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### Executive summary — scope and approach
- Updated assessment of fossil fuel subsidies at country, regional, and global level for 170 countries.
- Quantifies:
  - Explicit subsidies = undercharging for supply costs.
  - Implicit subsidies = undercharging for environmental costs and forgone consumption tax revenues.
- Total fossil fuel subsidy = (efficient price − retail price) × consumption, where efficient price = supply + environmental + consumption tax components.

### Global totals and composition (2022)
- Total fossil fuel subsidies: $7 trillion in 2022, equivalent to nearly 7.1 percent of global GDP.
- Share composition:
  - Explicit subsidies: 18 percent of total.
  - Implicit subsidies: 82 percent of total.
- Time series note:
  - Explicit subsidies increased from $0.5 trillion in 2020 to $1.3 trillion in 2022.
  - Explicit subsidies projected to decline if international prices recede from peak levels.

### Price gaps and fuel-specific findings
- Large pervasive underpricing, especially for coal.
- 80 percent of coal consumption was priced at below half of its efficient level in 2022.
- Fuel-product shares of total subsidy (2022):
  - Oil products (petroleum): nearly half of the subsidy.
  - Coal: 30 percent.
  - Natural gas: nearly 20 percent.
  - Electricity: remainder.

### Sources of implicit subsidies (2022)
- Underpricing components of total subsidies:
  - Local air pollution and global warming: nearly 60 percent.
  - Supply costs and transportation externalities: about 35 percent.
  - Forgone consumption tax revenue: remainder.

### Regional and country distribution (2022)
- Regional shares of total (explicit + implicit):
  - East Asia and Pacific (EAP): 48 percent of global total.
  - MENA, Europe, North America: 11 percent each.
  - CIS, South Asia, LAC: 5–9 percent each.
  - SSA: 2 percent.
- Regional shares of explicit subsidies (2022):
  - EAP: 38 percent; MENA: 26 percent; Europe: 16 percent; CIS, South Asia, LAC: 5–12 percent each; North America, SSA: below 3 percent.
- Country-level top contributors (2022, absolute):
  - China: $2.2 trillion
  - United States: $760 billion
  - Russia: $420 billion
  - India: $350 billion
  - European Union: $310 billion
- Relative-to-GDP (2022) examples:
  - Europe and North America: about 3 percent of regional GDP.
  - CIS: 23 percent of regional GDP.
  - MENA: about 18 percent of regional GDP.
  - EAP and South Asia: about 10 percent each.

### Breakdown by product and component (2022)
- Explicit global subsidy shares (2022):
  - Petroleum: 26 percent
  - Natural gas: 48 percent
  - Electricity: 25 percent
  - Coal: less than one percent
  - Note: 97 percent of explicit subsidy is consumer-side; 3 percent is producer support.
- Total (explicit + implicit) subsidy shares (2022):
  - Coal: 30 percent (nearly all from carbon and local air pollution underpricing)
  - Petroleum: 47 percent
  - Natural gas: 18 percent (half implicit)
  - Electricity: 5 percent
- Component shares (2022):
  - Local air pollution + climate change: about 60 percent of total subsidies.
  - Broader externalities and supply costs: about 35 percent.
  - General consumption tax undercharging: remainder.
- Fuel-specific notes:
  - Coal: climate damages ≈ $6.8 per GJ; local air pollution and global warming account for 53 and 45 percent of coal subsidies respectively.
  - Natural gas: supply costs $7–$25 per GJ across regions; carbon damages ≈ 15–60 percent of supply costs; local air pollution damages typically below $1 per GJ.
  - Road fuels: supply costs ≈ $0.70 per liter for gasoline and diesel (2021-22); carbon damages $0.15 per liter (gasoline) and $0.18 per liter (diesel); congestion and accident externalities contribute about $0.3–$1.1 per liter.

### Environmental and health impacts of full and partial reform (scenarios)
- Reform scenarios:
  - Full reform: all 170 countries progressively raise fuel prices to efficient levels by 2030.
  - Partial reform: progressively close half the gap between pre-reform and efficient price levels by 2030.
- Baseline assumptions:
  - Current fuel taxes/subsidies revert to 2019 real levels as international prices fall unless otherwise fixed; carbon pricing held fixed in real terms at 2022 levels.
- Full reform impacts by 2030:
  - CO2 emissions: reduce 43 percent below baseline levels in 2030 (34 percent below 2019 levels).
  - Emission reduction composition: 55 percent from reduced coal use, 31 percent from petroleum, 12 percent from natural gas.
  - Global air pollution deaths from fossil fuels: reduce 50 percent below baseline in 2030, averting about 1.6 million premature deaths per year.
  - Regional CO2 reductions: range from 25 percent below baseline in Europe to ~55 percent in the CIS.
- Partial reform impacts:
  - CO2 emissions: fall 32 percent below 2030 baseline levels.
  - Removing explicit subsidies only: reduces emissions 5 percent.
  - Health co-benefits: partial reform averts 1.2 million air pollution deaths a year (as reported in earlier executive summary section).
- Non-pricing "smart" reform (tradable emission-rate standards or feebates):
  - Achieves about 50 percent of CO2 reductions from full reform and 65 percent of reductions in local air pollution deaths.
  - Does not raise revenues; results in revenue loss of 0.5 percent of GDP relative to full reform.
  - Net welfare gains ≈ 50 percent of those from full fuel price reform.

### Fiscal and welfare impacts of reform
- Revenue gains (2030, full reform):
  - $4.4 trillion in 2030, equal to 3.6 percent of global GDP (relative to baseline, accounting for erosion of pre-existing tax bases and rebates).
  - Revenues for 121 emerging market and developing countries in 2030: $3 trillion.
- Partial reform revenues:
  - 64 percent of full reform revenue, about $2.8 trillion across all countries.
- Welfare impacts:
  - Global net welfare benefit from full reform: 3.6 percent of global GDP = environmental benefits of 5.2 percent of GDP less economic welfare costs of 1.6 percent of GDP.
  - Partial reform: environmental benefits 3.2 percent of GDP; efficiency costs 0.5 percent of GDP; net welfare benefit 2.7 percent of GDP.
  - For the average country, reform that reduces CO2 by about 25 percent below baseline in 2030 raises net welfare before counting global climate benefits.

