Many governments around the world are reacting quickly to protect consumers from increasing fuel prices. In the days following the conflict in the Middle East, the IEA has tracked announcements from around 40 countries that are deploying or considering deploying emergency measures to shelter consumers from price increases. Immediate government responses have been to implement price caps, fuel subsidies and shifts in taxation, along with price stabilisation mechanisms that can quickly set limits on consumer price increases.  

Previous crises, including the Covid-19 pandemic and the 2022 energy crisis, demonstrated that impacts often fall disproportionately on the poorer segments of the population. On top of this general effect, consumers and small businesses in remote and Island territories are often very exposed to increases in oil prices. Even in normal times, electricity generation on islands can cost 10 times more than on mainland territories where they are often dependent on diesel generators. As a response to this issue, Barbados, for example, has locked in the price of heavy fuel oil which powers electricity generation, at USD 92 per barrel for the three months, starting from April 2026.

Experience from previous events can guide measures today. Between early 2022 and April 2023, governments had spent around USD 900 billion in direct grants, vouchers, tax reductions and price regulations, often resulting in additional costs to compensate energy companies for operating losses. Blanket measures such as price caps and energy tax reductions were widely used as they are relatively easy to administer and can alleviate pressure quickly. However, they can also represent high costs to government and be challenging to phase-out.

Designing emergency support mechanisms that are temporary and targeted towards consumers that most need assistance can ensure that government support is deployed both quickly and efficiently in times of crisis. Investing in short-term measures to promote energy efficiency and demand restraint can also help to quickly lower energy bills in cost-efficient ways. Some examples of mechanisms that have been used widely follow, with a specific attention to measures that target low-income and vulnerable households.

Governments can support low-income households by reducing their energy costs or giving them money to help pay for energy. Unlike universal subsidies which benefit everyone, targeted programmes focus only on vulnerable or eligible groups making assistance more efficient and reducing government spending.

In response to the crisis in the Middle East, the United Kingdom has announced an allocation of GBP 53 million to support vulnerable heating oil customers and is committed to ensuring help reaches those who need it most. In 2022, learning from the Covid-19 crisis where universal payments led to increased energy consumption, Japan made targeted cash payments to 16 million low-income households to compensate them for rising electricity, gas and fuel costs. The Philippines recently launched a nationwide programme providing a PHP 5 000 cash subsidy (about USD 80) to public utility vehicle drivers starting with 139 000 tricycle drivers to help them cope with surging fuel prices. During the Covid-19 crisis, Pakistan delivered a cash transfer to low-income households including fuel support for low-income earners. In response to the current crisis, Pakistan is considering putting in place the same programme as a relief package for registered recipients, specifically targeting motorcycle and rickshaw owners who rely on fuel for their daily income.   

Additionally, governments can also set a maximum price that energy suppliers can charge consumers for energy. Such caps are intended to protect households and businesses from high energy prices, especially during times of market volatility. While not specifically targeted, price caps can provide immediate relief for lower-income households who spend a higher share of their income on energy and ensure that they can still meet basic consumption needs. However, untargeted price caps can be costly and might reduce incentives for consumers to reduce their long-term energy demand.    

Governments can play a determining role in how energy related taxes and levies are distributed among utilities, industry and households. These policy choices can have a significant impact on the energy price for end users and can also be leveraged in times of crisis to provide bill relief for households. For example, governments can eliminate or reduce taxes (such as sales tax, VAT, import duties, or excise duties) on energy bills to lower costs for households. Targeting tax reductions on products that use less energy than standard versions is also a lever to reduce household energy bills. Governments can also design tariff bands that determine price thresholds by income brackets, to offer lower prices for those who consume less to ensure that they can meet minimum energy needs.

In response to the current crisis in the Middle East, Austria has announced that it will return extra tax revenue from higher fuel prices to consumers by cutting the petrol tax, starting with a reduction of 5 euro cents per litre. Meanwhile, Türkiye has introduced a temporary fuel tax adjustment mechanism that offsets up to 75% of oil‑price increases by reducing the Special Consumption Tax, aiming to protect consumers from rising pump prices. In 2022, Finland increased the tax reduction workers could claim for their commuting costs. This helped target benefits toward daily commuters. In 2002, Brazil implemented a social tariff banding programme which offered progressive subsidies for low-income households based on their consumption, starting with a 65% reduction for households consuming less than 30kWh. In 2025, this was reformed to provide 60 million low-income Brazilians a full subsidy for the first 80 kWh consumed.

