Orderly reform of fossil fuel subsidies in Latin America: Case studies from Brazil and Colombia

The document analyzes fossil fuel subsidies in Brazil and Colombia, advocating for the creation of national inventories and a prioritized reform roadmap. It highlights the inefficiency of certain production subsidies, such as Brazil's REPETRO, and suggests redirecting savings toward renewable energy and social equity. Using regional examples, it warns against abrupt reforms, as seen in Bolivia, and recommends progressive, well-communicated strategies similar to those in Ecuador.

• Fossil fuel subsidies in Latin America and the Caribbean decreased significantly from USD 97 billion in 2022 to USD 52.8 billion in 2024.
• In Brazil, fossil fuel subsidies totaled USD 7.78 billion in 2024, representing a 53.23% decrease from the previous year. Indirect subsidies were the largest share at 58.22% (USD 4.53 billion), and production-side subsidies accounted for 54% of the total.
• The REPETRO subsidy in Brazil is identified as a 'quick reform' opportunity due to its high cost and low efficiency; in 2022, the state spent USD 12.6 in subsidies for every 1 dollar of foreign direct investment received.
• Colombia's annual fiscal cost for fossil fuel subsidies is at least COP 46.2 trillion (USD 10.5 billion). The majority of these subsidies (72% by value and 44% by number) require gradual reform to ensure they benefit low-income consumers or support transition minerals.
• Regional experiences show that abrupt subsidy elimination without compensation or communication can lead to social unrest, as occurred in Bolivia in 2025, whereas Ecuador's progressive approach since 2018 is presented as a more successful model.
• The document recommends redirecting funds from subsidy reforms toward different priorities based on the country: Colombia should focus on instruments like Bancóldex's 'Sostenible Adelante' and IPSE projects for non-interconnected zones, while Brazil should prioritize community distributed generation and energy storage.

APA

Osorio, P., Hoyos, Ó., Barba, D. C., Mogollón, A. M., Carvalho, C., & Cardoso, A. (2026). Orderly reform of fossil fuel subsidies in Latin America: Case studies from Brazil and Colombia. Transforma. https://transforma.global/wp-content/uploads/2026/06/Executive-Summary-Orderly-reform-subsidies-LatinAmerica-web.pdf

Chicago

Osorio, Paula, Óscar Hoyos, Diana Carolina Barba, Ana María Mogollón, Cássio Carvalho, and Alessandra Cardoso. Orderly reform of fossil fuel subsidies in Latin America: Case studies from Brazil and Colombia. Transforma, 2026. https://transforma.global/wp-content/uploads/2026/06/Executive-Summary-Orderly-reform-subsidies-LatinAmerica-web.pdf.

Wikipedia

{{cite report |last1=Osorio |first1=Paula |last2=Hoyos |first2=Óscar |last3=Barba |first3=Diana Carolina |last4=Mogollón |first4=Ana María |last5=Carvalho |first5=Cássio |last6=Cardoso |first6=Alessandra |title=Orderly reform of fossil fuel subsidies in Latin America: Case studies from Brazil and Colombia |publisher=Transforma |date=June 2026 |url=https://transforma.global/wp-content/uploads/2026/06/Executive-Summary-Orderly-reform-subsidies-LatinAmerica-web.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{osorio2026orderly, author = {Osorio, Paula and Hoyos, Óscar and Barba, Diana Carolina and Mogollón, Ana María and Carvalho, Cássio and Cardoso, Alessandra}, title = {{Orderly reform of fossil fuel subsidies in Latin America: Case studies from Brazil and Colombia}}, institution = {Transforma}, year = {2026}, month = jun, url = {https://transforma.global/wp-content/uploads/2026/06/Executive-Summary-Orderly-reform-subsidies-LatinAmerica-web.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }