IDEAS home Printed from https://ideas.repec.org/p/gue/guelph/2016-09.html
   My bibliography  Save this paper

Global Energy Subsidies: An Analytical Taxonomy

Author

Listed:
  • Ross McKitrick

    () (Department of Economics and Finance, University of Guelph)

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

  • Ross McKitrick, 2016. "Global Energy Subsidies: An Analytical Taxonomy," Working Papers 1609, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2016-09
    as

    Download full text from publisher

    File URL: http://www.uoguelph.ca/economics/repec/workingpapers/2016/2016-09.pdf
    Download Restriction: no

    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. Nwachukwu, Maxwell Umunna & Chike, Harold, 2011. "Fuel subsidy in Nigeria: Fact or fallacy," Energy, Elsevier, vol. 36(5), pages 2796-2801.
    4. Kojima,Masami & Koplow,Doug, 2015. "Fossil fuel subsidies : approaches and valuation," Policy Research Working Paper Series 7220, The World Bank.
    5. 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.
    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. repec:wsi:ccexxx:v:08:y:2017:i:02:n:s2010007817500063 is not listed on IDEAS
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. repec:clh:resear:v:4:y:2011:i:14 is not listed on IDEAS
    13. repec:clh:resear:v:9:y:2016:i:10 is not listed on IDEAS
    14. Li, Aijun & Lin, Boqiang, 2013. "Comparing climate policies to reduce carbon emissions in China," Energy Policy, Elsevier, vol. 60(C), pages 667-674.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Subsidies; energy; oil; gas; externalities; fiscal policy;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:gue:guelph:2016-09. 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: (Stephen Kosempel). General contact details of provider: http://edirc.repec.org/data/degueca.html .

    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.