Article Series: Fossil Fuel Subsidies

Fossil Fuel Resources

Resources for identifying, measuring and assessing fossil-fuel subsidies.

Research Type: 

Comparison of Fossil-Fuel Subsidy and Support Estimates

‘Global’ estimates of fossil-fuel subsidies vary between organizations: from a total of US$ 2 trillion for the IMF’s post tax estimate to the IEA’s US$ 544 billion. This short primer developed by the Global Subsidies Initiative (GSI) in conjunction with the OECD, World Bank, IMF and the IEA aims to explain the estimates and methods used. While there is a great deal of overlap as to the exact subsidies being measured, the kinds of subsidies that are included and the method used to estimate them can differ. For example, only the IMF's post-tax method includes unpriced externalities from fossil-fuel use, and this significantly increases the estimated cost of subsidies globally. Differences between global estimates are also related to the inclusion of different countries, the coverage of different fuels and estimation at different time-periods. Despite these differences, all organizations agree that identifying and measuring fossil-fuel subsidies is a first step in helping governments to get the prices right and to manage such subsidies sustainably in the future.

Measuring Subsidies Using The Price-Gap Approach

The price-gap approach is one of the most commonly employed methods for estimating fossil-fuel subsidies: an examination of differences between the price for a good or service in the economy against what that price would be without government intervention. This report explains how the price-gap method works, reviews its benefits and limitations, and explores potential systematic bias in estimates, drawing conclusions and implications for their interpretation. It concludes that price gap data should be collected annually for all major fossil-fuel energy producing and consuming nations. Gaps in the estimation method could then be filled in every five years through the more complex but more complete 'transfer' method of estimating subsidies.

The report was completed under IISD's From Bali to Copenhagen project. More information about this project is available at: http://www.iisd.org/trade/crosscutting/bali_copenhagen/

Mapping the Characteristics of Producer Subsidies: A Review of Pilot Country Studies

This paper helps increase the body of knowledge about the data sources that hold information on subsidies to fossil-fuel producers, by reviewing available data in a diverse group of countries in terms of data transparency, governance systems, energy markets and stages of economic development - China, Germany, Indonesia and the United States. It finds that fossil-fuel producers are supported by a multitude of policies, ranging from direct payments to preferential access to government-owned lands. While direct payments proved relatively easy to identify in government budget reporting, data was not always provided at a sufficient level of disaggregation to allow proper attribution to beneficiaries.

Subsidy Estimation: A Survey of Current Practice

This technical manual draws together the different subsidy estimation methods that are used and have been published, mainly by intergovernmental organizations and governments. While the manual quotes multiple sources for most methods, often the approaches do not differ fundamentally, and users may simply want to refer to the one that makes most sense to them. In cases where they do differ markedly, users should choose whichever method best serves their purposes and can be implemented with the available data.

For a user-friendly introduction to the manual, explaining which methods should be used to estimate which kinds of subsidies, please see our related Policy Brief, A How-to Guide: Measuring subsidies to fossil-fuel producers.

Scoping the feasibility of fossil-fuel subsidy estimation

This study reviews the literature on fossil-fuel subsidy estimation, providing a brief overview of major producing and consuming nations and outlining the available international data. It concludes that a great deal of information on fossil-fuel subsidies is already available. However, it also identifies major gaps: non-standardized data makes it hard to compare countries; estimates rarely cover all forms of subsidization; and the accessibility and quality of data differs considerably between countries. It also discusses possible strategies for improving the existing body of knowledge, including national-level data collection, accounting for externalities and developing a research program for work in this area.

Archive of Non-GSI Fossil-Fuel Studies

The GSI regularly reviews studies by other organisations in its Subsidy Watch blog. Click here to browse the archive of non-GSI studies.