The Environmental Cost of Global Fuel Subsidies

Lucas Davis

The Energy Journal, 2017, vol. 38, issue 1_suppl, 7-28

Abstract: ABSTRACT Despite increasing calls for reform many countries continue to provide subsidies for gasoline and diesel. This paper quantifies the external costs from global fuel subsidies using the latest available data and estimates from the World Bank and International Monetary Fund. Under preferred assumptions about supply and demand elasticities, current subsidies cause $44 billion in external costs annually. This includes $8 billion from carbon dioxide emissions, $7 billion from local pollutants, $12 billion from traffic congestion, and $17 billion from accidents. These external costs are in addition to conventional deadweight loss, estimated to be $26 billion annually. Government incentives for alternative fuel vehicles are unlikely to cost-effectively reduce these externalities as they do little to address traffic congestion or accidents and only indirectly address carbon dioxide and local pollutants.

Keywords: Energy Subsidies; Road Transportation; Fossil Fuels; Alternative; Fuel Vehicles; Petroleum Products (search for similar items in EconPapers)
Date: 2017
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Related works:
Journal Article: The Environmental Cost of Global Fuel Subsidies (2017)
Working Paper: The Environmental Cost of Global Fuel Subsidies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:38:y:2017:i:1_suppl:p:7-28

DOI: 10.5547/01956574.38.SI1.ldav

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