How Large are Global Energy Subsidies?

43 Pages Posted: 2 Jun 2015

See all articles by David P. Coady

David P. Coady

International Monetary Fund (IMF)

Ian Parry

International Monetary Fund (IMF)

Louis Sears

International Monetary Fund (IMF)

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department

Multiple version iconThere are 2 versions of this paper

Date Written: May 2015

Abstract

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

Coady, David P. and Parry, Ian and Sears, Louis and Shang, Baoping, How Large are Global Energy Subsidies? (May 2015). IMF Working Paper No. 15/105. Available at SSRN: https://ssrn.com/abstract=2613304

David P. Coady (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Ian Parry

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Louis Sears

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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