|**Intervention category and description**|**OECD coverage of TSE**<br>**for fossil fuels**|**Gap between reference**<br>**and local prices?**|
|---|---|---|
|**Goods and services provided by government.**<br>Underpricing of access to land and other goods and<br>services|Not yet reported|Unlikely|
|**Permits.**Underpricingofpermits and licenses|No|Unlikely|
|**Shifting of risk burdens.**Government assumption of<br>price, safety, and other risks; consumer or resident<br>assumption of risks through limits on commercial liability|No|Not for fuel priced at<br>trade parity|
|**Special treatment of SOEs.**Undue risk-taking, soft budget<br>constraints leading to contingent liabilities, debt<br>cancellations,tax-exempt operatingstatus|As reported|Unlikely|

_Source_ : Authors.

The second column in Table 1 indicates which items the OECD’s analysis of budgetary support and tax expenditures for fossil fuels has quantified to date (www.oecd.org/site/tadffss/). The last column indicates which of the individual categories may be captured in the price-gap approach, as used by the IEA and IMF. More specifically, to be captured by the price-gap approach, a specific measure would need to affect the end-user price (usually downward). With most measures in the table, there are potential scenarios wherein the price is decreased (or increased), although the degree of capture will depend on the scope and quality of input data. The ability of price-gap calculations to pick up subsidies is not consistent across energy sources. For example, globally traded commodities such as refined petroleum products may have clearing prices at global levels (the fuel is sold at trade parity), regardless of the cost of production. To the extent that producer subsidies lead to over-supply by a major producer, even in the case of oil, the world oil price could, at least in theory, fall slightly. However, this effect will be more likely with other fossil fuels.

Table 2 below and Table A.2 in the appendix present additional issues that can have the same effects as A, B, and C above but are not included in Table 1 for a variety of reasons:

- _The main policy objective is not the provision of energy subsidies._ Examples include unconditional cash transfers as social safety nets (last item in Table 2), even if one of the reasons for the introduction of cash transfers is higher energy prices, and generation of fundamental knowledge such as basic research and development, as opposed to support for commercially developing specific technologies. Social protection merits an explanation.

- _The distortions in energy markets are the result of administrative or managerial deficiencies rather than targeted strategies to promote fossil fuels._ Examples include weak capacity (such as lack of enforcement of regulations against short-weighting or weak tax administration), crime (electricity theft), operational inefficiencies (billing and collection inefficiency), or political difficulties in implementing disciplinary procedures (a classic example being the inability to disconnect government ministries or the military for nonpayment of energy bills).

- _They have to do with uninternalized costs of externalities_ , which are discussed in more detail below.

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