subsidies removed
of distortion (US$
million, various
years, 1988 –to 1995)
CO2 emissions relative
to reference scenarios
resulting from reforms
by 2010 million tonnes
of removing subsidies
Shah (1995)
(difference between domestic
and world prices)b
1,5000 in 2050
most regions, largest in CIS.
Improved terms-of-trade for
non-OECD countries.
(1994)
>50 (OECD estimate)
increased coal trade.
in coal industry, increased coal
trade. Cost of using subsidies to
maintain jobs is 94–145,000 DM
per job/year. Reduces cost
of meeting CO2 target.
Barriers to gas and electricity
trade
Below-market cost financing
1,400
NQ
0.8
NQ
Reduces cost of meeting CO2 target.
electricity supply industry (ESI)
VAT below market rate
Subsidies to capital
Excise tax exemption for
fossil fuels use by ESI
Total net and cross-subsidies
300
1,500
700
10,000
0.6
3.3
5.9
19.2
control for coal
Price control/debt forgiveness
for electricity consumers
6,000
(about half caused by shift from coal to other fuels, half to reduced
final energy demand)
(but note that model included no
subsidy recycling mechanism).
coal and nuclear producers
VAT on electricity below
general rate
2,500
1,200
0.2
subsidies
DJA (1994) analysis of federal
subsidies
15,400c
64
GNP increased 0.2% if revenue
used to reduce capital taxes.
a The model used is comparative static: emission reduction is calculated using mostly 1991 market data.
b This measure of “subsidies” is a crude one, and does not necessarily indicate the existence of any particular government policy.
c The two studies analyze different sets of energy supports and use slightly different estimates for some of them: these figures are not a reliable indication of
total US federal energy subsidies. See Appendix A, Table 14, OECD (1997c) for details. Results are sensitive to assumptions regarding the future structure
of the US electricity supply industry.
NQ = not quantified
