This paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries. Globally, subsidies remained large at $4.7 trillion (6.3 percent of global GDP) in 2015 and are projected at $5.2 trillion (6.5 percent of GDP) in 2017. The largest subsidizers in 2015 were China ($1.4 trillion), United States ($649 billion), Russia ($551 billion), European Union ($289 billion), and India ($209 billion). About three quarters of global subsidies are due to domestic factors—energy pricing reform thus remains largely in countries’ own national interest—while coal and petroleum together account for 85 percent of global subsidies. Efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28 percent and fossil fuel air pollution deaths by 46 percent, and increased government revenue by 3.8 percent of GDP.So that's nice - they have told us what they mean by "subsidy". Now I look, the previous report (WP/15/105) has much the same authors but a somewhat different abstract; my quibbles from before about what should "really" count as a subsidy remain. As before the "implicit" subsidies are much larger than the "explicit" ones. Let's look at one of their pictures, to try to make this clearer.
The pic tries to compare existing and efficient prices across the world for coal. One obvious puzzle is that the retail price (yellow circles) is near constant. Coal is globally trafficked, but that degree of constancy seems weird. GW is accounted for (red) at $40 per tonne. And for coal, the rest is local pollution. Some of this makes sense - presumably the Ukrainians burn bad coal badly in densely populated areas; ditto Thailand, China, Russia. The very low values for Mexico, Tanzania and Ethiopia are harder to understand. World-averaged, their calculations are that about 2/3 of coal "subsidies" are local pollution, and 1/3 GW.
Maybe looking at petrol will make things clearer. We see now what we already knew, that retail prices vary wildly. But we see something else that we probably didn't realise, that part of the implicit subsidy for petrol is "accidents". Another quite large one is congestion. Leading to the apparently bizarre conclusion that a country could potentially reduce it's fossil fuel subsidies by building more roads. Wait, what?
In a very few (basket) cases retail cost is less than supply cost, and these are the usual suspects: Saudi Arabia, Iran. These are unquestionably subsidies. Glboally, about 2/5 of petrol "subsidy" is local pollution; 2/5 other local factors; and the rest a mix.
So there you have it. This is of course not an IMF official document merely a working paper, but that won't stop people saying The IMF — no enemy of business — estimates that globally fossil fuels, which poison our future, are being subsidized $5.2 TRILLION annually...
Incidentally, I have no objection at all to their defining a quantity that is "the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations)". That seems like a useful quantity; I'm just doubtful that the bare word "subsidy" is a useful shorthand for that quantity.
* Why is carbon pricing in some countries more successful than in others? by Franziska Funke and Linus Mattauch
* The Hidden Subsidy of Fossil Fuels - A new report says that the world subsidized fossil fuels by $5.2 trillion in just one year. But that calculation is less tidy than it seems - by Robinson Meyer, The Atlantic.
* Walmart Bullied by Government, or Was It? by Pierre Lemieux
* What Can A Research-Minded Metal Detectorist Do In Sweden? Aardvarchaeology – by Dr. Martin Rundkvist