Reviewing the implementation design of energy subsidy reforms: insights from novel cross-country data

Over the past two decades, energy subsidy reforms have increasingly gained importance as mitigation measures to fight climate change. Still, many countries subsidize fossil energy consumption, and reforms are often short-lived. This paper presents harmonized cross-country data on the design of energy subsidy reforms, obtained from a structured literature review of both implemented and failed consumption subsidy reforms between 1978 and 2021. This standardized data enables the identification and validation of key design characteristics, including the motivation for reform, the use of gradual approaches, communication strategies, pricing mechanisms, and social protection measures, as well as their use in implementing reforms. The data highlight significant regional heterogeneity and emphasize the importance of context-specificity in shaping reform designs. The study also demonstrates the connection between key aspects of reform design and reform implementation, as well as associations with subsidy levels. It offers lessons for middle-income countries, especially those planning to implement carbon pricing policies. Lastly, this paper lays the groundwork for future research to explore these factors in greater detail; one avenue is to link design characteristics and political economy factors.KEY POLICY INSIGHTS Many reforms fail to reduce subsidies sustainably, a pattern strongly linked to the pricing mechanisms that countries use. Automatic pricing systems and even liberalised prices can still generate subsidies, as the data on subsidy levels suggests, while government-controlled prices often lead to repeated reforms.Gradual subsidy removal improves implementation success compared to one-off approaches, especially in regions with fragile fiscal structures.Government-controlled pricing mechanisms are more often represented in successful implementations. Higher-income countries are better able to manage more complex reforms, such as automatic or liberalized pricing systems.Other insights from energy subsidy reforms are also relevant for countries – especially low- and middle-income nations – considering carbon pricing.