Since the mid-2010s, the global narrative surrounding fossil fuel subsidies has undergone profound shifts, reflecting mounting pressures from climate change mitigation efforts and economic restructuring. Governments worldwide have publicly committed to reducing or eliminating subsidies that artificially lower the cost of fossil fuels, recognizing that such financial supports run counter to the goal of transitioning toward cleaner energy systems. However, what remains unclear — and increasingly scrutinized — is the actual implementation and durability of these subsidy reforms. A rigorous new analysis focusing on some of the world’s most subsidizing nations sheds light on a paradox at the heart of decarbonization policy: while reform efforts have intensified, their persistence remains fragile, raising serious doubts about the trajectory for meaningful climate action.
The study, conducted through the collection of original monthly data from 21 countries with the largest gasoline subsidies between 2003 and 2015, provides a rare longitudinal lens to scrutinize fossil fuel subsidy reforms from 2016 to 2023. Unlike many previous examinations reliant on sporadic or annual snapshots, this approach captures the nuanced temporal dynamics that characterize policy changes. The findings reveal a troubling pattern: although the frequency and ambition of subsidy reforms have increased since 2016, their actual durability has sharply declined. Only about 30% of these reform initiatives remain in place after a full year, and a mere 9% persist beyond three years, suggesting a fragility in policy stability that undermines long-term climate commitments.
This fragility in subsidy reforms may be symptomatic of the deep-rooted economic and social complexities involved in rolling back fossil fuel supports. Gasoline subsidies, in particular, often serve as significant social and political safety nets in many countries, cushioning consumers against volatile global oil prices and inflationary pressures. The political economy surrounding subsidies involves a delicate balancing act between short-term public acceptance and the long-term imperatives of environmental sustainability. Frequent reversals or rollbacks of reform signal the intense resistance reformers face from entrenched economic interests, political opposition, or adverse economic shocks that strain government capacities.
Equally striking is the persistence — or resurgence — of subsidies in many of these countries. The data indicate that subsidies actually increased in 12 of the examined nations over the period of 2016 to 2023, while remaining essentially unchanged in the other nine. This lack of consistent subsidy reduction stands in stark contrast with international climate goals, which call for the phased elimination of fossil fuel subsidies as a critical strategy to reduce greenhouse gas emissions. The persistence or growth of subsidies not only distorts energy markets but also perpetuates carbon-intensive consumption patterns, thereby locking countries into fossil-dependent trajectories with dire climate consequences.
The findings from this rigorous data analysis confront the widely held assumption that once subsidy reforms are enacted, they would be irreversible or at least sustained for a substantial period. Instead, the volatility observed points to the need to reassess the underlying design and implementation strategies of reform programs. It is insufficient to measure policy success solely by the announcement or initial implementation of subsidy cuts; what matters more is the endurance of such measures amid political, economic, and societal pressures. This distinction is crucial for policymakers, international investors, and supporters of the sustainable energy transition.
From a technical perspective, the research methodology that underpins these findings employed monthly-level monitoring of gasoline prices adjusted for international oil price fluctuations, inflation, and local taxation policies. By controlling for these external variables, the analysis isolates the direct effect of government subsidies on retail gasoline prices — a key indicator of subsidy intensity. This granular approach allows for identifying not only whether subsidies exist but how they evolve, rise, fall, or revert over time, offering unprecedented insights into the stability of reform trajectories.
The study’s focus on gasoline subsidies is particularly relevant because gasoline represents a nexus of energy consumption tied intimately to transportation emissions — a sector responsible for a significant share of global CO2 output. Governments often deploy subsidies here to ease the financial burden on drivers, trucking entities, and consumers, often justified by arguments to protect economic competitiveness or social equity. However, this approach inadvertently encourages higher fuel consumption and delays the adoption of more efficient or electrified transport alternatives. The challenge lies in devising phase-out strategies that preserve social welfare without sacrificing climate goals — a balance policymakers continue to wrestle with amid competing demands.
