Title: Petroleum subsidies, clean energy transition, and decarbonisation in oil-producing developing countries: what is the role of regulatory quality?

Authors: Ibrahim Shittu; Abdul Rais Bin Abdul Latiff; Siti 'Aisyah Baharudin

Addresses: School of Social Sciences, Universiti Sains Malaysia, 11800 Gelugor Penang, Malaysia ' School of Social Sciences, Universiti Sains Malaysia, 11800 Gelugor Penang, Malaysia ' School of Social Sciences, Universiti Sains Malaysia, 11800 Gelugor Penang, Malaysia

Abstract: Energy transition and decarbonisation are critical gateways to cutting carbon emissions, improving energy security, and achieving the United Nations Sustainable Development Goals. Researchers have paid enormous attention to understanding key drivers of clean energy transition and decarbonisation. However, they have overlooked the role of fossil fuel subsidies and regulatory quality in developing countries where fuel subsidies are prominent and institutional quality is weak. This study employs a Prais-Winsten regression to examine the impact of petroleum subsidies and regulatory quality on clean energy transition and decarbonisation in 25 developing countries between 2010 and 2020. The result revealed that petroleum subsidies hinder the shift to clean energies and encourage high carbon intensity. However, when these subsidies are accompanied by a strong regulatory quality, they promoted energy transition and decarbonisation. The study recommends practical pathways to reform fuel subsidies, swap subsidy saving into clean energies, and strengthen regulatory quality.

Keywords: clean energy; energy transition; carbon emission; decarbonisation; petroleum subsidies; regulatory quality; developing countries; Prais-Winsten regression; SDGs; renewable energy.

DOI: 10.1504/IJSE.2025.142921

International Journal of Sustainable Economy, 2025 Vol.17 No.1, pp.26 - 51

Published online: 02 Dec 2024 *

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