fuel subsidies. Jennifer Ellis provides a detailed literature review, focusing on the six modelling studies in the last 20 years that have attempted to analyze global impacts for all fuels. The studies mostly considered effects on greenhouse gas emissions and gross domestic product, but very little of the work has considered other environmental or social impacts. The paper highlights a number of areas where further research should be undertaken but concludes that there is already enough evidence to demonstrate the significant environmental and economic benefits of phasing out fossil-fuel subsidies, and recommends that policy-makers do not delay in beginning the reform process.

Papers in this series:

• Untold Billions: Fossil-fuel subsidies, their impacts and the path to reform: A Summary of Key Findings
• Effects of Fossil-Fuel Subsidy Reform: A review of modelling and empirical studies
• The Politics of Fossil-Fuel Subsidies
• Strategies for Reforming Fossil-Fuel Subsidies: Practical lessons from Ghana, France and Senegal
• Gaining Traction: The importance of transparency in accelerating the reform of fossil-fuel subsidies
• Mapping the Characteristics of Producer Subsidies: A review of pilot country studies

For information about the GSI's other reports on fossil-fuel subsidies, click here.