### Distributional and policy design implications
- Underpricing forfeits government revenue and disproportionately benefits wealthier households in absolute terms.
- Recommended policy design features:
  - Use savings from subsidy reform to finance targeted, income-based transfers to vulnerable households; prefer transfers unrelated to energy consumption to preserve conservation incentives (e.g., means-tested transfers or lump-sum bill rebates).
  - Where politically constrained, deploy non-pricing measures (feebates, tradable performance standards) as complements or second-best options.
  - Prefer direct fees on smokestack emissions for large stationary sources; where monitoring is limited, use fuel input taxes reflecting air pollution damages as second-best (possibly with rebates for demonstrated lower emissions).
  - Address road externalities with km-based charging; fuel taxes remain a blunt second-best until km-based systems are implemented.
  - Expand and redesign social protection systems as needed to protect poorer households.

### Measurement, valuation, and methodological choices (key numeric inputs and assumptions)
- CO2 emissions factors: oil products ≈ 25 percent lower and gas ≈ 45 percent lower than coal.
- Road fuels: diesel CO2 per liter ≈ 16 percent higher than gasoline.
- Carbon price trajectory (central case): starting at $60 per tonne in 2020 and rising by $1.5 per tonne each year (characterized as conservative and consistent with limiting warming to 2°C).
- Alternative CO2 valuation: $185 per tonne would increase subsidy estimates by about 50 percent (to ≈ 11 percent of global GDP).
- Global premature outdoor air pollution fatalities: 4.5 million in 2019; 92 percent from fine particulates and 8 percent from ozone; two-thirds of deaths among those aged 65+; 60 percent of outdoor air pollution deaths attributed to fossil fuels.
- Mortality valuation (2022 average advanced country): around $5.2 million per death (OECD 2012 meta-analysis updated for inflation and income); extrapolated across countries using PPP per capita income and declining elasticity from 1.2 to 0.8 as income rises.

### Data sources, projections, and uncertainties
- Fuel use baseline: IEA (2023a) with Enerdata (2023) supplements; data available to 2019 and projected onward using IMF-World Bank CPAT.
- Supply cost measurement:
  - Well-integrated markets: import/export prices with margin adjustments.
  - Non-tradable products (electricity): domestic production cost.
  - Coal and gas: weighted domestic and international prices by consumption shares.
- Recent international price movements (mid-2020 to mid-2022):
  - Coal: ≈ 400 percent increase.
  - Oil: ≈ 110 percent increase.
  - Gas: 200 percent in North America, 750 percent in East Asia, 1,100 percent in Europe.
- 2030 forecasted prices (relative to 2021 forecasts): oil +15 percent, natural gas +200 percent, coal +130 percent (considerable uncertainty).
- Uncertainties and caveats:
  - Parameter uncertainties (e.g., CO2 valuation, concentration–mortality links) affect magnitude but central-case implications are presented.
  - Upstream methane leakage not accounted for (focus on consumption).
  - Emission factors for industry/buildings filled using power-sector rates (conservative).
  - Common global CO2 value applied across countries.

### Methods for estimating local population exposure and transport externalities
- Two approaches averaged for country-level exposure:
  - Intake fraction approach: granular mapping of plant locations to population density, regression decay of intake fractions with distance, extrapolation for vehicles/buildings using urban intake fractions.
  - Air quality modelling (TM5-FASST): downscaled source-receptor matrices across 56 regions to countries, supplemented by local source apportionment studies; accounts for meteorology/topography and limited non-linearities.
- Transportation externalities:
  - Congestion: TomTom GPS data for 400 cities across 54 countries; LASSO extrapolation for others; marginal-to-average delay ratio assumed 400 percent; value of travel time = 60 percent of nationwide average market wage in 2022.
  - Accidents and road wear: external costs per vehicle km apportioned and monetized using mortality valuations; road wear attributed via highway maintenance expenditures per unit diesel use.

