Fossil Fuel Subsidy Reform: What Role for the World Trade Organization?

The removal of fossil fuel subsidies (FFS) would bring about many important and positive effects, among them helping to reduce air pollution and emissions of greenhouse gases that cause climate change and improving government’s finances. It could also reduce distortions affecting trade in not only the subsidized products, such as coal, fuel oil and natural gas, but also in goods that compete with fossil fuels, such as wind turbines and solar photovoltaic panels.

The Trade Effects of Phasing Out Fossil-Fuel Consumption Subsidies

This report draws on previous OECD work to assess the impact on international trade of phasing out fossil fuel consumption subsidies provided mainly by developing and emerging economies. The analysis employed the OECD’s ENV-Linkages General-Equilibrium model and used the IEA’s estimates of consumer subsidies, which measure the gap existing between the domestic prices of fossil fuels and an international reference benchmark.

Natural gas fracking well in Louisiana

Last April when dried distillers grains DDGs started showing up in far flung markets, the industry touted it as an example of their global competitiveness.  I was thinking subsidy arbitrage was more likely.  Seems like the subsidies are closer to the truth.  Philip Brasher summarizes the pending trade case launched by China for dumping DDGs.  He notes that the case is likely retaliation for a case the US launched against China for subsidies to renewable energy industries such as wind and solar.  It is likely that both the US and Chinese cases have merit, and that the existing subsidies do, indeed, result in substantial distortions in trade patterns.  It is also likely that politics, rather than economics, is more likely to drive their resolution.

Sustainability Criteria for Fisheries Subsidies - Options for the WTO and Beyond

Inappropriate subsidies contribute to widespread overfishing and to the distortion of trade in fisheries products. Current negotiations in the World Trade organization aim to address this problem through binding new subsidies rules. Meanwhile, many governments are working to reform their domestic fisheries subsidies programmes. But some fisheries subsidies will undoubtedly continue to be used for years to come. In this context, a knowledge of the policies and practices that can reduce the risks associated with these subsidies is critically important.

Public Subsidies and Policy Failures: How Subsidies Distort the Natural Environment, Equity and Trade and How to Reform Them

(PowerPoint). Cees van Beers and Andre de Moor. (Northampton, MA: Edward Elgar, 2001). Link goes to PowerPoint presentation; actual book not on the web. Discusses the negative environmental and economic effects of subsidizing fossil fuel energy.