How Large are Global Energy Subsidies?
43 Pages Posted: 2 Jun 2015
Date Written: May 2015
This paper provides a comprehensive, updated picture of energy subsidies at the global and regional levels. It focuses on the broad notion of post-tax energy subsidies, which arise when consumer prices are below supply costs plus a tax to reflect environmental damage and an additional tax applied to all consumption goods to raise government revenues. Post-tax energy subsidies are dramatically higher than previously estimated, and are projected to remain high. These subsidies primarily reflect under-pricing from a domestic (rather than global) perspective, so even unilateral price reform is in countries’ own interests. The potential fiscal, environmental and welfare impacts of energy subsidy reform are substantial.
Keywords: Energy sector, Subsidies, Energy prices, Consumption taxes, Fiscal reforms, Sensitivity analysis, energy subsidies, efficient taxation, deadweight loss, revenue, environment, vehicle, traffic, subsidy, transport
JEL Classification: Q31, Q38
Suggested Citation: Suggested Citation