To reduce greenhouse gas emissions in the coming decades, many governments will have to reform their energy policies. These policies are difficult to measure with any precision. As a result, it is unclear whether progress has been made towards important energy policy reforms, such as reducing fossil fuel subsidies. We use new data to measure net taxes and subsidies for gasoline in almost all countries at the monthly level and find evidence of both progress and backsliding. From 2003 to 2015, gasoline taxes rose in 83 states but fell in 46 states. During the same period, the global mean gasoline tax fell by 13.3% due to faster consumption growth in countries with lower taxes. Our results suggest that global progress towards fossil fuel price reform has been mixed, and that many governments are failing to exploit one of the most cost-effective policy tools for limiting greenhouse gas emissions.
We thank K. Bawn, M. Bazilian, D. Coady, A. Cooley, J. Kyle, Y.-M. Liou, I. Parry, D. Posner, B. Shang and D. Treisman for their suggestions on the analysis, IMF and World Bank staff for sharing their country data, and E. Chenoweth and A. Glynn for their early guidance on the research design. Our data collection efforts were supported by the UCLA Burkle Center and the Natural Resources Governance Institute. Earlier versions of this paper were presented to seminars at the World Bank, the Council on Foreign Relations, the 2015 meeting of the American Political Science Association, the 2015 meeting of the International Political Economy Society, Georgetown University, UCLA Law School, Yale University and Columbia University.
Supplementary Figures 1–4, Supplementary Tables 1–2, Supplementary Notes 1–2.