### Annex highlights — data and country-level results
- Fuel use/projections: IEA and Enerdata inputs; CPAT projections.
- Supply cost mark-ups (examples):
  - Coal mark-ups: $1, $3, $6 per GJ for power, industrial, residential; halved for domestic coal producers.
  - Natural gas mark-ups: $2, $2, $8 per GJ for power, industrial, residential; adjusted down 25 percent for domestic gas.
  - Finished petroleum margins: $0.15–$0.22 per liter plus $0.10 per liter for land-locked and small island developing countries; LPG priced at 30 percent discount to gasoline.
- Annex III country sample (Total / Implicit / Explicit subsidies, 2022) — select entries preserved exactly as reported:
  - Argentina — Total subsidies: 14; 2.5; 313 — Implicit subsidies: 36; 6.4; 800 — Explicit subsidies: 50; 8.9; 1,113
  - Australia — Total subsidies: 8; 0.5; 302 — Implicit subsidies: 40; 2.4; 1,519 — Explicit subsidies: 47; 2.9; 1,821
  - Brazil — Total subsidies: 2; 0.1; 11 — Implicit subsidies: 67; 3.1; 310 — Explicit subsidies: 69; 3.2; 321
  - Canada — Total subsidies: 2; 0.1; 47 — Implicit subsidies: 36; 1.9; 953 — Explicit subsidies: 38; 2.0; 1,000
  - China — Total subsidies: 270; 1.5; 189 — Implicit subsidies: 1,966; 11.0; 1,379 — Explicit subsidies: 2,235; 12.5; 1,568
  - Germany — Total subsidies: 43; 1.0; 520 — Implicit subsidies: 86; 2.0; 1,028 — Explicit subsidies: 129; 3.0; 1,548
  - France — Total subsidies: 18; 0.6; 278 — Implicit subsidies: 46; 1.5; 714 — Explicit subsidies: 64; 2.1; 992
  - India — Total subsidies: 32; 1.0; 23 — Implicit subsidies: 314; 9.6; 223 — Explicit subsidies: 346; 10.6; 245
  - Indonesia — Total subsidies: 78; 6.2; 285 — Implicit subsidies: 116; 9.2; 422 — Explicit subsidies: 194; 15.4; 707
  - Italy — Total subsidies: 10; 0.4; 162 — Implicit subsidies: 54; 2.4; 910 — Explicit subsidies: 63; 2.8; 1,072
  - Japan — Total subsidies: 34; 0.6; 274 — Implicit subsidies: 276; 5.2; 2,224 — Explicit subsidies: 310; 5.8; 2,498
  - Mexico — Total subsidies: 15; 1.1; 115 — Implicit subsidies: 83; 6.5; 657 — Explicit subsidies: 98; 7.6; 772
  - Russia — Total subsidies: 71; 4.0; 488 — Implicit subsidies: 351; 19.6; 2,423 — Explicit subsidies: 421; 23.6; 2,912
  - Saudi Arabia — Total subsidies: 129; 13.8; 3,579 — Implicit subsidies: 124; 13.2; 3,418 — Explicit subsidies: 253; 27.0; 6,996
  - South Africa — Total subsidies: 5; 1.2; 85 — Implicit subsidies: 56; 12.8; 934 — Explicit subsidies: 61; 13.9; 1,019
  - Korea — Total subsidies: 65; 3.2; 1,250 — Implicit subsidies: 97; 4.8; 1,870 — Explicit subsidies: 162; 8.1; 3,120
  - Turkiye — Total subsidies: 59; 5.9; 694 — Implicit subsidies: 93; 9.3; 1,098 — Explicit subsidies: 152; 15.2; 1,792
  - United Kingdom — Total subsidies: 19; 0.6; 275 — Implicit subsidies: 55; 1.7; 823 — Explicit subsidies: 74; 2.3; 1,098
  - United States — Total subsidies: 3; 0.0; 9 — Implicit subsidies: 754; 3.2; 2,234 — Explicit subsidies: 757; 3.2; 2,243
  - Vietnam — Total subsidies: 7; 1.7; 67 — Implicit subsidies: 50; 12.6; 507 — Explicit subsidies: 56; 14.3; 574
  - Ethiopia — Total subsidies: 4; 3.6; 33 — Implicit subsidies: 4; 3.8; 34 — Explicit subsidies: 8; 7.4; 67
  - Iran — Total subsidies: 63; 10.5; 711 — Implicit subsidies: 100; 16.7; 1,131 — Explicit subsidies: 163; 27.2; 1,842
  - Morocco — Total subsidies: 1; 1.0; 38 — Implicit subsidies: 13; 8.9; 340 — Explicit subsidies: 14; 9.9; 378

### Key conclusions
- Fossil fuels are substantially underpriced globally; total subsidies in 2022 ≈ $7 trillion (7.1 percent of global GDP).
- Full fuel price reform yields large climate, health, fiscal, and welfare benefits:
  - CO2 reductions (2030): 43 percent below baseline.
  - Air pollution deaths averted: about 1.6 million per year by 2030.
  - Revenue gain (2030): $4.4 trillion or 3.6 percent of global GDP.
  - Net global welfare gain: 3.6 percent of global GDP.
- Smart non-pricing measures can deliver meaningful benefits but are materially less effective than pricing reforms.
- Policy design should couple reforms with targeted support for vulnerable households and pursue complementary non-pricing instruments where politically necessary.

*Source: IMF Working Paper — IMF Fossil Fuel Subsidies: 2023 Update (wpiea2023169-print-pdf).*

### Executive Summary ......................................................................................................

### Executive Summary

### Overview
- This paper provides an updated assessment of fossil fuel subsidies at a country, regional, and global level.
- It quantifies explicit subsidies (undercharging for the supply costs of fossil fuels) and implicit subsidies (undercharging for environmental costs and forgone consumption tax revenues).
- The full gap between efficient prices (the sum of supply, environmental, and other costs) and retail prices multiplied by consumption equals the total fossil fuel subsidy.
- Results for 170 individual countries are available online.

### Global totals and composition (2022)
- Total fossil fuel subsidies amounted to $7 trillion in 2022, equivalent to nearly 7.1 percent of global GDP.
- Explicit subsidies (undercharging for supply costs) account for 18 percent of the total.
- Implicit subsidies (undercharging for environmental costs and forgone consumption taxes) account for 82 percent of the total.
- Explicit subsidies increased from $0.5 trillion in 2020 to $1.3 trillion in 2022.
- Much of the increase in explicit subsidies is attributed to sharply higher international fossil fuel prices and temporary price support measures; explicit subsidies are expected to decline if international prices continue receding from their peak levels.

### Price gaps and fuel-specific findings
- Differences between efficient prices and retail prices for fossil fuels are large and pervasive across fuels, especially for coal.
- Globally, 80 percent of coal consumption was priced at below half of its efficient level in 2022.
- By fuel product:
  - Undercharging for oil products accounts for nearly half the subsidy.
  - Coal accounts for another 30 percent.
  - Natural gas accounts for nearly 20 percent.
  - Underpricing for electricity accounts for the remainder.

### Sources of implicit subsidies
- Underpricing for local air pollution and global warming account for nearly 60 percent of global fossil fuel subsidies.
- Underpricing for supply costs and transportation externalities (such as congestion) explain another 35 percent.
- The remainder is accounted for by forgone consumption tax revenue.

### Regional and country distribution
- East Asia and the Pacific accounts for nearly half of the global subsidy.
- By country, in absolute terms China remains the biggest subsidizer of fuels, followed by the US, Russia, EU, and India.
- Implicit subsidies are projected to rise in the baseline as the share of fuel consumption in emerging markets (where local environmental costs are generally larger) continues to climb.

