With limited fiscal space for poverty reduction and social protection, countries are exploring ways to provide support to poor and vulnerable people in an efficient and effective way. In recent years, governments have increasingly been considering the replacement of energy subsidies delivered through energy prices with targeted cash transfers to select end users. Globally, energy subsidies were estimated at US$531 billion in 2021, and exceeded US$1 trillion in 2022,1 with country-level spending on energy subsi￾dies often exceeding allocations for social assistance. Energy subsidies are very costly— government spending to subsidize fossil fuels, heating, or electricity can put significant pressure on a country’s fiscal balance, consuming scarce fiscal resources that could other￾wise be used for pro-poor public spending. By distorting price signals, subsidies lead to overuse of the subsidized fuels and reduce incentives for energy conservation and invest￾ment in energy efficiency and cleaner energy alternatives, and thereby undermine climate change mitigation efforts. Much evidence indicates that energy subsidies tend to be regres￾sive, often disproportionately benefiting higher-income households.2 As countries explore ways to address the fiscal burden, opportunity costs, and regressive incidence of energy subsidies, they are increasingly focusing on creating, strengthening, or expanding social protection mechanisms to support people most in need. However, developing the ability to make such transitions and deliver solutions that meet key government objectives involves significant effort and requires key steps such as understanding subsidies and their reform; planning, financing, and implementing social protection measures; and at the same time being mindful of political economy constraints.