15 Global Energy Subsidies

The low or negative returns also preclude network expansion to the very customers and service regions it needs to reach in order to ameliorate energy poverty and improve the quality of life for the billions of people without access to modern energy services. [...] Formal approval among the 20 largest economies in the world (the G-20) to phase out environmentally harmful subsidies to fossil fuels has also provided political support for action, though the success of that commit- ment remains far from certain.4 Finally, a growing number of researchers around the world are focused on the issue and continue to produce important new analysis of the subject. [...] As of the end of 2011, according to IMF analysis, half of the countries in the Middle East and Central Asia had fuel subsidies exceeding 2.3 per cent of GDP and half of the countries in Sub-Saharan Africa had fuel subsidies greater than 1.3 per cent of GDP (Coady, Flamini and Antonio, 2012: 48). [...] The figures are striking: 30 of the 38 countries tracked by the IEA had subsidies in excess of 5 per cent of federal revenues, and nearly one-quarter of the sample was spending more than 20 per cent of federal revenues. [...] Tran- sitions require confidence that the government will have the will and the capability to make good on transitional support or other promises it made to achieve buy-in on the reforms, and to prevent backsliding that will undermine the positive aspects of the shift.