### Environmental and health impacts and reform scenarios
- Fully reforming fossil fuel prices by removing explicit fuel subsidies and imposing corrective taxes such as a carbon tax would:
  - Reduce global carbon dioxide (CO2) emissions by 43 percent below ‘business as usual’ levels in 2030 (34 percent below 2019 levels).
  - Be in line with keeping global warming to ‘well below’ 2oC and towards 1.5oC.
  - Avert about 1.6 million premature deaths per year from local air pollution by 2030.
- Second-best efficient combinations of (tradable) CO2 and local air emission rate standards (or their feebate equivalents) across sectors would:
  - Reduce CO2 emissions by around 20 percent in 2030 relative to baseline levels.
  - Avert 1.2 million air pollution deaths a year.
  - Largely avoid politically difficult increases in energy prices.

### Fiscal and economic benefits of reform
- Full fuel price reform would raise substantial revenues, worth about 3.6 percent of global GDP.
- For developing countries as a whole, revenue gains from full price reform exceed the estimated extra spending needed to achieve the Sustainable Development Goals.
- Reforming fossil fuel subsidies is in countries’ own interest even when excluding climate benefits:
  - For the average country, reforming fuel subsidies to the extent that they reduce CO2 by about 25 percent below baseline levels in 2030 would raise net welfare (due to local environmental benefits and removing price distortions), before even counting global climate benefits.
  - Globally, full price reform would generate net welfare benefits of about 3.6 percent of GDP.

### Additional implications
- Underpricing fossil fuels implies governments forgo a valuable source of much-needed revenue and undermines distributional and poverty reduction objectives since most of the benefits from undercharging accrue to wealthier households.
- The paper discusses implications for policymakers, including those implementing non-pricing reforms and wishing to avoid additional burdens on low-income households.

*IMF Working Paper — Executive Summary*

### 1.5 to 2°C beyond reach

### 1.5 to 2°C beyond reach

### Main findings and context
- The energy price surge of 2021-22 promoted energy conservation but reduced the relative price of coal compared to natural gas in a way that is harmful from a climate perspective.
- As energy prices recede from their elevated levels, governments have an opportunity to phase in robust carbon pricing or equivalent measures.
- Relief measures for the price surge, following on from the COVID-19 pandemic, have heightened the attraction of policy reforms that raise new revenues to address limited fiscal space.
- 99 percent of the global population remain exposed to local air pollution levels that exceed World Health Organization guidelines.
- Previous IMF assessment (Parry and others 2021) put global fossil fuel subsidies at $5.9 trillion in 2020 or 6.8 percent of GDP, with only 8 percent of the 2020 subsidy reflecting undercharging for supply costs (explicit subsidies) and 92 percent undercharging for environmental costs and forgone consumption taxes (implicit subsidies).

### Policy framework and recommendations
- Policies that increase the relative price of fossil to clean fuel technologies must play a pivotal role in achieving emissions reductions.
- A transparent methodology indicating how current fuel prices compare with efficient levels, and the environmental, fiscal, and economic benefits from fuel price reform, is critical for guiding policy reforms.
- Raising energy prices can be politically challenging; a portion of savings from subsidy reform can finance targeted, income-based transfers to vulnerable households and increased access to low-carbon alternatives.
- Non-pricing instruments—emission rate standards, feebates, and clean technology subsidies—avoid significant increases in energy prices but are less efficient; the methodology developed can guide the design of non-pricing reforms by indicating implicit price signals.
- More fine-tuned instruments (e.g., direct fees on local air pollution emissions, kilometer (km)-based charges for road congestion) are preferable where feasible; the discussion provides guidance on efficient levels of such instruments.
- For large stationary emitters, a fee on smokestack emissions is most efficient for local air pollution; where monitoring is constrained, fuel input taxes reflecting air pollution damages are a second-best policy (possibly combined with rebates for firms demonstrating lower emissions).
- Road externalities (congestion, accidents, road damage) are most efficiently addressed through various km-based charging systems; until such systems are implemented, fuel taxes remain a valid second-best instrument.
- To protect poorer households, some countries may need to expand and redesign social protection systems since most benefits from fossil fuel subsidies accrue to wealthier households in absolute terms.

### Conceptual definition of efficient fuel prices
- Economically efficient price for a fossil fuel product = [unit supply cost + unit environmental cost] × [1 + general consumption tax rate, if applicable]
- Environmental costs included:
  - Global warming: fuel’s CO2 emissions factor × value per tonne of CO2 emissions.
  - Local outdoor air pollution: fuel’s emissions factor for each pollutant × damage per unit of emissions, aggregated over pollutants.
  - Road externalities: congestion, accidents, and road damage linked to vehicle use of road fuels (addressed via km-based charges ideally; fuel taxes are a blunt second-best).
- Environmental costs from electricity consumption are taken to be zero in this framework because global and local pollution are attributed to fuel inputs.

### Definitions of subsidies (as used in the paper)
- Explicit subsidy (for a fuel product, in a sector, in a country) = [sectoral unit supply cost ─ fuel user price] × [sectoral fuel consumption]
- Total (explicit + implicit) subsidy = [sectoral efficient fuel price ─ fuel user price] × [sectoral fuel consumption]
- Undercharging for VAT is counted as an implicit subsidy. Producer subsidies (e.g., accelerated depreciation) are included in explicit subsidies.
- If fuel user price exceeds supply cost, explicit subsidy is counted as zero; if price exceeds efficient level, total subsidy is counted as zero.
- Subsidies are aggregated across sectors (power generation, industry, transportation, buildings), fuels (coal, natural gas, gasoline, diesel, kerosene, LPG, other oil products), and countries.

