World Bank Group

11/28/2023 | Press release | Distributed by Public on 11/28/2023 19:23

Eight in 10 People Would Support Reforming Energy Subsidies in Exchange for Better Public Services, Survey Finds

WASHINGTON, November 28, 2023 - Up to 80 percent of people surveyed in 12 middle-income countries around the world would support reforming energy subsidies in exchange for better schools, hospitals, and roads, according to a study by the World Bank released today.

This figure represents a doubling-or even tripling in some instances-of public support compared to reforms offered without compensation. The findings provide governments with viable pathways to garner public support to reform energy subsidies, which can be inequitable, harmful to the environment, and costly: in 2022, these subsidies resulted in a record $1.3 trillion in direct costs.

The online survey captured the views of about 37,000 people in Angola, Argentina, Bangladesh, Bolivia, Ecuador, Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan, and Vietnam, countres which collectively spent nearly $200 billion in energy subsidies in 2022.

Other compensatory options also garnered strong support. Nearly three-quarters of respondents indicated they would support energy subsidy reform in exchange for better access to energy sources or investments to improve the environment. Even the least popular option-universal cash transfers-gained support from 60 percent of respondents. Only 30 percent would support reforms without any compensation.

"This timely and important study presents policymakers with compelling options to boost public support for reforming costly energy subsidies," said Luis Felipe López-Calva, World Bank Global Director for Poverty and Equity. "Such reforms can help governments redirect critical fiscal resources toward greater investments in sustainable and inclusive development, improving people's lives and helping protect the environment."

The study found that governments could further increase public support for energy subsidy reform through effective communication and information campaigns. Only half of the survey respondents knew that fuel or electricity subsidies existed in their country; in contrast, those who were aware of such subsidies were more likely to support reforms. Using experimental tools, the study found that providing information about the negative consequences of energy subsidies, particularly in terms of damaging the environment, could significantly raise support for reform.

The study underscores that it is possible to make progress on a challenging reform agenda. However, it notes that such reform should also be taken with a long-term view, given the complex institutional and political realities.