Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130439
Authors: 
Coady, David
Parry, Ian
Sears, Louis
Shang, Baoping
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5814
Abstract: 
This paper estimates fossil fuel subsidies and the economic and environmental benefits from reforming them, focusing mostly on a broad notion of subsidies arising when consumer prices are below supply costs plus environmental costs and general consumption taxes. Subsidies are $4.9 trillion worldwide in 2013 and $5.3 trillion in 2015 (6.5 percent of global GDP in both years). Undercharging for global warming accounts for 22 percent of the subsidy in 2013, air pollution 46 percent, broader vehicle externalities 13 percent, supply costs 11 percent, and general consumer taxes 8 percent. China was the biggest subsidizer in 2013 ($1.8 trillion), followed by the United States ($0.6 trillion), and Russia, the European Union, and India (each with about $0.3 trillion). Eliminating subsidies would have reduced carbon emissions in 2013 by 21 percent and fossil fuel air pollution deaths 55 percent, while raising revenue of 4 percent, and social welfare by 2.2 percent, of global GDP.
Subjects: 
energy subsidies
global warming
air pollution
efficient taxation
deadweight loss
revenue
JEL: 
Q31
Q38
Q48
Document Type: 
Working Paper

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