The World Bank has announced its ongoing efforts to redirect harmful energy and agricultural subsidies towards more climate-friendly outcomes. At COP28, the organization emphasized the high costs of these subsidies on the planet and committed to assisting client countries with analytical work and investments, in collaboration with other development partners.
The World Bank's strategy involves two main tracks: global advocacy and knowledge sharing, alongside country-level reforms. Globally, they have organized five policy dialogues focused on reforming agricultural subsidies, secured funding to enhance a global database on agricultural support, and strengthened the Agricultural Incentives Consortium. They have also documented extensive experience in energy subsidy reforms at the country level.
On a national scale, their efforts have increased significantly from 20 deep dives in 2023 to 40 in 2024. These initiatives provide countries with options for repurposing subsidies. Grants have been awarded to six pilot projects aimed at realigning fertilizer support and soil health programs in Bangladesh, Ghana, Indonesia, Mozambique, Malawi, and Tanzania. Such realignments are intended to reduce water and air pollution while promoting inclusive growth in agriculture productivity and rural incomes.
In Colombia, a grant was provided to make access to finance programs more inclusive and climate-smart. The current energy subsidy reform work includes technical assistance grants supporting initiatives across 75 countries.
Countries like Bangladesh, Indonesia, and Malawi are reportedly showing increased willingness to consider repurposing large fertilizer subsidy programs. Two examples of recent transformational agricultural reforms include:
"The Philippines used to support rice producers through import protections," but now policy changes supported by the World Bank have shifted this support so that "farmers receive support through the Rice Competitiveness Enhancement Fund."
"In Uzbekistan," World Bank assistance "helped eliminate costly taxation of cotton and wheat prices (estimated at 1.6 percent of GDP in 2018), abolish forced labor in cotton harvesting," paving "the way for a vast agriculture modernization program that prioritizes crop diversification, soil health, and market development."
In terms of energy policies, the World Bank is aiding countries with critical regulatory reform steps such as aligning energy prices more closely with costs while introducing measures to mitigate price increase impacts. This effort has contributed over $4.5 billion in fiscal savings from 2021-2024.
Looking ahead, two additional grants will be awarded for agricultural reforms while scaling up support through World Bank operations. Efforts will also focus on addressing data gaps related to fuel prices and subsidy measures. A new Global Fuel Prices database is set for publication early next year along with a Global Fuel Subsidies and Price Control Measures database analyzing fuel pricing regimes across 150 countries since 2021.