Removing fossil fuel subsidies is important for mitigation and making carbon pricing polices effective. We find that removing subsidies on fossil fuels may not generate more public resistance (or support) than introducing a carbon tax, and by specifying alternatives for revenue recycling, the level of acceptability may increase.
Recommendations for policy
The results concerning policy attitudes imply that removing subsidies on fossil fuels may not present much more of a political challenge than introducing carbon taxation.
Specifying alternatives for revenue recycling — where public funds currently used for subsidies are instead directed toward other public investments — might increase the level of acceptability of carbon pricing and subsidy removal.
Fossil fuel subsidy removal frees public funds for investing in social and economic development, which would be of great value and use in many developing countries.
Before deciding on removing existing fossil fuel subsidies, careful country-specific investigations should be done to determine the preferred options for revenue recycling among the public.
based on N. Harring, E. Jönsson, S. Matti, G. Mundaca & S. C. Jagers Nature Climate Change https://doi.org/10.1038/s41558-023-01597-5 (2023).
The policy problem
Annually, the world spends about US$697 billion on directly subsidizing fossil fuels. If indirect costs were also included (such as the contribution of fossil fuels to global warming, local air pollution and other externalities, and foregone consumption tax), subsidies would be 6.8% of the global gross domestic product. The costs of maintaining fossil fuel subsidies are expected to increase and be regressive for developing countries especially when they are less resource-endowed and have more difficulties in raising fiscal revenues than developed countries. Removing fossil fuel subsidies is crucial not only for making more valuable use of government funds, but also for reducing carbon dioxide emissions and making carbon pricing policies more effective. Currently, scientific evidence on the scale and scope of public attitudes toward fossil fuel subsidy removal policies is scarce. We investigate the public opinion on the removal of fossil fuel subsidies in five developing countries.
We find that opposition to removal of existing subsidies is not greater than opposition to possible carbon pricing implementation. Our results indicate that the public in fact considers a subsidy removal policy as being equally desirable (or undesirable) as the introduction of a carbon tax. If so, we should expect suggestions for subsidy removal to be met with similar public opposition or support as has been seen for other carbon pricing measures. There are few studies with which we can compare our findings. Therefore, there are reasons to be cautious in making general conclusions about the extent to which there will be support for the removal of fossil fuel subsidies, at least in the countries we studied. Furthermore, the public in different countries may turn out to have different preferences for how additional revenues from either removing subsidies or collected taxes should be used (Fig. 1).
By using a 1 × 7, pre-registered survey experiment (N = 6,636), we contribute to the existing literature in the following ways: (1) fivedeveloping countries (Ecuador, Egypt, India, Indonesia and Mexico) are studied — they were selected because they all have large subsidies for fossil fuel linked to both its consumption and production; (2) we analyse public attitudes toward the introduction of a carbon tax, and the removal of subsidies on both industrial and private consumption of fossil fuels; (3) we examine whether and how attitudes toward subsidy removal and carbon taxation may differ from each other; (4) we study whether policies that use savings from fossil fuel subsidy removals to invest in the social and economic welfare system lead to more positive attitudes toward subsidy removal.
Support for Fossil Fuels Almost doubled in 2021, Slowing Progress Toward International Climate Goals, According to New Analysis from OECD and IEA (IEA & OECD, 2022); https://go.nature.com/3e9jdixThis report provides the most recent data on fossil fuel subsidies globally.
Bergquist, M., Nilsson, A., Harring, N. & Jagers, S. C. Meta-analyses of fifteen determinants of public opinion about climate change taxes and laws. Nat. Clim. Change 12, 235–240 (2022). This study determines which variables are most strongly associated with public support for climate policy instruments.
Mildenberger, M., Lachapelle, E., Harrison, K. & Stadelmann-Steffen, I. Limited impacts of carbon tax rebate programmes on public support for carbon pricing. Nat. Clim. Change 12, 141–147 (2022). This study explores how carbon tax rebate programmes in Switzerland and Canada affect public support for carbon taxes.
Mundaca, G. How much can CO2 emissions be reduced if fossil fuel subsidies are removed? Energy Econ. 64, 91–104 (2017). This study investigates the price elasticities for fossil fuels and the effects of fossil fuel subsidy removal on climate emissions.
We are grateful for financial support from FORMAS — the Swedish research council for Sustainable Development 2019-00916; 2019-02005, The Swedish Research Council: 2016-03058, The Swedish Energy Agency: 2019-006655.
The authors declare no competing interests.
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Harring, N., Jönsson, E., Matti, S. et al. Public acceptance of fossil fuel subsidy removal can be reinforced with revenue recycling. Nat. Clim. Chang. 13, 214–215 (2023). https://doi.org/10.1038/s41558-023-01609-4