Energy subsidies

The International Monetary Fund writes:

This paper provides: (i) the most comprehensive estimates of energy subsidies currently available for 176 countries; and (ii) an analysis of "how to do" energy subsidy reform, drawing on insights from 22 country case studies undertaken by IMF staff and analyses carried out by other institutions.

Energy subsidies are pervasive and impose substantial fiscal and economic costs in most regions. On a "pre-tax" basis, subsidies for petroleum products, electricity, natural gas, and coal reached 480 billion dollars in 2011 (0.7 percent of global GDP or 2 percent of total government revenues). The cost of subsidies is especially acute in oil exporters, which account for about two-thirds of the total. On a "post-tax" basis—which also factors in the negative externalities from energy consumption—subsidies are much higher at 1.9 trillion dollars (2½ percent of global GDP or 8 percent of total government revenues). The advanced economies account for about 40 percent of the global post-tax total, while oil exporters account for about one-third. Removing these subsidies could lead to a 13 percent decline in CO2 emissions and generate positive spillover effects by reducing global energy demand.

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