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This chapter examines the role of the Global Subsidies Initiative (GSI) in catalyzing global action on fossil fuel subsidy reform. The GSI is a small but influential non-governmental organisation that has played a key role in promoting and maintaining the momentum of subsidy reform as an issue with global resonance. Specifically, it examines the political mechanisms through which the GSI has generated interest in, and promoted, subsidy reform along with the GSI's specific impacts on reform efforts by intergovernmental organisations and the national governments of India and Indonesia. Coalition building, capacity building, and normalization are three political mechanisms GSI leverages to disrupt the status quo of carbon locked-in systems and advance fossil fuel subsidy reform. The analysis of these mechanisms underscores the importance of politics in achieving subsidy reform. The key to implementing reform is not simply finding the most appropriate technical solution or high-level support, although both help. Rather, it is in understanding how fossil fuel subsidy reform gains support or is resisted.
fuel producing states, debates about fuel subsidies also include redistributive energy justice frames, such as the population’s right to cheap energy. The question is: how are these contradictory frames reflected in countries that are simultaneously small island developing states and fossil fuel producers, and do other frames feature in their debates? This chapter examines how fossil fuel subsidies and their reform have been addressed in Trinidad and Tobago, a petroleum producer and small island developing state. It puts forward an analytical framework of actors, frames and contexts central to the global and local subsidy reform debate. This framework is used to understand the particular context of a small island state heavily dependent on hydrocarbon exports and that has entrenched producer and consumer subsidies. The chapter illustrates how actors use frames (environmental stewardship, economic prudence, climate and energy justice) in the reform debate, and how historical and economic contexts influence the reform process.
The Indian government implemented the Direct Benefit Transfer for LPG (DBTL) scheme in year 2015 to improve the efficiency of subsidy disbursal mechanism and to create an enabling ecosystem for subsidy targeting. DBTL, which covers 166 million households, enables transfer of consumption linked subsidy directly to the bank account of beneficiaries.
This chapter discusses the scheme’s performance in terms of its implementation, achievement of its objectives, and experiences of key stakeholders (consumers, distributors, bank managers, implementation officers, officials of the oil marketing companies and the ministry). The findings are based on independent evaluation carried out using mixed methods approach.
The chapter argues that strong political will, effective communication and messaging, combined with robust implementation plan contributed to the scheme's successful implementation. It also elaborates on the lessons learned from the scheme’s implementation and strategies employed to overcome the challenges faced, which could be useful for designing fossil fuel subsidies reform in other countries and context.
In spite of the consensus among expert communities about the benefits of reforming fossil fuel subsidies and the high-level commitments to do so, the level of concerted political action in the wake of this recognition is still low. The variation in the degree of effort to reform fossil fuel subsidies between countries but also between different international institutions means that the level of concerted political action is low both within and between the two levels. Although fossil fuel subsidies and efforts to reform them have received increasing scholarly and political attention, there is a lack of theoretically oriented accounts of the politics of fossil fuel subsidies. This chapter briefly explains the core of the problem of fossil fuel subsidies, and highlights how theoretically informed discussions could contribute to practical problem solving. The chapter also outlines our theoretical framework. This framework focuses on the ways in which international institutions and actors have come to address fossil fuel subsidies, and how they influence the domestic level, as well as on political factors that either hinder or promote fossil fuel subsidy reform on the domestic level
To increase understanding of the potential for phasing out fossil fuel subsidies, this chapter highlights evidence of their economic, social and environmental costs, as well as the benefits of, and opportunities for, reform. Fossil fuel subsidies can inhibit sustainable economic development by creating a burden on government budgets; discouraging investment in renewable energy and energy efficiency; increasing the risk of stranded assets (in the event of climate regulation); damaging public health by increasing air pollution; and undermining carbon price signals. This analysis then synthesises lessons from the literature, and from case studies on several countries that have undertaken subsidy reform, before setting out the key ingredients for successful reform. We find that despite the challenges associated with reform, several countries have recently made significant progress in reforming subsidies for fossil fuels across a wide range of sectors. This chapter discussed several cases which can help to identify the key ingredients for successful reform. The steps identified are very similar to those needed for any effective processes of policy change.
