• English
  • Deutsch
Facebook icon
LinkedIn icon
Twitter icon
YouTube icon
Header image Ecologic

Energy Subsidies

Energy Subsidies

There are several reasons to reform the subsidy regime in the energy sector.

Energy subsidies come in many shapes and forms. Reducing them is a rare win-win. Both public budgets and the climate would profit. In this book chapter, Frans Oosterhuis and Katharina Umpfenbach are digging into the conundrum why energy subsidy reform remains slow across the world despite its obvious benefits.

Based on a stocktaking of the types, size and rationale of subsidies in the energy sector globally, the authors argue that energy subsidies are often introduced to tackle a set of social goals at the same time. In many cases, however, they are badly suited to reach these goals effectively. Energy subsidies, especially for fossil fuel, create incentives to use energy inefficiently; they contribute to path dependencies and invite freeriding, for example when middle-income households profit from low prices although they could afford energy at full market cost.

With the exception of well-designed subsidies for immature renewable energy technologies, there are thus several reasons to reform the subsidy regime in the energy sector. To avoid political backfire, reform should be based on thorough evaluation of the subsidy’s effectiveness, clear and transparent communication and good timing. In Europe e.g., the current focus on austerity can be a window of opportunity for tackling energy subsidy reform.

The book Paying The Polluter - Environmentally Harmful Subsidies and their Reform can be ordered at Edward Elgar Publishing for £81.


Oosterhuis, Frans and Katharina Umpfenbach 2014: "Energy Subsidies", in: Frans Oosterhuis and Patrick ten Brink (eds.): Paying The Polluter - Environmentally Harmful Subsidies and their Reform. Cheltenham: Edwar Elgar Publishing, 105–124.

20 pp.
Table of Contents

Kai Schlegelmilch
1. Introduction: High Hopes and Down-to-Earth Realism
Frans Oosterhuis and Patrick ten Brink
2. A Global Survey of Potentially Environmentally Harmful Subsidies
Ronald Steenblik
3. Hidden Subsidies: The Invisible Part of the EHS Iceberg
Sirini Withana, Patrick ten Brink, Leonardo Mazza and Daniela Russi
4. Can We Recognise an Environmentally Harmful Subsidy if We See One?
Jan Pieters
5. Quantifying the Impacts of Environmentally Harmful Subsidies
Cees van Beers and Jeroen van den Bergh
6. Energy Subsidies
Frans Oosterhuis and Katharina Umpfenbach
7. Environmentally Harmful Subsidies in the Transport Sector
Laurent Franckx and Inge Mayeres
8. Agriculture, Food and Water
Frans Oosterhuis and Kris Bachus
9. Environmentally Harmful Subsidies and Biodiversity
Patrick ten Brink, Markus Lehmann, Bettina Kretschmer, Stephanie Newman and Leonardo Mazza
10. Reforming EHS in Europe: Success Stories, Failures and Agenda Setting
Jacqueline Cottrell
11. Phasing Out Environmentally Harmful Subsidies Worldwide
Anja von Moltke
12. Reform of Environmentally Harmful Subsidies: Distributional Issues
Annegrete Bruvoll and Haakon Vennemo
13. The Way Forward: Reforming EHS in the Transition to a Green Economy
Patrick ten Brink, Sirini Withana and Frans Oosterhuis
Annex 1: EHS Assessment Guide
Patrick ten Brink and Sirini Withana

subsidies, energy, fossil fuels, reduction of CO2 emissions, reforms, environment, environmental economics, environmental politics and policy, politics and public policy, environmental governance and regulation, global