Published on Let's Talk Development

Stop subsidizing asteroids: How to persuade people that governments should stop subsidizing fossil fuels

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"Break Free from Fossil Fuels" street sign. | © Eelco Böhtlingk on Unsplash Information about the negative consequences of fossil fuel subsidies increases support for reform. | © Eelco Böhtlingk on Unsplash

Climate change represents an existential threat to humanity. Yet governments spend trillions each year subsidizing the consumption of fossil fuels, effectively paying to speed up climate change. The United Nations Development Programme famously calls out this irrationality in the Don’t Choose Extinction campaign where they highlight how humans subsidizing fossil fuels equates to if dinosaurs had paid the giant asteroid to hit Earth.

Despite the widely recognized urgent need for climate action, many governments are reluctant to reduce fossil fuel subsidies as they are concerned about public outcry. After all, past efforts by governments to remove fossil fuel subsidies have been associated with riots in some countries.

Our recent study provides novel insights for policy makers about how they can persuade citizens to support the removal of fossil fuel subsidies. We surveyed over 37,000 people across 12 middle-income countries that provide almost US$1 trillion annually on implicit and explicit fossil fuel subsidies, to examine what types of information and alternative policies would increase support for reform. Survey respondents were divided into four groups. The first three groups received information about the negative consequences of fossil fuel subsidies (that they are an inefficient use of government resources; that they benefit the rich more than the poor; or that they contribute to climate change and air pollution). The fourth group received no information (control group). Below we illustrate three key messages for policy makers:

1. There is a need to build public support for removing fossil fuel subsidies.

On average, only around 30 percent of survey respondents in the control group would support energy subsidies being removed if no alternative policies were put in place. Support was particularly low among respondents who perceived they were poor or middle class, and among those who believed energy subsidies were a right. Support was slightly higher among respondents who stated they trust the government. These findings across countries confirm existing case studies that highlight how the strength of the social contract between citizens and the government, as well as the economic circumstances of households, is related to support for fossil fuel subsidy reforms.

2. Information about the negative consequences of these subsidies increases support for reform.

Information about the negative consequences of fossil fuel subsidies on efficiency, equity, and the environment can lead to greater support for reform. In particular, the group that received information about how these subsidies contribute to climate change and air pollution had the largest increase in support for reform. The effect of this treatment was primarily driven by respondents who believe they are middle class and live in countries where gasoline is the primary fossil fuel that is subsidized. Among these respondents, support for reform increased by around 25 percent.

3. Most people would prefer fossil fuel subsidies to be replaced by alternative policies.

Remarkably, over 90 percent of respondents in each country stated they would support removing fossil fuel subsidies if an alternative policy were put in place. We asked respondents their level of support for reducing energy subsidies if the funds saved were to be redirected to a range of policy options, which are shown in Figure 1 below. In every country, respondents prioritized spending resources on hospitals, schools, and roads over short-term increases in household income through cash transfers and tax cuts. It is striking that even the least popular option, cash transfers for all households, had twice as much support as keeping fossil fuel subsidies as they are. These findings suggest that respondents would prefer greater provision of public services over cash, but cash is still much more popular than subsidies.

Figure 1:  Preferred alternative policy option to energy subsidies, share of respondents by country (%)

Our study highlights that it is possible to fight climate change by galvanizing support for the removal of fossil fuel subsidies. While our survey shows that policy makers’ concerns about how acceptable these reforms are may be valid, it also shows how to change attitudes. We illustrate that information campaigns are likely to have a crucial role in successful reform programs, especially when they emphasize how fossil fuel subsidies contribute to climate change and air pollution. In addition, the types of alternative policies implemented alongside a reduction in fossil fuel subsidies are pivotal in making reforms popular. We also make a methodological contribution by showing how this type of cross-country, randomized survey experiment can be used to generate novel insights about reform processes in middle-income countries. Collectively, our hope is that these results will help to spur governments to persuade their citizens of the need for fossil fuel subsidy reform, which is necessary for our collective future on a livable planet.

For more details about this study see our working paper, policy brief, and data replication package.

Christopher Hoy

Young Professional, Poverty and Equity Global Practice, World Bank

Yeon Soo Kim

Senior Economist, Poverty and Equity Global Practice

Minh Cong Nguyen

Senior Data Scientist, Poverty and Equity Global Practice, World Bank

Mariano Ernesto Sosa

Fiscal Policy Consultant, World Bank

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