Little is known about the incentive structure for the production of fossil fuels in South Africa. The economy is highly carbon-intensive, with coal-fired electricity at its core. The specifics of subsidies, where they originate, who benefits and why they persist remains largely unknown. This chapter presents new evidence that supports the argument that state funding has created a regime of inexpensive fossil fuels through long-running formal and informal institutions. We find that drivers of subsidies include apartheid-era industrial and energy policies that have become locked in. Despite major political change at the end of apartheid, many subsidies have persisted, while new subsidies have emerged with justifications that echo the apartheid state. Remarkably, the South African government has indicated to the Group of 20 that it has no ‘inefficient’ subsidies. We quantified subsidies paid in the period from 2007-2015. Our analysis shows that fossil fuel production has been to be supported in various ways. Direct transfers alone ranged between US$454 million and US$2.09 billion per year. A reform of South Africa’s subsidies is unlikely, as these subsidies remain largely invisible to the public
International economic institutions, particularly the G20, the OECD, the World Bank and the IMF, have been vocal in advocating reform of fossil fuel subsidies. Although studies of individual fossil fuel subsidy reforms point to the role of international economic institutions as one factor among many, no overarching study has studied their influence across countries. This chapter addresses this gap by analysing how the institutions have influenced the domestic politics of fossil fuel subsidies. Case studies of the United States, India, the United Kingdom, Indonesia and Denmark show that ideational influence on the public agenda was limited, while the influence on the policy-making agenda in Denmark and the UK was significant, and the G20 commitment established fossil fuel subsidy reform as a norm which governments had to take seriously. Learning mattered in terms of workshops organised by the World Bank and the OECD in changing beliefs regarding how to reform fossil fuel subsidies, something which in India and Indonesia shaped actual fossil fuel subsidy reform. Power-based influences were relevant only in the case of Indonesia.
Coal mining, along with other extractive industries, is often presented by Colombian governments as one of the key sectors driving the country’s economic growth and sustaining regional development. Based on this justification, successive governments have offered various forms of subsidies to coal mining companies, from tax rebates to special security services. However, recent domestic debate about the institutional framework governing extractive industries has drawn some attention, albeit limited, to the special benefits provided to this sector, introducing questions about the legitimacy and effectiveness of such subsidies. This chapter explores the political dynamics behind subsidies to large-scale coal extraction in Colombia. After a brief overview of the socio-economic importance and challenges associated with coal production in Colombia, it describes some of the key subsidies that support coal extraction. It then explores how discursive, instrumental and institutional forms of power have been used by different actors to introduce, maintain and, in some cases, remove these subsidies. Two case studies – the Plan Vallejo and a royalty rebate – are briefly analysed in more detail.
Indonesia is often referenced in the fossil fuel subsidies literature as a case of successful reform. However, these reforms have been going on for 15 years, yet subsidies are still offered. Using qualitative analysis, and adopting a political economy approach, this chapter asks whether the Indonesia case provides an example of ‘successful’ subsidy reform by analysing three periods of reform: (1) the aftermath of the Asian financial crisis under Presidents Suharto, Megawati and Wahid (1997–2003); (2) the introduction of social assistance programmes under President Susilo Bambang Yudhoyono, also known as SBY (2004–2013); and (3) the most recent reforms under President Joko Widodo, also known as Jokowi (2014–2015). The success of these reforms will be examined through several angles: the durability of the reforms; the economic effectiveness in reducing the amount of government expenditures to fossil fuel subsidies; and the ability of the reforms to increase state revenue and improve the overall distribution of socio-economic benefits.
Government programmes subsidising greenhouse gas emissions litter global fossil fuel markets. Amounting to hundreds of billions of USD per year, they act as a negative tax on carbon, slowing the transition to cleaner fuels, weakening carbon constraints, and absorbing a significant portion of government revenues in many countries. Subsidy reform is increasingly recognized as an important carbon mitigation strategy and fiscal lever. However, widely varying estimates of subsidy magnitude and battles over subsidy definitions slow reform efforts and complicate political consensus building. Global estimates vary by at least an order of magnitude, with a similar dispersion of country-specific estimates. This chapter reviews the most common approaches to measure global fossil fuel subsidies; and discusses subsidy definitions, current estimates, key causes of estimate variance, and measurement gaps. Areas of common agreement are also presented. These are frequently broader than the numerical variance alone would suggest and are critical for successful reforms. The chapter concludes with several high-leverage opportunities for improving subsidy transparency going forward.
The idea of fossil fuel subsidy reform (FFSR) can be considered as an international norm. Norms define what actors ought and ought not to do – respect human rights, for example, or ban chemical weapons. Contrary to binding laws and rules, norms are obeyed not (necessarily) because they are enforced, but because they are seen as legitimate. This chapter seeks to explain the emergence and (uneven) diffusion of FFSR as an international norm. Our focus lies on the international level, rather than on the domestic level. We first trace the long history of multilateral efforts to address fossil fuel subsidies, including at the G20 and the United Nations (UN). Then we interpret the role of norm entrepreneurs, political opportunity structures, and discursive contestation as drivers of the dynamics of the FFSR norm. A key conclusion that emerges from this is that the norm of FFSR remains essentially contested. In contrast to the established international consensus over how to define agriculture and fisheries subsidies, no common definition of energy subsidies has emerged, which hinders the implementation of the norm.