### Measurement and parameter choices (key numeric values and assumptions)
- CO2 emissions factors per unit of energy vary very little across countries but are about 25 and 45 percent lower for oil products and gas respectively than for coal.
- For road fuels, CO2 emissions per liter are about 16 percent higher for diesel than for gasoline (data accounts for moderately lower emissions from biofuel blending but not for partially offsetting land use emissions).
- Carbon price trajectory assumed: rise by $1.5 per tonne each year from a starting value of $60 per tonne in 2020 (characterized as a conservative price trajectory consistent with limiting global warming to 2°C).
- Alternative valuation cited: a recent assessment suggests a value of $185 per tonne for CO2 emissions; using this figure would make total global subsidy estimates about 50 percent larger, at around 11 percent of global GDP.
- Global premature fatalities from outdoor air pollution: 4.5 million in 2019 (per Global Burden of Disease).
  - 92 percent of those deaths were due to fine particulates and 8 percent to ozone.
  - Two-thirds of deaths were among people aged 65 and over.
  - 60 percent of outdoor air pollution deaths were attributed to fossil fuels (as opposed to other sources).
- Emissions factors and population exposure:
  - Local air emissions factors for fossil fuels by sector are taken from projections for 2020 onwards in Wagner and others (2020); data are more extensive for power and transport sectors.
  - Emissions factors represent an average over newer and older sources and tend to decline over time as capital stocks turn over (exception: diesel vehicles where on-road emission rates were revised upwards).
  - Country-level population exposure to air pollution averages across two different modelling approaches.

### Caveats, uncertainties, and scope limits
- Uncertainties exist on parameter values (e.g., valuation of CO2 emissions, link between pollution exposure and elevated mortality risks and their monetization); results are based on central case assumptions, and implications of alternative assumptions are largely transparent.
- The assessment of efficient fuel prices does not consider broader market failures like spillovers from learning-by-doing at firms adopting new clean technologies; such considerations often warrant targeted measures (e.g., temporary technology deployment subsidies) rather than further increases in fossil fuel prices.
- Upstream emissions leakage (e.g., venting and flaring of methane at coal mines and oil wells) is not accounted for given the focus on fuel consumption rather than production.
- For industrial and building sectors, data gaps in emissions factors are filled using power sector emission rates, which gives conservative estimates because abatement technologies are more common in power generation.
- The methodology assumes the use of a common global value for CO2 emissions across countries, reflecting CO2’s long atmospheric lifespan and the equal global contribution to future warming from a tonne emitted anywhere.

*Source: IMF Working Paper — IMF Fossil Fuel Subsidies: 2023 Update (excerpt).*

### Box 1. Estimating Local Population Exposure to Air Pollution

### Box 1. Estimating Local Population Exposure to Air Pollution

### Methodological overview
- Country-level estimates of population exposure to air pollution average across two modelling approaches: an intake fraction approach and a computational air quality modelling approach (TM5-FASST).
- Both approaches translate emissions into increased rates of relative mortality risks from pollution-related illness using concentration response functions from the epidemiological literature.

### Intake fraction approach
- Intake fractions measure the fraction of fine particulate emissions that are ultimately inhaled (or ingested) by exposed populations (estimates here draw on Black and others 2023 and update Parry and others 2014).
- For coal and gas plants with tall smokestacks, intake fractions are calculated by:
  - mapping geographical data on the location of individual plants to very granular population density data (each grid cell is 1 km square or less) at different distance classifications from each plant (up to 2,000 km away, within and across borders);
  - using regression coefficients indicating how intake fractions (for given population size) decline at greater distances from the emissions source; and
  - averaging over plants within each country.
- For vehicle and building emissions (which tend to stay close to ground level), intake fractions are extrapolated nationwide from an international database of (ground-level) intake fractions for over 3,000 urban areas.
- Intake fractions tend to be high in densely populated countries and where emissions sources are located inland, and lower for coastally located sources where a large portion of emissions dissipate without harming local populations.
- Fixed coefficients are used to translate intake fractions into increased rates of relative mortality risks based on local linearization of concentration response functions.

### Air quality modelling approach (TM5-FASST)
- Uses a downscaled ‘source-receptor’ model applied at the country level (TM5-FASST).
- TM5-FASST is based on a linearized version of TM5; the original source-receptor matrices in TM5-FASST are separated into 56 regions which are downscaled to obtain country-specific matrices and supplemented with local source apportionment studies estimating contributions of sources such as fossil fuels to baseline concentrations.
- The air quality modelling approach accounts for:
  - local meteorological and topographical factors influencing ambient pollution concentrations; and
  - (less significantly) possible non-linearities in concentration response functions over the relevant range of pollution reductions from fuel price reform.
- The air quality modelling approach is less granular than the intake fraction approach, implying less precision in measuring population sizes potentially exposed to fossil fuel-related pollution.

### Mortality valuation assumptions
- Assumptions about peoples’ willingness to pay for mortality risk reductions are required to quantify efficient fossil fuel prices.
- The estimates use OECD’s (2012) meta-analysis of several hundred stated preference studies on health risk valuations, which (after updating for inflation and real per capita income) implies a value of around $5.2 million per death avoided for 2022 for the average advanced country.
- This figure is extrapolated to other countries based on their per capita income relative to the advanced country average and an assumed elasticity for the mortality value with respect to per capita income that declines from 1.2 to 0.8 as per capita income increases.
- Extrapolations use purchasing power parity (PPP) income per capita.

### Broader externalities for transportation
- Traffic congestion:
  - Motorists should factor average delays into driving decisions but not marginal delays; assessing fuel taxation warranted by congestion requires a nationwide measure of marginal congestion costs.
  - Average delay per vehicle km estimates use TomTom GPS data where available and LASSO extrapolation otherwise (see Box 2).
- Traffic accidents:
  - External costs per vehicle km are measured by apportioning country-level traffic fatalities into external versus internal risks, monetizing them using the mortality valuation approach, and obtaining non-fatality external costs via extrapolations from several country case studies.
  - Results are converted into costs per unit of fuel use and adjusted for the distance-based fraction of fuel price elasticities.
- Road wear and tear:
  - Externalities from high axle-weight vehicles are based on highway maintenance expenditures by country per unit of road diesel fuel use, assuming half of the expenditures are attributed to vehicle use and scaled by the driving portion of the fuel price elasticity.
- Where data is unavailable, values are inferred by averaging countries with similar per capita incomes in the same region.

