Fossil fuel subsidies are the ‘worst energy policy in the world,’ researchers say
In an editorial in Science, U.S.-based energy policy experts Paasha Mahdavi and Michael Ross argue that governments creating consumer fossil fuel subsidies in response to rising energy prices is the “worst energy policy in the world.” Mahdavi, an associate professor at the University of California, Santa Barbara, in the U.S., and Ross, a professor at […]
U.S.-based energy policy experts Paasha Mahdavi and Michael Ross argue that governments creating consumer fossil fuel subsidies is the "worst energy policy in the world." The pair, writing in an editorial in Science, state that governments finance the gap between market prices and subsidized prices through taxes, borrowing or spending cuts elsewhere.
The reasoning behind this stance is the adverse effects of fossil fuel subsidies: they strain government budgets, exacerbate air pollution, deter investment in renewable energy, and are notoriously hard to eliminate once put in place.
Between 2016 and 2023, of the approximately 130 subsidy reforms attempted by the world's leading fossil fuel subsidy providers, 70% were abandoned within a year, and over 90% were gone within three years. Michael Ross, one of the authors, has yet to encounter a single successful fuel subsidy reform that can be applied universally. While Mexico managed to phase out its subsidies in 2017 after a lengthy and complex process, Ross contends that such outcomes are rare.
Governments are drawn to implementing fuel subsidies due to consumer sensitivity to gasoline prices, making it challenging to dismantle these policies. Unlike utilities bills or food prices, fuel prices are deeply ingrained in public consciousness.
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