Moreover, geopolitical and economic volatility over the examined period has likely contributed to the reversal or weakening of subsidy reforms. Volatile oil markets, currency depreciations, and inflationary episodes trigger fiscal strains that often prompt governments to reinstate subsidies to shield domestic consumers from external shocks. In some cases, subsidies become a political tool to maintain social stability during periods of unrest or economic uncertainty. These dynamics underscore the complex interplay between economic resilience and climate policy ambition, where pragmatic considerations often contest ideological commitments.
The fragile nature of recent reforms calls into question the efficacy of strategies currently favored by international financial institutions and climate policy frameworks, which emphasize incremental subsidy reductions often coupled with mitigation measures such as targeted social safety nets or energy efficiency programs. While these approaches intend to minimize social hardship, their insufficient political anchoring and inadequate stakeholder engagement may render them vulnerable to rollback. This highlights the imperative for more robust, transparent, and inclusive processes in formulating subsidy reform programs that can weather political turnover and economic duress.
In parallel, the study suggests that subsidy reforms need to be complemented by broader structural changes in the energy sector. Investments in renewable energy infrastructure, public transportation capacities, and electrification pathways may help reduce dependence on fossil fuels and make subsidy phase-outs politically feasible by providing viable alternatives. Countries that have managed sustained subsidy reductions often exhibit these characteristics, suggesting that reforms cannot be isolated finance sector decisions but require a whole-of-government and society transformation approach.
The findings from this exhaustive data compilation thus provide a sober assessment of international progress in fossil fuel subsidy reform. They reveal a disconnect between international climate pledges and on-the-ground policy realities, casting doubt on whether current trajectories are sufficient to meet ambitious emission reduction targets. As the world grapples with intensifying climate impacts and rising energy costs linked to geopolitical shifts, understanding the durability and direction of subsidy policies becomes ever more essential for designing credible climate strategies.
Researchers and policymakers will need to dig deeper into the socio-political contexts that drive subsidy resilience or reversal to improve reform outcomes. This means exploring factors such as public perceptions, vested interests within fossil fuel sectors, political institutions and governance capacity, and the role of international aid and regulatory frameworks. Greater investment in data gathering and analysis, transparency in subsidy reporting, and cross-country learning will be crucial.
Importantly, the increasing fragility of fossil fuel subsidy reforms aligns with broader global concerns about the sustainability of climate governance frameworks. It raises questions about how to balance national sovereignty and global climate imperatives, particularly for emerging economies that rely heavily on fossil fuel revenues and subsidies as economic tools. Crafting financing mechanisms and technical assistance programs that support subsidy phase-out without exacerbating poverty or inequality will remain a central challenge.
This study not only fills a critical empirical gap in understanding subsidy reform dynamics but also serves as a clarion call for a reassessment of global subsidy reduction campaigns. The ambition of reforms is insufficient in isolation; the durability and political feasibility of these measures dictate real progress toward a low-carbon future. As international discussions advance towards post-2030 climate targets, these insights should shape flexible yet resilient policy portfolios to avoid regression in fossil fuel subsidy landscapes.
In summary, the resurgence and fragility of fossil fuel subsidy reforms from 2016 to 2023 expose inherent tensions within global energy and climate governance. While the rhetoric of subsidy reduction remains strong, the reality reveals patchy progress marred by reversals and political contestation. Without addressing the structural, economic, and social barriers that undermine reform durability, the promise of subsidy phase-out may remain elusive, complicating efforts to curb fossil fuel dependence and achieve climate targets in the critical years ahead.
Subject of Research:
Analysis of fossil fuel subsidy reforms’ frequency, ambition, and durability across 21 countries from 2016 to 2023, focusing on gasoline subsidies and their implications for climate policy effectiveness.
Article Title:
Fossil fuel subsidy reforms have become more fragile
Article References:
Mahdavi, P., Ross, M.L. & Simoni, E. Fossil fuel subsidy reforms have become more fragile.
Nat. Clim. Chang. (2025). https://doi.org/10.1038/s41558-025-02283-4
Image Credits: AI Generated
