IMF PAPER REVEALS TRILLION DOLLAR ENERGY SUBSIDIES

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23 september 2015

[4C Note: We found this IMF article four months after its original publication on the IMF site. Because of its crucial importance, in general for the campaign against fossil fuel subsidies and in particular for the upcoming Paris climate summit, we present its essential details now, with a posterior dating. Link to the original for the full report with power point graphics here.]

Remarks by Vitor Gaspar at the launch of “How Large are Global Energy Subsidies?

Hutchins Center on Fiscal and Monetary Policy, Brookings Institution
IMF Website May 18, 2015

The presentation draws on a new IMF Working Paper.

It builds on quite a lot of work done recently at the IMF.

We published two books, one in 2013 entitled Energy Subsidy Reform, and a second in 2014 entitled Getting Energy Prices Right. The methodology is presented in a 2014 journal article in Economics of Energy and Environmental Policy.

The size of energy subsidies crucially depends on how they are defined. Our focus here is on a broad notion. Our energy subsidies estimates capture three elements: (1) the failure to recover the cost of supplying energy; (2) the failure to fully charge for the environmental damage from energy consumption; and (3) the failure to tax energy consumption in the same way as other consumption goods.

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We find that energy subsidies are big and rising.

Global energy subsidies increased from US$4.2 trillion in 2011 to US$5.3 trillion in 2015. In percent of GDP, global energy subsidies are estimated to increase from 5.8 percent of global GDP in 2011 to 6.5 percent in 2015.

These numbers are shocking.


They exceed global public health spending, estimated by the World Health Organization at US$4.3 trillion in 2013. It is one of the largest negative externalities ever estimated.

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