Getting on Target: Accelerating energy access through fossil fuel subsidy reform

The report argues that global fossil fuel subsidies, estimated at USD 425 billion in 2015, represent a massive untapped financial resource that could fund universal energy access multiple times over. It contends that untargeted consumption subsidies are often regressive, benefiting wealthier households and potentially hindering energy access by straining utility budgets and encouraging fuel smuggling. The authors propose a 'Remove, Target, and Swap' framework: removing subsidies with no energy access benefit, targeting necessary subsidies toward the poor (e.g., through connection subsidies), and swapping fossil fuel support for investments in renewable energy and energy efficiency.

• Global fossil fuel subsidies are significantly larger than the investment required for universal energy access. The 2015 estimate of USD 425 billion in subsidies is 7.5 times the amount needed to achieve universal access to both electricity and clean cooking.
• OECD countries provide substantially more financial support to fossil fuels than to energy development assistance. In 2015 and 2016, these countries spent 10 times more on fossil fuel support (USD 82 billion annually) than they committed to development assistance for the energy sector (USD 8.3 billion annually).
• In countries with high energy access deficits, fossil fuel subsidies represent a significant opportunity cost. On average across 12 countries, these subsidies equal USD 573 per household without electricity, and across 15 countries, USD 321 per household without clean cooking access.
• Untargeted consumption subsidies are socially regressive and inefficient. A review of 32 countries showed that the lowest two income quintiles received only 7.4% of gasoline subsidy benefits and 12.7% of LPG benefits, while the top two quintiles captured 83.2% and 73.9% respectively.
• Consumption subsidies often fail to reach the poorest populations because they only benefit those already connected to distribution networks or those who can afford the upfront cost of equipment. For example, in India, many rural households cannot access subsidized LPG due to insufficient distribution networks.
• Poorly designed subsidies can actively damage energy supply and infrastructure. Low tariffs can lead to massive debts for state-owned utilities, which in turn restricts investments in grid expansion and maintenance. In Rajasthan, India, large fiscal transfers to utilities failed to achieve rural electrification goals due to the underlying debt burden.
• Fossil fuel subsidies can lead to market distortions such as smuggling and fuel scarcity. In India, 45% of subsidized kerosene is lost to the black market, and in Nigeria, such diversion has led to kerosene being sold at two to five times the official subsidized price.
• The report recommends a three-part strategy for reform: 'Remove' subsidies with no energy access benefit (such as producer subsidies); 'Target' necessary subsidies toward poor households (such as LPG or electricity connection fees); and 'Swap' fossil fuel subsidies for investments in renewable energy and energy efficiency.
• Reinvesting subsidy savings into renewable energy can be more cost-effective than continuing fossil fuel support. For instance, switching from kerosene subsidies to solar home systems in India can result in significant savings for households over two years.

APA

Zinecker, A., Sanchez, L., Sharma, S., Beaton, C., Merrill, L., & Beaton, C. (2018). Getting on Target: Accelerating energy access through fossil fuel subsidy reform. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/getting-target-accelerating-energy-access.pdf

Chicago

Zinecker, Anna, Lourdes Sanchez, Shruti Sharma, Chris Beaton, Laura Merrill, and Christopher Beaton. Getting on Target: Accelerating energy access through fossil fuel subsidy reform. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/publications/getting-target-accelerating-energy-access.pdf.

Wikipedia

{{cite report |last1=Zinecker |first1=Anna |last2=Sanchez |first2=Lourdes |last3=Sharma |first3=Shruti |last4=Beaton |first4=Chris |last5=Merrill |first5=Laura |last6=Beaton |first6=Christopher |title=Getting on Target: Accelerating energy access through fossil fuel subsidy reform |publisher=International Institute for Sustainable Development |date=July 2018 |url=https://www.iisd.org/system/files/publications/getting-target-accelerating-energy-access.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{zinecker2018getting, author = {Zinecker, Anna and Sanchez, Lourdes and Sharma, Shruti and Beaton, Chris and Merrill, Laura and Beaton, Christopher}, title = {{Getting on Target: Accelerating energy access through fossil fuel subsidy reform}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = jul, url = {https://www.iisd.org/system/files/publications/getting-target-accelerating-energy-access.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }