Counting the Cost of Energy Subsidies

International Monetary Fund
http://www.imf.org/external/pubs/ft/survey/so/2015/new070215a.htm

Energy subsidies are projected at US$5.3 trillion in 2015, or 6.5 percent of global GDP, according to a recent IMF study. Most of this arises from countries setting energy taxes below levels that fully reflect the environmental damage associated with energy consumption.

The country-level estimates underlying these global figures are now publicly available.

Energy subsidies are substantial

Energy subsidies are dramatically higher than previously thought. Estimates for global energy subsidies in 2011 have been revised to US$4.2 trillion, more than double the US$2.0 trillion previously reported in a 2013 IMF book, Energy Subsidy Reform: Lessons and Implications.

The upward revision is partly due to factoring in new World Health Organization estimates on harm to health from pollution exposure. Additional country-level data on emissions and the damage they cause have also become available, as detailed in a more recent IMF book, Getting Energy Prices Right: From Principle to Practice.

Subsidies are projected to remain high, despite sharp declines in international energy prices. The estimate for 2015 is US$5.3 trillion (6.5 percent of global GDP). High growth in energy consumption, especially coal, inflation and real income growth, and persistent undercharging for environmental costs are all key factors.

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