energy subsidies: identifying gaps and constraints
DESCRIPTION
Energy subsidies: Identifying gaps and constraints. by Ronald Steenblik Director of Research. GSI’s Main Themes. Develop and promote standardization of terms and methods Fill in data gaps and establish transparent monitoring systems Increase awareness, dialogue and action. - PowerPoint PPT PresentationTRANSCRIPT
GSI’s Main Themes
• Develop and promote standardization of terms and methods
• Fill in data gaps and establish transparent monitoring systems
• Increase awareness, dialogue and action
Fill in data gapsand establish transparent
monitoring systems
Develop and promote
standardization of terms and methods
Develop model WTO subsidy notifications
Develop manual for subsidy estimation
Establish international subsidy standards
body
Web site - portal
Reports and commentary
Media relations
Increase awareness,
dialogue and action
Direct dialogue with decision makers
Work with developing-country experts to ensure feasibility
Paired studies between northern and southern researchers
Training and outreach
RESEARCH COMMUNICATIONS
Various projects on agriculture, energy, fisheries, and services:
● estimating total subsidies
● identifying top recipients
● proposing changes to rules and national policies
WO
RK
BY
OT
HE
RS
International subsidy change model
Academic studiescriticize policies
1st quick-and-dirtysubsidy estimates
Media runsheadlines
Vested interestsdefend policies
Public support forpolicies starts to waneMore academics
pay attention
Civil societypays attention
Bureaucracyfunds studies
Exportingcountries callfor IGO work
Media runsbackground
stories
IGO workeventually
funded
1st systematicsubsidy estimates
Politicians and interestsput their own
spin on results
Media runsheadlines
Major quantitativeanalyses undertaken
Proposalsfor multilateraldisciplines orother action
??
The energy-subsidy problematique
Attention has been directed at subsidies to energy generally, and fossil fuels in particular, since the late 1980s, and interest in these subsidies has waxed and waned ever since.
With many governments now poised to devote even more resources to their energy sectors — both to reduce dependency on imported natural gas and oil, and to limit growth in carbon-dioxide (CO2) emissions — it would be helpful if they had a clear picture of how much and what kind of support is currently being provided to energy production and consumption.
However, unlike subsidies to agriculture, and now fisheries, there is no single on-going process or consistent database that can be enlisted to serve that process.
Type of subsidy OECD Countries Non-OECD Countries
Incidence $109/yr Incidence $109/yr
Producer subsidies
Market price support Uncommon: easy to estimate 10 Common: moderately difficult to estimate
50
Direct production subsidies (including tax incentives)
Common: moderate difficulty to estimate
20 Extent not known: moderate difficulty
40
Subsidies to energy- producing capital
Very common: complicated to estimate
40 Abundant: difficult to find data and complicated to estimate
30
Subsidies for inputs Common: mainly through government services
10 Probably very common, especially in the form of free
resources: variable difficulty to estimate
20
Government-supported R&D Very common: data readily available from the IEA
30 Common mainly in richer countries: moderately difficult
to obtain data
20
Consumer subsidies
Market transfers (e.g., regulated low prices)
Common mainly in respect of regulated lifeline rates: data
available but could be a big job
10 Common: good time series available for general price
policies
250
Subsidies to energy- consuming capital
Common (e.g., for automobiles and aircraft): difficult to obtain
data and estimate
40 Probably common: difficult to obtain data and estimate
30
Total 160 440
Summary of incidence of subsidies to fossil fuels (including fossil-fuel-based electricity) and difficulty of estimating their values
Gap analysisSubsidies
(reform) in general
Border protection in
generalAgriculture Energy Fisheries Services
International rediness for change
Readiness for unilateral change at
domestic levelPublic pressure
relative to vested interests
Quality of debate in public arena
Case well made in lay terms
Quality of debate among those
engaged
Analysis of effects of support
Organisation of data *
Availability of
raw data
Sector Initial quantitative work
International response
Monitoring and reporting
Agriculture OECD inventories, produced mid-1980s
GATT negotiations started in 1986, AoA agreed in 1994
Monitoring (OECD) and reporting (to WTO) continuing
Fisheries OECD inventories produced late-1990s
WTO negotiations started in 2002, agreement in 2008?
Monitoring (OECD) continuing; reporting to WTO in future?
Coal IEA inventories produced late-1980s
Australia-EU agreement; mainly national reforms
Monitoring by the IEA until 2002.
Consumer subsidies for energy
World Bank drew attention to large subsidies early 1990s
G-7 drew attention to the problem; World Bank and IMF increased pressure
Ad hoc updates by the World Bank (late 1990s) and IEA (1999 and 2006).
Links between data work, international action and monitoring
Subsidy tracking and measurement is neither systematic nor easy
• To date there has been no systematic or standardized evaluation of energy subsidies around the world.
• Main approaches used to date:– Program-specific accounts: details on individual programs; can
capture intermediation value. Data intensive; no insights into incidence.
– Price gap: useful for multi-country studies, though challenges with finding appropriate reference price. Approach misses any subsidy that leaks to producers, investors, labor without affecting energy prices.
• Wide dispersion of estimates; data on many types of subsidies (tax breaks, credit, idemnification, state-owned enterprises) sparse or lacking entirely.
Reporting options
• Beef up reporting under the UNFCC.
• Improve the WTO notifications on non-agricultural subsidies.
• Encourage more attention to energy subsidies in WTO Trade Policy Reviews.
• Encourage more attention to energy subsidies in IEA country reviews.
WTO leverage points• Demonstrate importance of energy policy in commodity
and transport service flows; and in destruction of other sources of natural capital in LDCs.
• Demonstrate linkage between energy policies and environmental profile of exported and deployed capital equipment.
• Show distortions caused by subsidies to biofuels and to tied aid related to energy projects.
• Highlight gaps in WTO notifications.• Help countries formulate questions in the Committee on
Subsidies and Countervailing Measures about other countries’ subsidies to energy.
• Support efforts to liberalize trade in renewable-energy products and associated technologies under DDA Paragraph 31(iii) negotiations on environmental goods.
Defensive arguments that can create barriers to reform
• “We need to maintain this industry for energy security.”
• “If we eliminate this subsidy, poor people will be hurt.”
• “This subsidy is justified because it is for clean(er) energy.”
Overall ambition
• To establish a multinational, interdisciplinary research consortium to measure and analyze subsidies to fossil fuels in the main subsidizing countries.
• To communicate the results to both the academic community and policy makers, and to encourage reforms at the national and international levels.
The two phases
• Phase 1 to prepare groundwork for Phase 2, through studying feasibility of project, preparing a research proposal for soliciting funds.
• Phase 2 to undertake primary research on identifying subsidies to fossil fuels, modelling their impact, and recommending priorities for and approaches to their reform.