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Kinds of subsidies, who uses them and how big they are

Globally, subsidies to fossil fuels may be on the order of US$ 600 billion per year, of which the GSI estimates about US$ 100 billion is provided to producers. Nobody knows the real number, however, because there is no international framework for regularly monitoring fossil-fuel subsidies.

Clearly a more accurate picture is needed. Subsidies to consumers that lower end-user prices are relatively easy to estimate using the ‘price-gap' approach but producer subsidies come in many forms. These include tax breaks, low-interest loans, discounted royalties or access rights, and insurance guarantees. Support from such sources is rarely explicit in government budgets.

The GSI aims to improve subsidy estimates and is forging a new global understanding about fossil-fuel subsidies by:

  • Undertaking a detailed survey of fossil-fuel subsidies and their characteristics across four significant and diverse countries: China, Germany, Indonesia and the United States.
  • Providing new data and analysis on producer subsidies through detailed country studies, starting with the oil sectors in Indonesia and Canada.
  • Developing an online calculator for estimating consumer subsidies.
  • Developing better guidance on methodologies used for estimating fossil-fuel subsidies, including a paper analysing the pros and cons of the price-gap approach, and a technical manual that explains how to use a range of subsidy estimation methodologies.