Global Energy Subsidies: An Analytical Taxonomy

Ross McKitrick

No 1609, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: Governments around the world have pledged to eliminate or sharply reduce subsidies to energy firms in order to increase economic efficiency and reduce environmental externalities. Yet definitions of subsidies vary widely and, as a result, estimates of their global magnitude vary by orders of magnitude. I review why energy subsidies are so difficult to define and measure. I show why some non-standard measures are very poor proxies for subsidy costs and in fact may vary inversely with them. In particular, recent attempts to treat unpriced externalities as subsidies yield especially misleading results. In general, energy subsidies as conventionally understood do exist but only comprise a small portion of some very large recently-reported estimates, the bulk of which are indirect measures that may have little connection with actual costs to governments or allocational inefficiencies.

Keywords: Subsidies; energy; oil; gas; externalities; fiscal policy (search for similar items in EconPapers)
JEL-codes: Q35 Q41 Q48 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016
New Economics Papers: this item is included in nep-ene
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Journal Article: Global energy subsidies: An analytical taxonomy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2016-09

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