IMF Fossil Fuel Subsidies Data: 2023 Update

IMF Working Papers, August 24, 2023

Source details

Authors: Simon Black, Antung A. Liu, Ian W.H. Parry
Publication date: August 24, 2023
Scope: comprehensive global, regional, and country-level update of (i) efficient fossil fuel prices to reflect supply and environmental costs; and (ii) subsidies implied by charging below efficient fuel prices.
Accompanying spreadsheets provide detailed results for 170 countries.

Global fossil fuel subsidies in 2022: $7 trillion.
Subsidies as share of global GDP in 2022: 7.1 percent of GDP.
Explicit subsidies (undercharging for supply costs) share of total subsidy: 18 percent.
Share of subsidy due to undercharging for global warming and local air pollution: nearly 60 percent.
Coal pricing gap example: 80 percent of global coal consumption was priced at below half of its efficient level in 2022.
Paper length: 32 pages.
Working Paper series: Working Paper No. 2023/169.

Estimated reduction in global carbon dioxide emissions by 2030: 43 percent below baseline levels (in line with keeping global warming to 1.5-2oC).
Revenue gains from reform: 3.6 percent of global GDP.
Public health benefit: preventing 1.6 million local air pollution deaths per year.

Differences between efficient prices and retail fuel prices are described as large and pervasive.
Explicit subsidies have more than doubled since 2020 but remain a minority share of the total subsidy burden.
Environmental externalities (global warming and local air pollution) constitute the majority of the subsidy estimate.

Comprehensive fossil fuel price reform would simultaneously:
- Substantially cut global CO2 emissions (43 percent below baseline by 2030).
- Raise significant government revenues (3.6 percent of global GDP).
- Deliver major public health benefits (prevent 1.6 million local air pollution deaths per year).
Reform efforts should account for both supply-cost undercharging and underpricing relative to environmental costs; addressing only explicit supply-cost subsidies would leave the larger environmental component unpriced.

Source: IMF Fossil Fuel Subsidies Data: 2023 Update (IMF Working Paper No. 2023/169).