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Key Messages

• Subsidies to butane in Morocco are expensive: around 3.9 per cent of the Morrocan government budget was spent on butane subsidies in 2017.
• Proposals to reform butane subsidies could have a significant impact on consumers. Mitigation measures are needed to reduce social impacts and improve targetting.
• A swap from fossil fuel subsidies to renewable energy could help to reduce subsidy costs and prompt a clean energy transition.

In Morocco's agricultural sector, subsidized butane gas is used for irrigation and household tasks.

A proposed reform of the system of butane subsidies could substantially increase energy costs for some consumers, potentially increasing energy poverty and pushing some rural consumers toward cooking on open fires. 

A subsidy swap replacing subsidies to fossil fuels with renewable energy could allow the removal of fossil fuel subsidies and promote a transition to clean energy. Two technologies—solar irrigation pumps and solar thermal collectors—could potentially offset the use of butane and reduce the cost of butane subsidies. However, policies are needed to overcome high upfront costs. This report reviews how butane subsidies can be reformed, how the impacts on consumers can be managed and how some of the savings can be reallocated to promote a transition to clean energy.       

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