IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v101y2017icp379-385.html
   My bibliography  Save this article

Global energy subsidies: An analytical taxonomy

Author

Listed:
  • McKitrick, Ross

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.

Suggested Citation

  • McKitrick, Ross, 2017. "Global energy subsidies: An analytical taxonomy," Energy Policy, Elsevier, vol. 101(C), pages 379-385.
  • Handle: RePEc:eee:enepol:v:101:y:2017:i:c:p:379-385
    DOI: 10.1016/j.enpol.2016.10.035
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421516305870
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Li, Aijun & Du, Nan & Wei, Qian, 2014. "The cross-country implications of alternative climate policies," Energy Policy, Elsevier, vol. 72(C), pages 155-163.
    2. Parry, Ian W. H. & Williams, Roberton III & Goulder, Lawrence H., 1999. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 52-84, January.
    3. David Coady & Ian W.H. Parry & Louis Sears & Baoping Shang, 2015. "How Large Are Global Energy Subsidies?," IMF Working Papers 2015/105, International Monetary Fund.
    4. Kojima,Masami & Koplow,Doug, 2015. "Fossil fuel subsidies : approaches and valuation," Policy Research Working Paper Series 7220, The World Bank.
    5. James J. Opaluch & Thomas A. Grigalunas, 1984. "Controlling Stochastic Pollution Events through Liability Rules: Some Evidence from OCS Leasing," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 142-151, Spring.
    6. Robert J. Kalter & Thomas H. Stevens & Oren A. Bloom, 1975. "The Economics of Outer Continental Shelf Leasing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(2), pages 251-258.
    7. Kenneth J. McKenzie & Jack M. Mintz, 2011. "The Tricky Art of Measuring Fossil Fuel Subsidies: A Critique of Existing Studies," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 4(14), September.
    8. Radoslaw (Radek) Stefanski, 2016. "Into the Mire: A Closer Look at Fossil Fuel Subsides," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 9(10), March.
    9. Li, Aijun & Lin, Boqiang, 2013. "Comparing climate policies to reduce carbon emissions in China," Energy Policy, Elsevier, vol. 60(C), pages 667-674.
    10. Nwachukwu, Maxwell Umunna & Chike, Harold, 2011. "Fuel subsidy in Nigeria: Fact or fallacy," Energy, Elsevier, vol. 36(5), pages 2796-2801.
    11. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
    12. KEVIN DAYARATNA & ROSS McKITRICK & DAVID KREUTZER, 2017. "Empirically Constrained Climate Sensitivity And The Social Cost Of Carbon," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-12, May.
    13. Lin, Boqiang & Li, Aijun, 2012. "Impacts of removing fossil fuel subsidies on China: How large and how to mitigate?," Energy, Elsevier, vol. 44(1), pages 741-749.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wu, Shu, 2020. "The evolution of rural energy policies in China: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    2. Cailou Jiang & Ying Zhang & Maoliang Bu & Weishu Liu, 2018. "The Effectiveness of Government Subsidies on Manufacturing Innovation: Evidence from the New Energy Vehicle Industry in China," Sustainability, MDPI, Open Access Journal, vol. 10(6), pages 1-11, May.
    3. Timilsina, Govinda R. & Pargal, Sheoli, 2020. "Economics of energy subsidy reforms in Bangladesh," Energy Policy, Elsevier, vol. 142(C).
    4. Sumin Hu & Shulin Liu & Die Li & Yuxuan Lin, 2019. "How Does Regional Innovation Capacity Affect the Green Growth Performance? Empirical Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 11(18), pages 1-21, September.
    5. Natalini, Davide & Bravo, Giangiacomo & Newman, Edward, 2020. "Fuel riots: definition, evidence and policy implications for a new type of energy-related conflict," Energy Policy, Elsevier, vol. 147(C).
    6. Terneus Páez, Carlos Francisco & Viteri Salazar, Oswaldo, 2020. "Analysis of agro-food transport in Ecuador faced with a possible reduction in the subsidy of diesel," Energy Policy, Elsevier, vol. 144(C).
    7. Boyce, James K., 2018. "Carbon Pricing: Effectiveness and Equity," Ecological Economics, Elsevier, vol. 150(C), pages 52-61.
