Most Fossil Fuel Subsidy Reforms Have Failed
Analysis of data from 2016 to 2023 shows that 90% of policy attempts to eliminate fossil fuel subsidies were reversed.
Updated on Sept. 25, 2026 in Energy
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Should governments provide subsidies to keep consumer gasoline prices low?
A new editorial in Science reports that efforts to phase out fossil fuel subsidies often fail as governments struggle to manage consumer sensitivity to energy costs. Between 2016 and 2023, only a fraction of reforms in major subsidizing nations remained in place long-term.
Why it matters
Governments use these subsidies to shield citizens from price volatility, yet the political cost of removal frequently forces a policy reversal. Understanding why these initiatives collapse is essential for accelerating the global energy transition.
Of 130 subsidy reforms attempted in the 21 largest subsidizing countries, 70% collapsed within one year. These interventions often struggle because they are financed through taxes, borrowing, or reduced public spending to bridge the gap between market prices and consumer costs.
The players
Paasha Mahdavi
An energy policy researcher who analyzes the fiscal and political mechanics of fuel pricing.
Michael Ross
A researcher focused on the intersection of energy policy, government subsidy structures, and global environmental transitions.
The details
Governments implement these subsidies to offset the difference between market energy prices and consumer costs to mitigate inflationary pressure. Policy researchers Paasha Mahdavi and Michael Ross indicate that because consumers are highly attuned to daily gasoline prices, subsidy removal is politically fraught. Countries are now testing alternatives to blunt the impact, such as Indonesia's off-peak work-from-home policy for civil servants and the Netherlands' introduction of monthly off-peak rail passes.
Timeline
Between 2016 and 2023, 130 subsidy reforms were attempted across 21 major countries.
Mexico successfully ended its national fossil fuel subsidies in 2017.
The editorial was published in the journal Science on September 25, 2026.
The Tech Race
The study highlights how rare successful systemic shifts are when compared to Mexico's 2017 fossil fuel subsidy elimination. Current efforts are largely failing, marking a sharp contrast to the policy stability required for a long-term energy transition.
Consumers should expect continued volatility in energy prices as governments oscillate between subsidies and reform alternatives. Policies like discounted rail passes or flexible work schedules may increasingly serve as the primary mechanisms for mitigating the costs of fuel policy shifts.
The takeaway
The high reversal rate of subsidy reforms underscores that energy policy is constrained more by immediate political pressure than by long-term strategic planning. Watch for future outcomes in nations like the Netherlands to see if transit-based alternatives can provide a more stable path than traditional subsidies.
Further reading
For broader context on current shifts in the sector, explore the Energy section.
Source note: This article includes information reported by Mongabay.
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Should governments provide subsidies to keep consumer gasoline prices low?
