Fossil Fuel Subsidies & Sustainable Development

Phase out subsidies for fossil-fuels and agricultural inputs, and incentives for urban sprawl, to drive more efficient use of resources and release public funds for other uses, including programmes to benefit those on low incomes.

This five minute video investigates the issues for civil society organizations from fossil-fuel subsidies and their reform.

The most recent draft of the Sustainable Development Goals (SDGs), an outcome from Rio+20 and The Future We Want, now includes international cooperation and potentially financial support towards cleaner fossil-fuel technologies; however, the draft goals no longer recognise the need to phase-out inefficient fossil-fuel subsidies, which stood at $554 billion in 2012 (IEA, 2013). That is four times the level of aid from the OECD DAC in 2013 ($134 billion). This is a step backwards.

This paper explores the concept of financial sustainability and proposes a framework to analyze electricity sectors based on this model.

The Philippines has removed the majority of all consumer energy subsidies, successfully phasing out most price subsidies in the downstream oil and electricity sectors in the late 1990s and resisting intermittent demands for their reintroduction. This detailed case study looks into some of the factors that enabled such durable reforms. This includes slowly transitioning towards higher prices and the use of somewhat targeted subsidies and transfers to provide support for the country's most vulnerable consumers. The Philippines' government has also engaged in proactive efforts to articulate the rationale for price changes, monitor the deregulated market and repeatedly investigate the costs and benefits of reform through a series of high-level independent panels.

This paper, prepared by CUTS Institute for Regulation and Competition, examines the challenges in reforming subsidized electricity for India's agricultural sector.

This is the first edition of the India Energy Subsidy Review, a biannual publication of the IISD's Global Subsidies Initiative.