### Box 2. Estimating Average Delays from Road Congestion (methods and assumptions)
- Direct measurement:
  - TomTom uses anonymized GPS data from navigation devices, in-dashboard systems and smartphones to assemble indices of congestion in 400 cities across 54 countries.
  - TomTom establishes baseline free flow travel times for each road segment, analyzes actual travel across the year weighted by driver counts, and produces a Traffic Index representing the ratio between observed travel times and free flow travel time (for example, an overall congestion level of 36 percent means the average driver spends 36 percent more time than under uncongested conditions).
  - Congestion indices for all cities in a country are averaged to obtain that country’s urban congestion index.
- Extrapolation for countries without TomTom data:
  - A dataset of country-level characteristics was compiled using IRF (2022), OECD (2023), and the World Bank’s World Development Indicators.
  - A penalized maximum likelihood estimator (LASSO) was used to fit a generalized linear model connecting the TomTom Traffic Index for 54 countries to other country characteristics; under the assumption that the same relationships hold, congestion indices were estimated for other countries.
- Translation of average delays into marginal congestion costs multiplies average delays by:
  - the relationship between marginal and average delays, estimated to be 400 percent (based on a review of the literature);
  - vehicle occupancy (averaging over cars and buses);
  - people’s value of travel time (VOT), assumed to be 60 percent of the nationwide average market wage in 2022;
  - fuel economy (to express costs per liter rather than per km); and
  - the portion of the fuel demand elasticity that comes from reduced driving (affecting congestion) versus the portion from improved fuel economy/shifting to EVs (that does not affect congestion).

*IMF WORKING PAPERS IMF Fossil Fuel Subsidies: 2023 Update*

### Annex 1 provides details on data collection procedures for fuel use, prices, and supply costs. Fuel use data by

### wpiea2023169-print-pdf - Annex 1 provides details on data collection procedures for fuel use, prices, and supply costs. Fuel use data by

### Data sources and baseline projections
- Fuel use data by sector and country is obtained from IEA (2023a) and supplemented by Enerdata (2023).
- Data is available to 2019 after which baseline fuel consumption is projected using the IMF-World Bank’s Climate Policy Assessment Tool (CPAT).
- Baseline projections assume no changes in current fuel taxes/subsidies or current carbon mitigation policies, except for a reversion to pre-COVID policies if subsidies were introduced in response to COVID and the 2021/22 energy price surge.

### Measurement of supply costs, retail prices, and taxes/subsidies
- For well-integrated international markets (e.g., oil), supply costs are measured by the import or export price (for fuel importing and exporting countries, respectively), with adjustments for margins for transportation, processing, and distribution.
- For largely non-tradable products (e.g., electricity), supply cost is the domestic production cost, inclusive of margins.
- For coal and natural gas (partially integrated global markets), supply costs are measured by the weighted sum of domestic and international (margin-inclusive) prices where weights are the shares of domestic consumption from domestic and foreign producers.
- Retail prices are based on averaging over a range of sources.
- Fuel taxes (or subsidies) are computed as the difference between retail prices and supply costs and implicitly include excises, carbon taxes, emissions trading systems (ETSs), and VAT.
- Future fuel prices are given by current prices plus the product of changes in future international prices and historically estimated pass through rates to domestic prices, which are typically 60-100 percent.
- International energy price projections (in 2021$) are based on averaging over IMF and World Bank projections and differentiated by region in the case of natural gas.

### Recent international price movements and projections
- International coal and oil prices increased about 400 and 110 percent, respectively, between mid-2020 and mid-2022.
- Gas prices increased 200 percent in North America, 750 percent in East Asian markets, and 1,100 percent in Europe between mid-2020 and mid-2022.
- Prices are projected to steadily decline in the medium-term but remain substantially above previously predicted levels:
  - Forecasted 2030 prices for oil, natural gas, and coal are 15, 200, and 130 percent above those forecasted by the IMF and WB in 2021.
- Considerable uncertainty surrounds future price projections.

### Results — overview of outputs presented
- Four sets of results are presented:
  - A comparison of current and efficient fuel prices by product and selected countries.
  - The size of global fossil fuel subsidies and their decomposition by product, component, and region.
  - The environmental, fiscal, and net economic benefits from price reform.
  - Additional findings on efficient air emission fees, the net domestic benefits of climate mitigation, and the benefits of non-pricing reform.
- Detailed results for 170 countries are available in the accompanying spreadsheet.

### Comparing current and efficient fuel prices
- Results are for the average of 2021-22.
- Figures show cumulative share of global fuel consumption priced at given ratios of current-to-efficient price, and country-level estimates for coal, natural gas, gasoline, and (road) diesel.
- Coal, natural gas prices are averaged over power, industry, and building sectors; gasoline and diesel are averaged over road fuel consumption.

### Coal and natural gas: supply costs, pricing gaps, and damages
- Supply costs for coal vary from around $3 per gigajoule (GJ) to $11 per GJ in 2021-22.
- Fuel user prices are generally as large as supply costs aside from Brazil and Indonesia where prices are slightly below supply costs.
- Climate change damages from coal are equivalent to $6.8 per GJ or around 60-200 percent of supply costs.
- Local air pollution damages for coal vary widely; local air pollution damages exceed 40 percent of climate damages in six cases and are less than 50 percent of climate damages in ten cases.
- Supply costs for natural gas vary from around $7 per GJ in North America to around $25 per GJ in East Asia and Europe (up from $7-9 per GJ in 2019).
- Prices undercharge for supply costs in ten out of 25 cases in Figure 3 in 2021-22, reflecting large subsidies introduced in response to the energy price surge.
- Carbon damages for natural gas are around 15 to 60 percent of supply costs.
- Local air pollution damages from natural gas are typically modest (below $1 per GJ).
- The VAT component of efficient natural gas prices would contribute 5-20 percent of the efficient price for household consumption alone (but is smaller in cross-sector averages).
- Consumption-weighted averages: 80 and 27 percent of coal and natural gas consumption respectively is priced at below half of its efficient level.

