The Global Subsidies Initiative (GSI) is pleased to announce the publication of Jennifer Ellis’ paper “The Effects of Fossil-Fuel Subsidy Reform: A review of modelling and empirical studies.” This is the second paper to be published in the series Untold Billions: Fossil-fuel subsidies, their impacts and the path to reform.  

 

Subsidies are powerful instruments and when granted to fossil fuels, which are at the heart of all modern economies, subsidies have impacts throughout the economy, society and environment. Understanding the complex trade-offs between the different impacts of subsidy reform is a challenge for any government considering phasing out fossil-fuel

subsidies.  

 

In this report, Jennifer Ellis provides a detailed literature review, focusing on the six modeling studies in the last 20 years that have attempted to analyze global impacts of subsidies for all fuels.  The studies mostly considered effects on greenhouse gas emissions and gross domestic product, but very little of the work has considered other environmental impacts or social impacts.  The paper highlights a number of areas where further research should be undertaken but concludes that there is already enough evidence to demonstrate the significant environmental and economic benefits of phasing out fossil-fuel subsidies, and recommends that policy-makers do not delay in beginning the reform process.