|Table 9.3: Summary results from case studies on energy subsidy removal (note that subsidies are defined in various ways and are not comparable)|
|Study||Subsidy or group of
of distortion (US$
years, 1988 to 1995)
|Decrease in annual
CO2 emissions relative
to reference scenarios
resulting from reforms
by 2010 million tonnes
|Other economic effects
of removing subsidies
|Global price subsidies to consumers of fossil fuels
(difference between domestic
and world prices)b
|215,000||1366a||Enhanced economic growth.|
|GREEN||Global price subsidies to consumers of fossil fuels (difference between domestic and world prices)b||235,000||1,800 in 2000
1,5000 in 2050
|Enhanced economic growth in
most regions, largest in CIS.
Improved terms-of-trade for
|Coal PSEs in Europe and Japan||5,800||10 (DRI estimate)
>50 (OECD estimate)
|Job loss in coal industry,
increased coal trade.
|Böhringer||Coal in Germany||6,700||NQ||Nearly 1% GDP increase. Job loss
in coal industry, increased coal
trade. Cost of using subsidies to
maintain jobs is 94145,000 DM
per job/year. Reduces cost
of meeting CO2 target.
Barriers to gas and electricity
Below-market cost financing
|Reduces cost of meeting CO2 target.
Reduces cost of meeting CO2 target.
|Italy||Net budgetary subsidies to the
electricity supply industry (ESI)
VAT below market rate
Subsidies to capital
Excise tax exemption for
fossil fuels use by ESI
Total net and cross-subsidies
|Reduces cost of meeting CO2 target/makes CO2 tax more effective.|
|Norway||Barriers to trade||NQ||8 for Nordic region|
|Russia||Direct subsidies and price
control for coal
Price control/debt forgiveness
for electricity consumers
(about half caused by shift from coal to other fuels, half to reduced
final energy demand)
|1% drop in employment
(but note that model included no
subsidy recycling mechanism).
|UK||Grants and price supports for
coal and nuclear producers
VAT on electricity below
|0 to 40
|USA||DFI (1993) analysis of federal
DJA (1994) analysis of federal
GNP increased 0.2% if revenue
used to reduce capital taxes.
|Source: OECD (1997c)
a The model used is comparative static: emission reduction is calculated using mostly 1991 market data.
b This measure of subsidies is a crude one, and does not necessarily indicate the existence of any particular government policy.
c The two studies analyze different sets of energy supports and use slightly different estimates for some of them: these figures are not a reliable indication of
total US federal energy subsidies. See Appendix A, Table 14, OECD (1997c) for details. Results are sensitive to assumptions regarding the future structure
of the US electricity supply industry.
NQ = not quantified
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