### Gasoline and diesel: supply costs, taxes, and externalities
- Supply costs for road fuels in 2021-22 were around $0.70 per liter for both gasoline and diesel.
- Road fuel prices exceed supply costs in all but five countries; 85 percent of database countries impose road fuel excises.
- Gasoline prices exceed supply costs by 50 percent or more in all but ten countries; exceed by over 100 percent in France, Germany, Italy, UK.
- Most countries impose lower taxes per liter on road diesel than gasoline.
- Carbon damages are equivalent to $0.15 and $0.18 per liter for gasoline and diesel respectively.
- Local air pollution damages are generally small relative to carbon damages for gasoline.
- For diesel, local air pollution damages were typically 1-3 times as large as carbon damages in 2021-22.
- Congestion and accident externalities for gasoline contribute around $0.3-$1.1 per liter to efficient fuel taxes.
- VAT component of efficient fuel price is around $0.10-0.35 per liter for gasoline; less significant for diesel.
- Consumption-weighted shares: 60 and 70 percent of global gasoline and diesel consumption, respectively, is priced at less than 60 percent of their efficient levels.
- Policy implication: transportation tax systems will need overhauls as countries phase out gasoline and diesel vehicles; km-based tax systems are the natural replacement.

### Fossil fuel subsidies — global totals and composition
- Globally, estimated fossil fuel subsidies were $7 trillion in 2022 or 7.1 percent of GDP.
- Explicit and implicit subsidies in 2022 accounted for 18 and 82 percent of the total, respectively.
- Explicit subsidies were over twice as large in 2022 (1.3 percent of GDP) than 2020 (0.6 percent of GDP).
- Explicit subsidies are projected to decline to 0.6 percent of global GDP in 2030 as international energy prices recede.
- Implicit subsidies rise from 5 percent of GDP in 2020 to 6.1 percent in 2030.

### Breakdown by fuel product (2022)
- Explicit global subsidy shares in 2022:
  - Petroleum: 26 percent
  - Natural gas: 48 percent
  - Electricity: 25 percent
  - Coal: less than one percent
- 97 percent of the explicit subsidy in 2022 is consumer-side subsidies; 3 percent reflects direct support for fossil fuel producers.
- Total (explicit plus implicit) subsidy shares in 2022:
  - Coal: 30 percent of the global total (nearly all due to underpricing for carbon and local air pollution damages)
  - Petroleum: 47 percent
  - Natural gas: 18 percent (with half being implicit)
  - Electricity: 5 percent

### Breakdown by component (2022)
- By component, undercharging accounts for total subsidies as follows:
  - Local air pollution and climate change together account for about 60 percent of total fossil fuel subsidies in 2022.
  - Undercharging for broader externalities and supply costs account for another 35 percent.
  - The remainder is undercharging for general consumption taxes.
- For coal: local air pollution and global warming account for 53 and 45 percent of total subsidies respectively.
- For petroleum: underpricing for local air pollution and broader externalities account for about 30 and 40 percent respectively; global warming accounts for 15 percent.
- For natural gas in 2022: global warming and supply costs accounted for 37 and 50 percent of the total subsidy respectively (contrast with 2019 where they were 71 and 11 percent).

### Breakdown by end-use sector and region (2022)
- End-use sector shares:
  - Coal use in power generation (about two-thirds of total coal use) and diesel and gasoline used in transport each account for 15-20 percent of total global subsidies in 2022.
  - Natural gas subsidies are split about equally across power, industry, and buildings.
  - Producer subsidies for natural gas, coal, and oil are minimal.
- Regional distribution of explicit subsidies in 2022:
  - East Asia and Pacific (EAP): 38 percent
  - Middle East and North Africa (MENA): 26 percent
  - Europe: 16 percent
  - Commonwealth of Independent States (CIS), South Asia, Latin America and the Caribbean (LAC): 5 to 12 percent each
  - North America and Sub-Saharan Africa (SSA): below 3 percent
- Regional distribution of total (explicit plus implicit) subsidies in 2022:
  - EAP: 48 percent
  - MENA, Europe, North America: 11 percent each
  - CIS, South Asia, LAC: 5-9 percent each
  - SSA: 2 percent
- Relative to regional GDP in 2022:
  - Europe and North America: about 3 percent
  - CIS: 23 percent
  - MENA: about 18 percent
  - EAP and South Asia: about 10 percent each
- Since 2020, total subsidies have increased significantly in all regions except North America, nearly doubling in Europe and MENA.

### Country-level contributions (2022)
- Top contributors to total subsidies in 2022:
  - China: $2.2 trillion
  - United States: $760 billion
  - Russia: $420 billion
  - India: $350 billion
  - European Union: $310 billion

### Benefits from energy subsidy reform — scenarios and assumptions
- Policy scenarios:
  - Full reform: all 170 countries progressively raise fuel prices over time to reach their efficient levels by 2030.
  - Partial reform: progressively close half the gap between pre-reform and efficient price levels by 2030.
- Baseline (no reform) scenario assumptions:
  - Current fuel taxes/subsidies return to 2019 levels in real terms as international prices fall or are fixed if taxes increased between 2019 and 2022.
  - Carbon pricing is held fixed in real terms at their 2022 levels.
- Under cases where energy prices are regulated, reform would also entail institutional changes such as liberalizing pricing or adopting pricing formulas that fully reflect supply and environmental costs.