Reducing oil consumption in the short term can help shield households and businesses from high prices. Combining those immediate actions with longer-term, structural measures to lower oil use can enhance energy security and affordability. Governments have the required tools to make households and businesses more resilient against potential oil price shocks. Key actions include:

• Reinforce the adoption of electric and more efficient vehicles and accelerate the installation of EV charging infrastructure: EVs now account for over 1 in 4 cars sold worldwide. Promoting EVs, hybrids, and other fuel-efficient vehicles – not just cars, but also two-wheelers, buses, and trucks – alongside expanded charging infrastructure can help reduce global reliance on oil. Governments can accelerate adoption through tax incentives, subsidies, low-emission zones, and other supportive policies. Some countries have recently stepped up electrification efforts amid the current crisis: Indonesia is aiming to convert its two-wheeler fleet through targeted programmes, while Lao PDR is investing in EV charging and exploring further measures. Meanwhile, integrating EV incentives into broader industrial strategies can amplify their impact. Brazil’s Green Mobility and Innovation Programme illustrates this by combining fuel economy standards with incentives for domestic EV production.

• Raise the ambition of fuel economy standards for road vehicles: While EV sales are growing, most vehicles on the road worldwide still rely on internal combustion engines. Many countries have set fuel economy standards to ensure new vehicles align with fuel efficiency and electrification targets. Today, most new cars sold are covered by such standards. Similarly, improving the fuel efficiency of trucks is critical, especially in fast-growing transport sectors in emerging economies. Notable policy examples include the EU’s CO₂ standards for cars and heavy-duty vehicles, Japan’s fuel efficiency standards for trucks and buses, and China’s fuel consumption limits tied to vehicle weight. Other countries like France have expanded their use of weight-based road taxes with differentiated rates for ICEs and EVs. Complementary measures such as labelling can also have an impact.

• Accelerate the deployment of alternative modern cooking solutions: LPG has provided a key avenue in many countries to replace traditional biomass and kerosene stoves for cooking, but electricity and other energy sources provide alternatives. Governments and organisations can support this transition through a range of measures, such as providing subsidies, offering microfinance for household purchases, or coordinating bulk procurement programmes to lower costs. For example, Indonesia is supporting households adopt electric cooking equipment by setting ambitious targets, carrying out pilot projects and distributing units to households with reliable electricity connections currently using LPG.

• Accelerate the deployment of energy management systems in industry: Energy management – the proactive and systematic monitoring, analysis, control, and optimisation of energy – has been shown to deliver more than 10% energy savings on average within the first three years of implementation in industrial companies. A growing number of companies are demonstrating even larger savings of 30% or more, with many of the measures at low or no cost. Governments can encourage the adoption of energy management systems in industry by providing incentives, technical support, and recognition programmes for companies implementing standards such as ISO 50001, which help monitor, optimise, and reduce energy use. For example, Japan combined incentives to implement energy management with benchmarking systems. Meanwhile, France provides tailored information, incentives, and support for small and medium-sized companies seeking to implement energy management practices.

• Accelerate the replacement of oil heating systems and industrial boilers with heat pumps: Many countries still rely on oil for their residential space and water heating, and oil products are used for low-temperature heat in industry. Electrifying these end-uses with high efficiency heat pumps, combined with retrofits, can help reduce oil demand. Policy examples include Canada’s Oil to Heat Pump Affordability Program, which provides upfront grants to low and median income households to help replace heating oil with heat pumps. In Finland, homeowners can replace their oil heating systems and obtain a grant of up to EUR 4 000 if installing a heat pump. In New England, a region where heating oil is still widely used, the New England Heat Pump Accelerator aims to support the installation of 580 000 units through targeted incentives.

• Increase plastic waste collection, re-use and recycling: Many plastic products are single use, some for essential purposes, such as medical supplies, and others mainly for convenience, like bottles, cutlery, and food containers. Measures to reduce their use have a modest impact on oil demand in the short term but can help pave the way for larger reductions. Existing recycling facilities can be optimised to increase recycling rates, supported by improved waste management infrastructure. Meanwhile, collection and recycling rates can also be gradually increased, alongside improvements in processing yield and material substitution.

• Scale up the supply of sustainable fuels: The availability of sustainable feedstocks remains a constraint on how much biofuel production can expand. Even so, there is scope to increase output by making greater use of waste cooking oil, animal fats, and other non-food sources. Meanwhile, synthetic fuels, such as hydrogen and ammonia, are unlikely to significantly reduce oil use in the near term, but accelerating research, development, and demonstration will be important to help diversify future energy supply. Sustainable fuels can play a role in both transport and industry, particularly in applications that are difficult to electrify, such as aviation, shipping, and high-temperature industrial processes.