3 world oil price was high, total global fossil fuel subsidies exceeded US$500 billion, with oil accounting for about US$300 billion, gas and electricity accounting for more than US$100 billion each, and coal making a negligible contribution (see figure 9.1 in IEA 2014). The IEA estimates that global fossil fuel subsidies fell to US$493 billion in 2014, and that the total would have been US$117 billion higher without the reforms that had taken place since 2009 (IEA 2015).

Subsidies identified by the price‐gap approach are disproportionately concentrated outside high‐income OECD countries. For this reason, the IEA’s list of subsidizing countries does not include any OECD member other than Mexico. Not all of the price gaps are paid for by the government budget: upstream oil and gas producers in some countries are required to sell hydrocarbons to domestic consumers at prices that are far below the opportunity cost, and in a handful of cases even below the cost of production. Non‐OECD net oil exporters, current or historical, are far more likely to subsidize oil and gas than countries that are net importers (see table 8 in Kojima 2012).

By contrast, OECD member countries do not provide generalized price subsidies as identified by the price‐gap approach, and instead provide producer subsidies or targeted conditional cash transfers (or their equivalent) without lowering end‐user prices measurably. The OECD database, _Inventory of Support Measures for Fossil Fuels_ , and its companion report (OECD 2015) provide detailed qualitative and quantitative data in a consistent manner for measures that support the production or use of fossil fuels in the 34 OECD member countries and six large emerging economies (Brazil, China, India, Indonesia, the Russian Federation, and South Africa). About two‐thirds of the reported support measures take the form of tax expenditures, such as tax reductions or exemptions, accelerated depreciation and capital allowances, and royalty concessions in upstream oil and gas. Another widespread form of support reported by the OECD is energy assistance programs for the poor. Tax reductions for fuels used in agriculture, fisheries, and other targeted industries are common (although tax rebates for fuels serving as intermediate goods would be justified under certain conditions). Austria, Finland, Germany, Poland, Slovenia, Sweden, and Switzerland give relief to industries that are intensive users of coal, oil, or gas.<sup>2</sup> Two recent publications, both appearing in 2013, reviewed the global experience with energy subsidy reforms in developing countries. Clements et al. (2013) examined 22 countries with 28 reform episodes up to 2012, and Vagliasindi (2013) examined 20 countries up to 2013. The criteria for country selection included data availability, regional coverage, hydrocarbon trade status, income, and different reform outcomes. To sustain reform, Clements et al. recommended a comprehensive reform plan, a communication strategy, transparency, appropriately phased and sequenced price increases, steps to improve the efficiency of state‐owned energy companies, well‐targeted social protection measures for the poor, and depoliticization of pricing (for example, by relying on a transparent fuel‐setting 2 Such tax concessions discourage the drive for energy efficiency improvement and diversification. Such concessions raise even more questions when intensive users of fossil fuels pay lower taxes on carbon dioxide emissions—or are exempted altogether, as in Slovenia, Sweden (for peat), and Switzerland (OECD 2013). To the extent that tax concessions apply to those sectors already covered by the EU Emissions Trading System, some tax reductions are justified. However, the trading system has been suffering from a surplus of free tradable permits and years of very low prices, limiting the size of justifiable tax reductions. Further, some countries and industries with reductions or exemptions are not participating in the trading system, making it difficult to justify any tax reduction in such cases.