How Large are Global Energy Subsidies?

38 Pages Posted: 18 Apr 2016

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: March 17, 2016

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.

Keywords: energy subsidies, global warming, air pollution, efficient taxation, deadweight loss, revenue

JEL Classification: Q310, Q380, Q480

Suggested Citation

Coady, David P. and Parry, Ian and Sears, Louis and Shang, Baoping, How Large are Global Energy Subsidies? (March 17, 2016). CESifo Working Paper Series No. 5814. Available at SSRN: https://ssrn.com/abstract=2766224

David P. Coady

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Ian Parry (Contact Author)

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

Register to save articles to
your library

Register

Paper statistics

Downloads
138
Abstract Views
775
rank
77,092
PlumX Metrics