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Sustainable Development Goal (SDG) 7 calls upon the global community to ensure access to affordable, reliable, sustainable and modern energy for all by 2030.

Often people assume that fossil fuel subsidies help the poor by making energy more affordable. In fact, most fossil fuel subsidies are not working well for energy access and poverty goals. The annual fossil fuel subsidy expenditure of USD 425 billion could be better invested by governments towards SDG outcomes. This is already recognized by SDG 12, in which the UN General Assembly’s 193 members included the reform of inefficient fossil fuel subsidies as a means of implementation to achieve more sustainable consumption and production. Subsidy savings could be invested to get on target for many development goals—not least, those on energy access.

This paper reviews the financial implications of fossil fuel subsidies and takes a closer look at how reforming fossil fuel consumption subsidies could interact with energy access goals.