This document is addressed primarily to those individuals who are interested in preparing estimates of subsidies to particular products or sectors—people who engage in what might be called “subsidy accounting.” Unlike financial accounting for the business sector, or public-sector accounting for governments, there exists no agreed set of standards for producing such accounts.
Use of biofuels does not reduce emissions from energy combustion but may offset emissions by increasing plant growth or by reducing plant residue or other non-energy emissions. To do so, biofuel production must generate and use ‘additional carbon’, which means carbon that plants would not otherwise absorb or that would be emitted to the atmosphere anyway. When biofuels cause no direct land use change, they use crops that would grow regardless of biofuels so they do not directly absorb additional carbon.
Subsidies for biofuels in the United States have reached levels unimagined when support for an "infant industry" began in the late 1970s. Today, the infant has grown into a strapping behemoth with a powerful sense of entitlement and an insatiable appetite for ethanol's primary feedstock: corn. In 2009, the U.S. Department of Agriculture reported a record corn harvest of 13.2 billion bushels, 9 percent larger than the harvest of 2008.
One way to correct market failures is tax shifting -- raising taxes on activities that harm the environment so that their prices begin to reflect their true cost and offsetting this with a reduction in income taxes. A complementary way to achieve this goal is subsidy shifting. Each year the world's taxpayers provide at least $700 billion in subsidies for environmentally destructive activities, such as fossil fuel burning, overpumping aquifers, clearcutting forests, and overfishing.
This report summarizes the Climate Policy Initiative Workshop, hosted at DIW Berlin, that took place in November 2009.
At their meeting in Pittsburgh in September 2009, G20 Leaders called for an additional evidence base to support efforts by the member nations to reform and remove fossil fuel subsidies. At a workshop in Berlin in November 2009 we discussed the definition and quantification of energy subsidies, the evaluation of their impact, and the political economy of their reform.
An accurate picture of the level and nature of subsidization is a necessary first step towards reform. Reliable information facilitates an assessment of the subsidy's costs, distribution and impacts, and the development of effective strategies for reform. At the international level, it provides a foundation for dialogue on reform and for monitoring of progress towards de-subsidization.
Reforming subsidies to fossil fuels is a challenging prospect for many governments. To help policy-makers better appreciate the trade-offs between economic, environmental and social impacts, various organizations have analyzed fossil-fuel subsidies and their effects, often with the aid of complex economic models.
Petroleum product subsidies have again started to rise with the rebound in international prices. This note reviews recent developments in subsidy levels and argues that it is necessary to reform the policy framework for setting petroleum product prices in order to reduce the fiscal burden of these subsidies and to address climate change. In 2003, global consumer subsidies for petroleum products totaled nearly $60 billion. They are projected to reach almost $250 billion in 2010.
This Bulletin article is an extract from the longer and more detailed analysis prepared for the German Federal Ministry of Environment, Nature Conservation and Reactor Safety. The extract focuses primarily on the industry trends and does not address the subsidy components of the original report. Readers primarily interested in nuclear subsidies should refer to the full report.
Short documentary providing useful background on global fishery subsidies and efforts at reform. It looks at the problem of over-fishing and approaches to making fisheries more sustainable, in particular through the reform of fishery subsidies. In this regard, the ongoing WTO negotiations aimed at improving and clarifying rules on fisheries subsidies are identified as a major opportunity.