    8. Zhang, Lei & Qin, Quande & Wei, Yi-Ming, 2019. "China's distributed energy policies: Evolution, instruments and recommendation," Energy Policy, Elsevier, vol. 125(C), pages 55-64.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Aijun & Du, Nan & Wei, Qian, 2014. "The cross-country implications of alternative climate policies," Energy Policy, Elsevier, vol. 72(C), pages 155-163.
    2. Sovacool, Benjamin K., 2017. "Reviewing, Reforming, and Rethinking Global Energy Subsidies: Towards a Political Economy Research Agenda," Ecological Economics, Elsevier, vol. 135(C), pages 150-163.
    3. Pang, Yu, 2019. "Taxing pollution and profits: A bargaining approach," Energy Economics, Elsevier, vol. 78(C), pages 278-288.
    4. Li, Aijun & Peng, Dan & Wang, Daoping & Yao, Xin, 2017. "Comparing regional effects of climate policies to promote non-fossil fuels in China," Energy, Elsevier, vol. 141(C), pages 1998-2012.
    5. Zhao, Xu & Luo, Dongkun & Lu, Kun & Wang, Xiaoyu & Dahl, Carol, 2019. "How the removal of producer subsidies influences oil and gas extraction: A case study in the Gulf of Mexico," Energy, Elsevier, vol. 166(C), pages 1000-1012.
    6. Xiang, Hongjin & Kuang, Yanxiang, 2020. "Who benefits from China’s coal subsidy policies? A computable partial equilibrium analysis," Resource and Energy Economics, Elsevier, vol. 59(C).
    7. Sun, Chuanwang & Ouyang, Xiaoling, 2016. "Price and expenditure elasticities of residential energy demand during urbanization: An empirical analysis based on the household-level survey data in China," Energy Policy, Elsevier, vol. 88(C), pages 56-63.
    8. Nils Ohlendorf & Michael Jakob & Jan Christoph Minx & Carsten Schröder & Jan Christoph Steckel, 2018. "Distributional Impacts of Climate Mitigation Policies - a Meta-Analysis," Discussion Papers of DIW Berlin 1776, DIW Berlin, German Institute for Economic Research.
    9. Radoslaw (Radek) Stefanski, 2016. "Into the Mire: A Closer Look at Fossil Fuel Subsides," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 9(10), March.
    10. Lin, Boqiang & Long, Houyin, 2014. "How to promote energy conservation in China’s chemical industry," Energy Policy, Elsevier, vol. 73(C), pages 93-102.
    11. Wang, Qiang & Li, Rongrong, 2015. "Cheaper oil: A turning point in Paris climate talk?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1186-1192.
    12. Li, Yiming & Li, Changqing, 2019. "Fossil energy subsidies in China's modern coal chemical industry," Energy Policy, Elsevier, vol. 135(C).
    13. Li, Aijun & Zhang, Aizhen & Cai, Hongbo & Li, Xingfeng & Peng, Shishen, 2013. "How large are the impacts of carbon-motivated border tax adjustments on China and how to mitigate them?," Energy Policy, Elsevier, vol. 63(C), pages 927-934.
    14. Li, Ke & Lin, Boqiang, 2015. "How does administrative pricing affect energy consumption and CO2 emissions in China?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 952-962.
    15. Ju, Keyi & Su, Bin & Zhou, Dequn & Wu, Junmin, 2017. "Does energy-price regulation benefit China's economy and environment? Evidence from energy-price distortions," Energy Policy, Elsevier, vol. 105(C), pages 108-119.
    16. Ouyang, Xiaoling & Lin, Boqiang, 2014. "Levelized cost of electricity (LCOE) of renewable energies and required subsidies in China," Energy Policy, Elsevier, vol. 70(C), pages 64-73.
    17. Ian Parry, 2016. "Reflections on the International Coordination of Carbon Pricing," CESifo Working Paper Series 5975, CESifo.
    18. Acharya, Rajesh H. & Sadath, Anver C., 2017. "Implications of energy subsidy reform in India," Energy Policy, Elsevier, vol. 102(C), pages 453-462.
    19. Maddison, David & Rehdanz, Katrin, 2011. "The impact of climate on life satisfaction," Ecological Economics, Elsevier, vol. 70(12), pages 2437-2445.
    20. Marc Vielle & Alain L. Bernard, 1998. "Un exemple d'utilisation : le coût de politiques de réduction des gaz à effet de serre," Économie et Prévision, Programme National Persée, vol. 136(5), pages 33-48.

    More about this item

    Keywords

    Q35; Q41; Q48; Subsidies; Energy; Oil; Gas; Externalities; Fiscal policy;
    All these keywords.

    JEL classification:

    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:101:y:2017:i:c:p:379-385. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/enpol .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.