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Dirty Little Secrets: Inferring Fossil-Fuel Subsidies from Patterns in Emission Intensities

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  • Radoslaw Stefanski

    () (University of St Andrews)

Abstract

I develop a unique database of international fossil-fuel subsidies by examining country specific patterns in carbon emission-to-GDP ratios, known as emission-intensities. For most - but not all - countries, intensities tend to be hump-shaped with income. I construct a model of structural-transformation that generates this hump-shaped intensity and then show that deviations from this pattern must be driven by distortions to sectoral-productivity and/or fossil-fuel prices. Finally, I use the calibrated-model to measure these distortions for 170 countries for 1980-2010. This methodology reveals that fossil-fuel price-distortions are large, increasing and often hidden. Furthermore, they are major contributors to higher carbon-emissions and lower GDP.

Suggested Citation

  • Radoslaw Stefanski, 2017. "Dirty Little Secrets: Inferring Fossil-Fuel Subsidies from Patterns in Emission Intensities," CDMA Working Paper Series 201702, Centre for Dynamic Macroeconomic Analysis.
  • Handle: RePEc:san:cdmawp:1702
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    Cited by:

    1. Antonio Mele & Radoslaw Stefanski, 2019. "Velocity in the Long Run: Money and Structural Transformation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 393-410, January.
    2. Biatna Dulbert Tampubolon & Ajun Tri Setyoko, 2019. "Controlling Policies on Fossil Fuels Subsidies to Overcome Climate Change," Energy Economics Letters, Asian Economic and Social Society, vol. 6(1), pages 1-16, March.
    3. Harro van Asselt & Kati Kulovesi, 2017. "Seizing the opportunity: tackling fossil fuel subsidies under the UNFCCC," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(3), pages 357-370, June.
    4. Cécile Couharde & Sara Mouhoud, 2018. "Fossil fuel subsidies, income inequality and poverty. Evidence from developing countries," EconomiX Working Papers 2018-42, University of Paris Nanterre, EconomiX.
    5. Antonio Mele & Radoslaw Stefanski, 2019. "Velocity in the Long Run: Money and Structural Transformation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 393-410, January.
    6. 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.
    7. Neil McCulloch, 2017. "Energy subsidies, international aid, and the politics of reform," WIDER Working Paper Series 174, World Institute for Development Economic Research (UNU-WIDER).
    8. Lin, Boqiang & Omoju, Oluwasola E. & Okonkwo, Jennifer U., 2015. "Impact of industrialisation on CO2 emissions in Nigeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1228-1239.
    9. 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.
    10. Breyer, Christian & Koskinen, Otto & Blechinger, Philipp, 2015. "Profitable climate change mitigation: The case of greenhouse gas emission reduction benefits enabled by solar photovoltaic systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 610-628.

    More about this item

    Keywords

    Carbon Subsidies; Subsidies; Fossil Fuels; Pollution; Energy; Energy Intensity; Industrialization; Structural Transformation; Climate Change; Global Warming; Emissions;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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