1. OECD work on fossil
fuel subsidies

2. Coverage
• Inventory fills a major gap in data on subsidies.
• Identifies and estimates more than 250 budgetary transfers and tax
expenditures for fossil fuel production and use.
• 24 OECD countries:
Australia, Belgium, Canada, Chile, France, Germany, Hungary, Iceland, Ireland,
Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New
Zealand, Norway, Poland, Spain, Sweden, Turkey, UK & US.
• 2 or 3 states, provinces or Länder covered for
Australia, Canada, Germany, and the US.
• In future: regularly update and add further countries, sub-national
entities, and other types of support mechanisms.

3. Matrix of fossil fuel support measures
Statutory or Formal Incidence (to whom and what a transfer is first given)
Direct consumption Output returns Enterprise Cost of Costs of
Unit cost of Household or income intermediate Production
consumption enterprise inputs Factors1
income
Capital grant
Direct Government- Output bounty
Input-price linked to
transfer of Unit subsidy subsidized life-line or deficiency Operating grant
subsidy acquisition of
funds electricity rate payment
land or capital
Transfer Mechanism (how a transfer is created)
Tax deduction
Investment tax
VAT or excise- related to energy Reduction in
Tax revenue Production tax Reduced rate credit; property
tax concession purchases that excise tax on
foregone credit of income tax tax reduction or
on fuel exceed given inputs
exemption
share of income
Under-pricing of
Under-pricing of
a good, Under-pricing of
Other access to a
Reduced government access to
government natural
resource rent service or government land;
revenue resource
tax access to a reduced royalty
foregone harvested by
natural payment
final consumer
resource
Provision of
Credit guarantee
Transfer of Third-party security (eg
Price-triggered Means-tested cold- Government linked
risk to liability limit for military
subsidy weather grant buffer stock acquistition of
government producers protection for
land or capital
supply lines)
Regulated Wage control;
Induced Mandated life-line Import tariff or Monopoly Export
price; cross
transfers electricity rate export subsidy 3
concession restriction
credit control
subsidy (sector specific)
1. Labour, land, capital, knowledge.

4. Overview of support by fuel
Note: This graph is based on an arithmetic sum of the individual support measures identified for a sample of 21 OECD countries, i.e.
the 24 OECD countries included in the inventory net of those countries for which estimates have not been collected yet (Chile, Iceland
and Luxembourg). It reflects the value of tax relief measured under each jurisdiction’s benchmark tax treatment. The estimates do not
take into account interactions that may occur if multiple measures were to be removed at the same time
Data source: OECD (2011), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels.

5. Overview of support by incidence
Notes:
• This graph is based on an arithmetic sum of the individual support measures identified for a sample of 21 OECD countries, i.e.
the 24 OECD countries included in the inventory net of those countries for which estimates have not been collected yet
(Chile, Iceland and Luxembourg). It reflects the value of tax relief measured under each jurisdiction’s benchmark tax treatment.
The estimates do not take into account interactions that may occur if multiple measures were to be removed at the same time
• PSE = Producer Support Estimate; CSE = Consumer Support Estimate; GSSE = General Services Support Estimate.
Data source: OECD (2011), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels.

6. Caveats
• Exercise in transparency no analysis as yet of the impacts of support
measures or judgment on whether they are economically efficient or
environmentally harmful.
• Benchmarks are critical, especially for establishing tax expenditures we
used benchmarks of individual countries.
• Countries vary in terms of their transparency in reporting support.
• Cannot compare totals across countries in a meaningful way.
• Caution needed in interpreting & aggregating data.

7. Emissions impacts of fossil fuel subsidy removal
“central policy” scenario: gradual phase-out to 2020 of fossil fuel consumer
subsidies in 37 emerging and developing economies
% changes in GHG emissions with respect to BAU
All GHG CO2
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
China *
WORLD
Russia *
Mexico *
Indonesia *
South Africa *
India *
Other countries * (2)
MENA * (1)
•Regions in which the fossil fuel subsidies have been removed
• (1) Middle East & Northern Africa
• (2) Other Asian, African and Latin American Emerging economies
•Sources : OECD ENV-Linkages Model - Based on IEA subsidy data for the year 2009

8. Unilateral removal of energy subsidies bring GDP gains
Impacts on GDP in 2050 (% change from baseline)
6%
% deviation relative to the baseline
5%
4%
3%
2%
1%
0%
Indonesia India Russia MENA (1) China Other South Mexico
countries Africa
(2)
• (1) Middle East & Northern Africa
• (2) Other Asian, African and Latin American Emerging economies
•Sources : OECD ENV-Linkages Model - Based IEA subsidies data for the year 2009

9. Multilateral reforms: impacts on projected GDP growth
Real GDP in 2050 as % of 2010 levels, with and without reform of fossil
fuel support
900%
800%
700% Baseline
600%
500%
Multilateral Reform
400%
300%
200%
100%
0%
Oceania
Canada
Mexico *
USA
& Korea
Brazil
countries *
Annex I * (2)
Indonesia *
Africa *
India *
MENA * (1)
& EFTA
China *
Russia *
EU27
South
Japan
Other
Rest of
•Regions in which the fossil fuel subsidies have been removed
• (1) Middle East & Northern Africa
•(2) Other European Annex 1 countries : Turkey, Ukraine, Belarus, Croatia, … 9
•(3) Other Asian, African and Latin American Emerging economies
•Sources : OECD ENV-Linkages Model - Based IEA subsidies data for the year 2009

10. Why make CO2 cheaper if you’re trying to make it scarcer?
Income gains from unilateral fossil fuel subsidy removal (% change in HH income vs BAU)
$45-75 6% less emissions
USD $409 billion billion globally from
2010 , developing country 2010, in fossil removal of fossil
5 fossil fuel consumption fuel support fuel subsidies
subsidies in OECD countries
4
$ 44
3 billion, 201
0, global
2 renewable
electricity
1 subsidies
0
-1
-2
Oil-exporting India China Russia Rest of the Non-EU Eastern
countries World European
Source: OECD and IEA analysis see website: www.oecd.org/iea-oecd-ffss
Countries
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11. Thank you!
For further information:
www.oecd.org/iea-oecd-ffss
www.oecd.org/g20/fossilfuelsubsidies
Or contact:
For OECD estimates about fossil-fuel support in OECD :
Ronald.Steenblik@oecd.org or Jehan.Sauvage@oecd.org
For economic impact of reforming non-AI consumer subsidies :
Jean.Chateau@oecd.org
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