The Fossil Fuel Subsidy Tracker incorporates estimates of fossil-fuel subsidies and other support measures for 192 economies and is updated once a year as latest data from source organisations become available. The estimates are gathered from three international databases: the OECD Inventory of Support Measures for Fossil Fuels, the IEA Energy subsidies database and the IMF Fossil Fuel Subsidies database. Estimates from the three organisations are based on two different approaches, which provide complementary information.
The IEA and IMF analyses of energy subsidies compare the end-use prices paid by fuel consumers with reference prices (such as import-parity prices). The Fossil Fuel Subsidy Tracker picks up IMF “explicit” (see note below) consumption subsidy estimates only (i.e. price gap). The IMF also includes production subsidies for selected countries as well as “implicit” (see note below) subsidies to fossil fuels. The “implicit” subsidies consider the undercharging for environmental costs and general consumption taxes and are therefore higher than the “explicit” subsidy estimates. IMF production and ”implicit” estimates have not been reflected in the Fossil Fuel Subsidy Tracker, as external costs are not commonly reflected in tax expenditure data. (Note: beginning 2021, the IMF started using the terminology “explicit” subsidies to refer to “pre-tax” subsidies and “implicit” subsidies to refer to “post-tax” subsidies.)
The OECD Inventory essentially covers direct budgetary transfers and tax expenditures that in some way provide a benefit or preference for fossil-fuel production or consumption relative to alternatives. It also covers measures that create enabling conditions for the fossil-fuel sector through the development of private or public services, institutions and infrastructure that may benefit fossil-fuel production or consumption in the long term, and fund activities to address the legacy of past mining or drilling (“general services support”).
The scope of the OECD Inventory is therefore broader than conventional conceptions of “subsidy”. Although the OECD Inventory covers measures that provide support (either absolute or relative) to fossil fuels, it does not attempt to assess the impact on prices or quantities of the measures considered, nor does it pass any judgement as to whether a given measure is justified or not. In that sense, the OECD Inventory casts a wide net that aligns well with its objective of promoting the transparency of public policies. Hence, information precedes analysis.
The estimates presented in the Fossil Fuel Subsidy Tracker may be under-estimates of actual subsidy totals. This is because the OECD Inventory may have not captured all support measures or because those that were captured have not been fully quantified. For some measures values are not available or may only have partial data coverage. Therefore, blank cells should be considered as values that have not been estimated and not as zero.
Fossil fuels are defined in accordance with the IEA Statistical Manual (2004). Fossil-fuel subsidies are defined based on the Agreement on Subsidies and Countervailing Measures (ASCM) under the World Trade Organization (WTO) (1994). A subsidy shall be deemed to exist:
- “if there is a financial contribution by a government or any public body within the territory of a Member (“government”), i.e. where:
- a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees);
- government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits);
- a government provides goods or services other than general infrastructure, or purchases goods;
- a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments.
- Or if there is any form of income or price support in the sense of Article XVI of GATT 1994.
- And if a benefit is thereby conferred”.
The subsidy mechanisms based on this definition include
(i) Direct transfer of government funds;
(ii) Tax expenditure, other revenue foregone, and under-pricing of goods and services;
(iii) Induced transfers (price support); and
(iv) Transfer of risk to government.
The methodology for reporting SDG 12.c.1 on fossil-fuel subsidies: “Measuring Fossil Fuel Subsidies in the Context of the Sustainable Development Goals” has been developed by UN Environment with the OECD and the IISD. The tracker’s methodology is aligned with the one developed for reporting SDG indicator 12.c.1 (the amount of fossil fuel subsidies provided as a proportion of GDP) and is intended to bridge any reporting gap on the indicator. The methodology for SDG indicator 12.c.1 developed by the UN Environment Programme, the OECD, and IISD, is summarised in the following document: “Measuring Fossil Fuel Subsidies in the Context of the Sustainable Development Goals.”
The SDG methodology–and therefore the FFS Tracker–adopts the OECD Inventory approach for direct budgetary transfers and tax expenditures, and the IEA and IMF approach for induced transfers – i.e. price-gap approach. The fourth subsidy category in the OECD definition, transfer of risk, is not included in the Fossil Fuel Subsidy Tracker at this stage– which is aligned with the SDG approach.
Subsidy reporting, monitoring capacity, and data availability differ across economies. The methodology therefore recommends a phased approach to move from existing OECD, IEA and IMF global datasets to a process that incorporates national figures as they become available.
Fossil fuel subsidies and other support measures categories
The fossil-fuel subsidies and other support measures in the Fossil Fuel Subsidy Tracker are categorised by Fuel type, Beneficiaries, and Support mechanism.