How Large Are Global Energy Subsidies?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper estimates fossil fuel subsidies and the economic and environmental benefits from reforming them, focusing mostly on a broad notion of subsidies arising when consumer prices are below supply costs plus environmental costs and general consumption taxes. Subsidies are $4.9 trillion worldwide in 2013 and $5.3 trillion in 2015 (6.5 percent of global GDP in both years). Undercharging for global warming accounts for 22 percent of the subsidy in 2013, air pollution 46 percent, broader vehicle externalities 13 percent, supply costs 11 percent, and general consumer taxes 8 percent. China was the biggest subsidizer in 2013 ($1.8 trillion), followed by the United States ($0.6 trillion), and Russia, the European Union, and India (each with about $0.3 trillion). Eliminating subsidies would have reduced carbon emissions in 2013 by 21 percent and fossil fuel air pollution deaths 55 percent, while raising revenue of 4 percent, and social welfare by 2.2 percent, of global GDP. Terms of use: Documents inJEL-Codes: Q310, Q380, Q480.

Path dependence in energy systems and economic development

“…As an example, in 2013, post-tax subsidies in the USA amounted to US$350 billion for petroleum products, US$78 billion for natural gas and US$178 billion for coal -thus, US$605 billion of subsidies on fossil fuels, equivalent to 3.75% of the USA's GDP 49 . These subsidies have undoubtedly been in place for a long time -at least 100 years for the fossil fuel industry in the USA 50 -locking the economy into an even higher level of energy intensity than it would be without subsidies.…”

Paris COP 21: Power that Speaks the Truth?

“…Even its strongest advocates recognize that prices in carbon markets have never been of a level likely to create a significant cost of production, though they have been part of significant profits for the banks who operate the market (see Newell et al, 2013;Koch, 2014). One might also note that despite the existence of attempts to internalise some emissions-related externalities, and also to create carbon trading markets, IMF research indicates that there are simultaneously perverse multi-trillion Dollar subsidies that sustain a dependence on oil around the world (Coady et al, 2015;also, Di Muzio, 2015). Moreover, as Helm (2012) makes clear, fracking has changed the context for carbon dependence.…”

Re-thinking UK transport emissions – getting to the 2050 targets

“…A recent International Monetary Fund working paper (Coady et al, 2015) has put remarkable figures to the scale of the subsidies, at around US$4·9 trillion in 2013 and rising to US$5·3 trillion in 2015. The implications for this on the costbenefit analysis of transport infrastructure planning are profound and the value of traditionally held modes is set to change following the UN Climate Change Conference in Paris 2015.…”