Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda

This report provides a non-technical analysis of energy subsidies and their relationship to climate change and sustainable development. It explores how fossil fuel subsidies, while often intended to protect vulnerable populations, frequently lead to increased greenhouse gas emissions, inefficiencies, and economic burdens. The document outlines the various forms, sizes, and global distribution of these subsidies, highlighting their disproportionate concentration in non-OECD countries. It details the unintended social and environmental consequences, such as benefiting wealthier populations and exacerbating pollution. At the same time, it recognizes the potential role of targeted subsidies in expanding access to modern energy and supporting renewable technologies. With examples from countries like India, Chile, and Germany, the report offers practical lessons and policy recommendations for designing and reforming subsidies. These include principles of transparency, cost-effectiveness, and time limits.