The G-20's efforts to progress fossil-fuel subsidy reform have revived an old debate: what is a subsidy?
It is difficult to find a commonly agreed-upon answer to this question because the very nature of subsidies goes to the heart of sensitive issues such as government spending, sovereignty of governments to use natural resources as they see fit, trade competition and poverty alleviation. But how this debate is resolved is vital, as it will set the parameters for the G-20's national actions, determining whether the leaders' commitment will courageously advance or merely pay lip service to development, climate change and energy security goals.
In this policy brief, the GSI recommends a three-step process to define, measure and evaluate subsidies, beginning with a broad definition that covers preferential treatment in all its forms, and then narrowing down to focus on which subsidies meet national criteria for reform. This method is flexible with respect to national priorities, practical, in line with existing international obligations and paves the way for a consistent approach across sectors. The brief outlines how it could be applied to any sector, but drawing on examples from the energy sector in particular.
Last updated: 15 October, 2010
