This presentation was made by Assia Elgouacem, OECD, at the Paris Collaborative on Green Budgeting Experts Workshop held at the OECD, Paris, on 20 June 2018

1. Session 4: OECD work on
estimating support for fossil fuels
Assia ELGOUACEM, Junior Trade Policy Analyst
OECD Trade and Agriculture Directorate
Paris Collaborative on Green Budgeting
Experts Workshop:
Mapping the forward agenda and testing initial outputs
20 June 2018

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2Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
 The IEA price-gap approach is only relevant when the domestic price falls short of the
international reference fossil fuels price.
 The price-gap has many advantages, but it only measures a certain type of support to
fossil fuels and does not account for producer support measures or certain types of
consumer support.
 It leaves out policies that do not lower consumer prices but that do have important fiscal
and environmental impacts.
 Fuels in OECD member economies are generally taxed to some degree so that retail
prices exceed import (or export)-parity prices. The IEA price-gap approach does not apply.
 To account for support provided there, one needs to look at individual spending
programmes and tax codes.
 The OECD started doing this back in 2010, and work has since progressed to cover over
1000 measures in 43 economies as of 2017.
Inventory approach to estimating support for
fossil fuels

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3Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
 OECD’s PSE-CSE accounting framework.
 Stage at which fuel is consumed.
 Formal Incidence
How are the data organised?

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4Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
Government support comes in many shapes and
forms
Statutory or Formal Incidence (to whom and what a transfer is first given)
A: Output returns B: Enterprise
income
C: Cost of
intermediate
inputs
Costs of Value-Adding Factors
D: Labour E: Land and
natural resources
F: Capital G: Knowledge
TransferMechanism(howatransferiscreated)
1: Direct
transfer of
funds
Output bounty or
deficiency
payment
Operating grant Input-price
subsidy
Wage subsidy Capital grant
linked to
acquisition of land
Grant tied to the
acquisition of
assets
Government R&D
2: Tax
revenue
foregone
Production tax
credit
Reduced rate of
income tax
Reduction in
excise tax on input
Reduction in social
charges (payroll
taxes)
Property-tax
reduction or
exemption
Investment tax
credit
Tax credit for
private R&D
3: Other
government
revenue
foregone
Under-pricing of a
government good
or service
Under-pricing of
access to
government land
or natural
resources
Debt forgiveness
or restructuring
Government
transfer of
intellectual
property rights
4: Transfer of
risk to
government
Government
buffer stock
Third-party liability
limit for producers
Assumption of
occupational
health and
accident liabilities
Credit guarantee
linked to
acquisition of land
Credit guarantee
linked to capital;
equity conversions
5: Induced
transfers
Import tariff or
export subsidy
Monopoly
concession
Monopsony
concession; export
restriction
Wage control Land-use control Credit control
(sector-specific)
Deviations from
standard IPR rules

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5Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
OECD fossil fuel support estimates amount to
USD 150 billion
OECD (2018)

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6Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
Tax expenditures account for the bulk of support
for fossil fuels
OECD (2018)
43
83
52
66
91
114
105
93
80
56
74
110
72
108
127
135
135
126
97
98
0
50
100
150
200
250
300
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Tax Expenditure Direct Transfers

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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
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assia.elgouacem@oecd.org
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