OLADE = Organización Latinoamericana de Energía (Latin American Energy Organization); OPEC = Organization of Petroleum Exporting Countries.

# **Magnitude of Subsidies**

The IEA has been calculating fossil-fuel consumption subsidies annually since 2008 (for 2007). In recent years, the total varied from US$312 billion in 2009 to US$573 billion in 2012, before falling by US$25 billion to US$548 billion in 2013 (Figure 2). Except in 2008 and 2009, more than half of subsidies were for petroleum products. Some fuel subsidies are captured under electricity; this is particularly true for coal, as the power sector is the main outlet market for thermal coal. These estimates represent a lower bound on global subsidies to fossil fuels for two reasons. First, the reliance on the price-gap approach misses a variety of subsidies that flow to producers even if they do not lower the market price of the commodity. Second, for lack of reliable data, the IEA does not evaluate all countries. The total will be higher after the addition of producer subsidies and inclusion of more countries, although the likely scale of increase is not known.

The OECD does not yet capture all subsidy mechanisms, and does not report total OECD-wide support for each year for those that it does capture. Tax expenditures are not comparable and hence not strictly additive. The foreword to the 2013 inventory, which contains subsidy estimates for 2011, mentions that the aggregated value of the individual budgetary measures and tax expenditures provided in OECD countries amounted to between US$55 billion and US$90 billion a year between 2005 and 2011 (OECD 2013a). On average, support for oil and petroleum products far exceeded that for natural gas or coal.

The IMF reports subsidies by country as a percentage share of both government revenue and of GDP. These ratios are presented for each fuel and electricity in 2011, and then aggregated across all the

**Figure 2 Fossil-fuel subsidies based on price gap calculated by the IEA**

<!-- Start of picture text --> US$ billion<br><!-- End of picture text --> <!-- Start of picture text --> 600<br><!-- End of picture text --> <!-- Start of picture text --> 500<br><!-- End of picture text --> <!-- Start of picture text --> 400<br><!-- End of picture text --> <!-- Start of picture text --> 300<br><!-- End of picture text --> <!-- Start of picture text --> 200<br><!-- End of picture text --> <!-- Start of picture text --> 100<br><!-- End of picture text --> <!-- Start of picture text --> 2009<br><!-- End of picture text --> <!-- Start of picture text --> 2010<br><!-- End of picture text --> <!-- Start of picture text --> 2012<br><!-- End of picture text --> <!-- Start of picture text --> 2007<br><!-- End of picture text --> <!-- Start of picture text --> 2008<br><!-- End of picture text --> <!-- Start of picture text --> 2011<br><!-- End of picture text --> <!-- Start of picture text --> 2013<br><!-- End of picture text --> <!-- Start of picture text --> US$/barrel<br><!-- End of picture text --> <!-- Start of picture text --> 120<br><!-- End of picture text --> <!-- Start of picture text --> 100<br><!-- End of picture text --> <!-- Start of picture text --> Electricity<br><!-- End of picture text --> <!-- Start of picture text --> Coal<br><!-- End of picture text --> <!-- Start of picture text --> 80<br><!-- End of picture text --> <!-- Start of picture text --> Oil<br>IEA average<br>crude oil<br>import price<br>(right axis)<br><!-- End of picture text --> <!-- Start of picture text --> 60<br><!-- End of picture text --> <!-- Start of picture text --> 40<br><!-- End of picture text --> <!-- Start of picture text --> 20<br><!-- End of picture text --> _Source_ : IEA 2014b. Reproduced with permission. _Note_ : All dollars are nominal.

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