Fossil fuel subsidies are the ‘worst energy policy in the world,’ researchers say

Writing in Science, researchers Paasha Mahdavi and Michael Ross argue that consumer fossil fuel subsidies, deployed by governments to cushion price spikes like the one following the U.S.-Israeli war on Iran, are the worst energy policy in the world. Governments cover the gap through taxes, borrowing, or cuts elsewhere, and the authors note that of roughly 130 subsidy reform attempts among the 21 biggest subsidizers between 2016 and 2023, 70% collapsed within a year and more than 90% were gone within three.

Ross told Mongabay he hasn't found a widely applicable subsidy reform that's worked, citing Mexico's convoluted but eventually successful 2017 removal as a rare case. He pointed to Ethiopia, Norway, and Uruguay as countries aggressively transitioning away from fossil fuels, and called for demand-side measures like EV support and renewables buildout.

Outside expert Jonas Kuehl of the International Institute for Sustainable Development agreed blanket subsidies are poorly targeted, disproportionately benefiting heavy fuel users rather than the poorest households. He noted some governments are trying alternatives instead, like Indonesia's work-from-home Fridays for civil servants and the Netherlands' off-peak rail pass.

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