This report maps out the context, magnitude, trends and impacts of India’s energy subsidies. It aims to enhance transparency and dialogue on energy choices in India and to help track shifts in government support from fossil fuels to renewables.
India is the world’s second most populous country and the world’s third largest economy—and it continues to grow at a rapid pace. It is also undertaking enormous efforts to provide modern energy products and services to millions of households living in energy poverty. In years to come, it will therefore have to deal with a substantial increase in the demand for energy. How will this demand be met?
The Government of Indonesia is considering reform of its consumer subsidies for liquefied petroleum gas (LPG) due to its rising fiscal cost: IDR 25 trillion (USD 1.9 billion) in 2016: around half of its total energy subsidy expenditure.
Oil, gas and coal are multi-billion dollar businesses, yet every year fossil fuel companies get billions in tax breaks and handouts. In a world that’s shifting to cleaner sources of energy, those subsidies don’t make sense—especially when they work against the other actions we’re taking to fight climate change.
Indonesia’s Ministry of Energy and Mineral Resources estimates that around six million households are still without access to electricity, and large investments are needed to supply reliable power across the country.
Coal is a central focus in this quest, and the Indonesian government expects it to continue to play a significant role in the decades to come. However, coal has harmful environmental and health impacts, while cleaner, renewable energy alternatives are becoming increasingly cost-competitive.
China is the world’s most populous country and in 2016, the world’s #1 in coal consumption and production; # 2 in the consumption and production of oil products; and #3 in natural gas consumption.
Energy is a key issue in China’s policies, and government support has played an important role steering the development of the energy sector. China is determined to shift to a low-carbon economy: the country has committed to reach the peak of GHG emissions around 2030 and “to phase out inefficient fossil fuel subsidies” as both a G-20 and APEC member.
‘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.