The OECD uses a bottom-up method of estimating government support to fossil fuels by identifying and quantifying individual policy measures. This approach measures fossil fuel support as all direct budgetary transfers and tax expenditures that provide a benefit or preference for fossil-fuel production or consumption.
The definition of support, as opposed to subsidy, is a deliberately broader one, which encompasses policies that can induce changes in the relative prices of fossil fuels. The Inventory casts a wide net, in line with its objective of promoting the transparency of public policies. The OECD definition follows the subsidy definition in the Agreement on Subsidies and Countervailing Measures (ASCM) under the World Trade Organization (WTO), which can be found in its full extent in the Glossary below.
The OECD’s broad definition of support was adopted in 2019 to track and measure the Sustainable Development Goal Indicator 12.c.1 on fossil-fuel subsidies, in a joint publication by UNEP, IISD and OECD. This joint effort allows data reporting for this indicator to be cost-effective, uniform and transparent across countries, capitalising on the data collection and processing activities in place for the OECD Inventory of Support Measures for Fossil Fuels.
The data in the Inventory are obtained from official government sources. They are as comprehensive as possible, but not exhaustive. There is, in particular, more information presented in the Inventory for those countries that have been relatively more transparent in their budget books. This does not necessarily mean that these countries have higher levels of support than other countries, but may reflect that they have been more transparent about the support that is provided. The measures captured in the Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed (see discussion in the OECD Companion to the Inventory of Support Measures for Fossil Fuels 2015 for more detail).