IEA - Analysis of Fossil Fuel Subsidies
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IEA - Analysis of Fossil Fuel Subsidies

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IEA World Energy Outlook 2011 - Analysis Of Fossil Fuel Subsidies

IEA World Energy Outlook 2011 - Analysis Of Fossil Fuel Subsidies

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  • 1. IEA analysis of fossil-fuel subsidies International Energy Agency Paris , 4 October 2011© OECD/IEA 2011
  • 2. Fossil-fuel subsidies can haveunintended effects Fossil-fuel subsidies result in an economically inefficient allocation of resources and market distortions, while often failing to meet their intended objectives© OECD/IEA 2011
  • 3. Fossil-fuel consumption subsidies remain big World subsidies to fossil-fuel consumption 600 Billion dollars Electricity 500 Coal 400 Natural gas 300 Oil 200 100 0 2007 2008 2009 2010 Fossil fuel subsidies have been driven higher by the rebound in international energy prices they totalled $409 billion in 2010 – about $110 billion up on 2009© OECD/IEA 2011
  • 4. Major energy producers are among the biggest subsidisers World fossil-fuel consumption subsidies by net oil & gas importer/exporter, 2007-2010 450 Billio n dollars Exporter 400 Importer 350 300 250 200 150 100 50 0 2007 2008 2009 2010 For importers, subsidies can impose a heavy burden on state budgets, while for producers they quicken the depletion of resources, reducing export earnings over the long-term© OECD/IEA 2011
  • 5. Fossil-energy subsidies go mostly to the rich Share of fossil-fuel subsidies received by the lowest 20% income group, 2010 Subsidies are an extremely inefficient means of assisting the poor: only 8% of the $409 billion spent on fossil-fuel subsidies in 2010 went to the poorest 20% of the population© OECD/IEA 2011
  • 6. Cutting fossil-fuel subsidies would bringeconomic, energy & environmental benefits Without further reform, spending on fossil-fuel consumption subsidies is set to reach $660 billion in 2020, or 0.7% of global GDP Phasing-out fossil-fuel consumptions subsidies by 2020 would:  slash growth in energy demand by 4.1%  reduce growth in oil demand by 3.7 mb/d  cut growth in CO2 emissions by 1.7 Gt Many countries have started or planned reforms since early-2010  key driver has been fiscal pressure on government budgets  G20 & APEC commitments have also underpinned many reform efforts  much more remains to be done to realise full extent of benefits© OECD/IEA 2011