Strategies for Reforming Fossil-Fuel Subsidies: Practical lessons from Ghana, France and Senegal

By Tara Laan, Christopher Beaton, Bertille Presta on May 3, 2010

This paper analyzes the experiences of countries that have undertaken reform of their fossil-fuel subsidies and establishes what lessons can be learned. It focuses in particular on France, Ghana and Senegal, as well as drawing from case studies of other countries and previous work that examines the reform of energy subsidies and price subsidies. The paper finds there is no single formula for success, but six important strategies are identified:

1. Carry out research: quantify the subsidy, assess how its costs and benefits are distributed and estimate the likely effects of its removal.

2. Establishment of reform objectives and parameters: clearly articulate objectives to help focus the reform strategy.

3. Construction of a coherent reform policy: ideally designed with support from a broad range of stakeholders.

4. Implementation: reform is not easy and may require several attempts.

5. Monitoring, evaluation and adjustment: policies can be adapted in light of new information, requiring a continual assessment of the underlying policy objectives.

6. Forward movement: successful reform requires the prevention of backsliding.

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Report details

IISD, 2010