The Economics, Politics and Future of Energy Subsidies

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.

This report discusses these aspects, first for energy-consumption subsidies, and second for support for energy production. The third section explores possible extensions of the scope of energy subsidies to include exemptions from user fees or general taxes and environmental externalities. Each of the three sections explores the role that international cooperation can play in reducing the negative impacts of subsidies.

In addition to the summary report linked to above, individual presentations on subsidies can be accessed here.