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Global Energy Subsidies: An Analytical Taxonomy

Listed author(s):
  • Ross McKitrick

    ()

    (Department of Economics and Finance, University of Guelph)

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.

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File URL: http://www.uoguelph.ca/economics/repec/workingpapers/2016/2016-09.pdf
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Paper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 1609.

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Length: 30 pages
Date of creation: 2016
Handle: RePEc:gue:guelph:2016-09
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Web page: https://www.uoguelph.ca/economics/

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  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.
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  4. Kojima,Masami & Koplow,Doug, 2015. "Fossil fuel subsidies : approaches and valuation," Policy Research Working Paper Series 7220, The World Bank.
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  6. David Coady & Ian W.H. Parry & Louis Sears & Baoping Shang, 2015. "How Large Are Global Energy Subsidies?," IMF Working Papers 15/105, International Monetary Fund.
  7. 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.
  8. 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.
  9. 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.
  10. Kevin Dayaratna & Ross Mckitrick & David Kreutzer, 2016. "Empirically-Constrained Climate Sensitivity and the Social Cost of Carbon," Working Papers 1608, University of Guelph, Department of Economics and Finance.
  11. Li, Aijun & Lin, Boqiang, 2013. "Comparing climate policies to reduce carbon emissions in China," Energy Policy, Elsevier, vol. 60(C), pages 667-674.
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