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» "An update of the G20 Pittsburgh and Toronto Commitments", joint report by IEA, OPEC, OECD and World Bank on fossil-fuel and other energy subsidies, prepared for the G20 Meeting of Finance Ministers and Central Bank Governors (Paris, 14-15 October 2011) and the G20 Summit (Cannes, 3-4 November 2011) Press release: OECD and IEA recommend reforming fossil-fuel subsidies to improve the economy and the environment and launch of the OECD Inventory of Estimated Budgetary Support and Tax Expenditures Relating to Fossil Fuels, October 2011   » Download the report (PDF, 5 MB) » More on this inventory  OECD-IEA Fossil Fuel Subsidies and Other Support More on IEA fossil fuel subsidy analysis

 

Background

Under the Korean G20 Presidency, the International Energy Agency (IEA), OECD, OPEC and the World Bank were requested to prepare a report on fossil fuel subsidies "The Scope of Fossil-Fuel Subsidies in 2009 and a Roadmap for Phasing out Fossil-Fuel Subsidies: An IEA, OECD and World Bank report" for the November 2010 G-20 summit meeting in Seoul, Republic of Korea.

This work extends the analysis of an earlier Joint Report on fossil fuel subsidies that had been prepared by the IEA, OECD, OPEC and the World Bank and presented to the G-20 Toronto Summit in June 2010. The latest joint report includes data on fossil fuel consumption subsidies for 2009 and provides a road map for phasing out fossil fuel subsidies.

The work on fossil fuel subsidies by the international organisations was in response to a request by G-20 Leaders when they met in Pittsburgh in September 2009. At that time, leaders agreed to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption”. They asked the OECD together with the IEA, OPEC and the World Bank to “provide an analysis of the  scope of energy subsidies and suggestions for the implementation of this G20 country initiative.

 

The work by the international organisations includes:

• Discussion of the scope of energy subsidies;
• Preliminary estimates of energy subsidies, and identification of the gaps in the existing data and issues around the measurement of energy subsidies;
• Modelling-based analysis of the implications of phasing-out fossil fuel subsidies on the economy, including socio-economic and trade impacts, the environment, and the energy sector; and
• Suggestions for the implementation of phase-out of these subsidies, drawing on country case studies, including discussion of how to address social impacts.

OECD work

Building on previous OECD work on environmentally-harmful subsidies, four main areas of work on fossil fuel subsidies are underway by the OECD:

• Development of a methodology for identifying and estimating producer and consumer energy subsidies, based on the Producer and Consumer Subsidy Estimates (PSE & CSE) used by OECD in other sectors, such as agriculture.
• Preliminary estimates of fossil fuel subsidies in OECD countries, to complement work by others – such as the IEA – to estimate subsidies in developing and emerging economies.
• Modelling-based analysis of the economic, trade, and GHG emission impacts of phasing-out fossil fuel subsidies.
• Advice and recommendations on the phase-out of fossil fuel subsidies, especially on how to address social or competiveness impacts, drawing lessons learned from experiences with country subsidy reforms.

OECD produced two Background Papers for the Joint Report to the G20:

• "Measuring Support to Energy - Version 1.0", OECD Secretariat (2010);
• "An Overview of the OECD ENV-Linkages Model", Burniaux, J-M. and J. Chateau (2010).

In addition, some of the OECD Economic Surveys: List by country and Environmental Performance Reviews that OECD regularly produces of OECD and emerging economies include sections on fossil fuel subsidy reform to assess country progress and provide targeted advice for reforms.

 

A recent Working Paper on Mitigation Potential of Removing Fossil Fuel Subsidies provides detailed modelling-based analysis of the potential economic and environmental benefits of phasing-out fossil fuel subsidies.

 

Events

• Expert Workshop on Estimating Support to Fossil Fuels, 18–19 November 2010

 

G20 Statements referencing the work on fossil fuel subsidies

• G-20 Toronto Summit Declaration, 26-27 June 2010;
• G20 Communiqué, Meeting of Finance Ministers and Central Bank Governors, Busan, Republic of Korea, 5 June 2010;
• G20 Communiqué, Meeting of Finance Ministers and Central Bank Governors, Washington D.C., 23 April 2010;
• G20 Communiqué, Meeting of Finance Ministers and Central Bank Governors, United Kingdom, 7 November 2009;
• Leaders' Statement: The Pittsburgh Summit, 24-25 September 2009.
  

 

Permanent URL: www.oecd.org/g20/fossilfuelsubsidies