Numbers ranging from half a trillion to two trillion dollars have been cited in recent years for global subsidies for fossil fuels. How are these figures calculated and why are they so different? The most commonly used methods for measuring subsidies are the price-gap approach-quantifying the gap between free-market reference prices and the prices charged to consumers-and the inventory approach, which constructs an inventory of government actions benefiting production and consumption of fossil fuels.
Presentation at a meeting sponsored by the Energy Research Institute of China's National Development and Reform Commission and the World Bank in Beijing, China. The presentation reviews existing estimates of global subsidies to energy, including their magnitude, differences in estimation methods and assumptions, reporting trends, and emerging issues.
We are grateful to the World Bank for making a Mandarin version of this presentation available as well.
The Inventory Of Estimated Budgetary Support and Tax Expenditure for Fossil Fuels 2013 collects details on more than 550 fossil fuel support measures in the 34 OECD member countries, including many provided by state and provincial governments. The report also highlights progress made and the benefits identified by a number of OECD countries in reforming support to fossil fuels in recent years. It updates an earlier report released in 2011.
Ben Sills of BusinessWeek reports today that the International Energy Agency (IEA) estimates global fossil fuel subsidies in 2008 at $557 billion. The figure is based on an interview the magazine did with Fatih Birol, Chief Economist of the International Energy Agency.
When people look for official information on US energy policy and trends, the Energy Information Administration (EIA), part of the US Department of Energy, is one of the first places they look. I look there too: EIA staff do great work in many areas; they are willing to talk about their work and assumptions; and they have developed a model of data sharing that I wish many more government departments would adopt.
David Coady and his team at the IMF have just released an update on estimated global subsidies to petroleum products.
Petroleum product subsidies have again started to rise with the rebound in international prices. This note reviews recent developments in subsidy levels and argues that it is necessary to reform the policy framework for setting petroleum product prices in order to reduce the fiscal burden of these subsidies and to address climate change. In 2003, global consumer subsidies for petroleum products totaled nearly $60 billion. They are projected to reach almost $250 billion in 2010.
Consumer subsidies to oil consumption depress the visible price of fossil fuels to end users, and with it their incentive to substitute alternative fuels or conservation. Understanding which countries mute price adjustments in oil products, and to what degree, is important in mapping out the options and trade-offs for reform.
Patterns of energy production and use threaten the stability of
eco-systems and the health and well-being of current and future
generations. Still, energy subsidies worldwide amount to around USD
300.000 billion per year, or around 0.7 per cent of GDP.