### Climate, health, and fiscal impacts of reform
- Full reform impacts by 2030:
  - Reduces projected global fossil fuel CO2 emissions 43 percent below baseline levels in 2030 or 34 percent below 2019 emissions.
  - Reduction sources: around 55 percent from reduced coal use, 31 percent from petroleum, 12 percent from natural gas.
  - Regional CO2 reductions range from 25 percent below 2030 baseline levels in Europe to around 55 percent in the CIS.
  - Reduces global air pollution deaths from fossil fuel combustion by 50 percent below baseline levels in 2030, equivalent to 1.6 million a year.
  - Reduction in mortality rates from fossil fuels ranges from 30 percent in SSA, North America, LAC, and Europe to 65 percent in the CIS.
- Partial reform impacts:
  - Global CO2 emissions fall by 32 percent below 2030 baseline levels.
  - Removing explicit subsidies alone reduces emissions only 5 percent.
- Fiscal impacts:
  - Full price reform raises revenues of $4.4 trillion, 3.6 percent of global GDP, in 2030 (relative to baseline levels and accounting for revenue losses due to erosion of pre-existing fuel tax bases and rebates to power generators installing local pollutant abatement equipment).
  - Revenues generated by full price reform in 121 emerging market and developing countries in 2030 would amount to $3 trillion.
  - Partial reform raises 64 percent of the revenue from full reform, amounting to about $2.8 trillion in revenue across all countries.

*Source: https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023169-print-pdf.pdf*

### 3.6 percent of global GDP,

### 3.6 percent of global GDP, equal to environmental benefits of 5.2 percent of GDP less economic welfare costs of 1.6 percent of GDP

### Economic welfare impact of fuel price reform
- Global net welfare benefit from full reform: 3.6 percent of global GDP, equal to environmental benefits of 5.2 percent of GDP less economic welfare costs of 1.6 percent of GDP.
- Partial reform results:
  - Environmental benefits: 3.2 percent of GDP.
  - Efficiency costs: 0.5 percent of GDP.
  - Net welfare benefit: 2.7 percent of GDP.
- Economic costs are measured as the value of forgone benefits to fossil fuel consumers less savings in supply costs (i.e., the area between the fuel demand and supply curves integrated over the fuel reduction); equivalently, reductions in consumer and producer surplus, less government revenue gains.
- Efficiency costs grow exponentially with taxes, while gains to local health, climate and transportation co-benefits are more linear.

### Revenue implications (Figure 10 context)
- Revenue gain results are presented by region and world; revenue gain in $ terms for world is excluded for visualization purposes.
- Regional abbreviations used: Commonwealth of Independent States (CIS), East Asia and Pacific (EAP), Latin America and the Caribbean (LAC), Middle East and North Africa (MENA), Sub-Saharan Africa (SSA).

### Domestic co-benefits from CO2 reductions (G20 focus)
- Two CO2 reduction calculations for G20 countries:
  - (i) CO2 reductions that maximize domestic net benefits (incremental domestic environmental benefit per tonne equals incremental abatement cost).
  - (ii) CO2 reductions that leave countries no worse off domestically (total domestic environmental benefits equals total abatement costs).
- Aggregate G20 results:
  - CO2 reductions that maximize domestic net benefits: 27 percent below 2030 baseline levels (simple aggregate).
  - CO2 reductions that leave countries no worse off: 48 percent reduction on average.
- Cross-country variation:
  - Reductions exceed 25 percent in six cases (e.g., China, Turkey).
  - Reductions are less than 10 percent in six cases (e.g., Canada).
  - Reductions of at least 40 percent in six cases and below 10 percent in three cases for the “no worse off” criterion.
- Co-benefits magnitude:
  - Air pollution reductions exceed 2.5 percent of GDP in countries with high coal use (e.g., Indonesia, China, and Russia).
  - Reduced driving externalities range from 0.1 to 1.5 percent of GDP.

### Efficient air emission fees (coal plant SO2, 2022)
- Efficient fees are calculated as deaths per tonne of SO2 multiplied by the mortality value per death.
- Average efficient fee across G20 countries with significant coal-fired generation:
  - Simple average: $15,000 per tonne of SO2.
  - Range: above $40,000 per tonne in two cases (China and Russia) to below $10,000 per tonne in seven others (e.g., Australia, Canada, and South Africa).
- Mortality valuations vary by country (examples):
  - India: $0.8 million per death.
  - China: $2.4 million per death.
  - United States: $6.5 million per death.
- Deaths per thousand tonnes of SO2: simple average of 5, varying from 1 (Australia, France, South Africa) to 20 (China).

### Non-pricing reform (smart combination of non-pricing measures)
- Design: least-cost combination reducing CO2 and local pollution intensity across power, industry, transport, and buildings (e.g., tradable emission rate standards or feebates).
- Characteristics:
  - Implicit prices reflect the global CO2 price assumption and country/fuel/sector local emissions damages.
  - Does not exploit demand reductions (no pass through of tax revenues into fuel prices; does not phase out explicit subsidies but introduces non-pricing measures equivalent to doing so).
- Outcomes relative to full fuel price reform:
  - Achieves 50 percent of the CO2 reductions from full fuel price reform.
  - Achieves 65 percent of the reductions in local air pollution deaths.
  - Does not raise revenues; there is a revenue loss of 0.5 percent of GDP due to erosion of fuel tax bases.
  - Net welfare gains are 50 percent of those from full fuel price reform.
- Implication: smart non-pricing policies can deliver significant health and climate benefits but are significantly less effective than pricing policies.
- Note: non-pricing policies could moderately increase driving (rebound effect), though this was not modeled.

### Sensitivity of results
- No formal sensitivity analysis provided here; implications of alternative parameter values are often transparent and resemble sensitivity analysis in Coady and others (2019).
- Example sensitivities:
  - Given global warming costs of about $2 trillion in 2022, increasing or decreasing the value of CO2 emissions by 50 percent would increase or decrease the global subsidy by about $1 trillion.
  - Increasing or decreasing fuel price elasticities by 50 percent would increase and decrease the CO2, air pollution mortality, and economic efficiency benefits from fuel price reform by approximately one third (reflecting constant elasticity fuel demand specification).

### Conclusion and policy guidance
- The update confirms substantial and pervasive underpricing of fossil fuels across countries and that subsidies are of macroeconomic importance.
- Large economic welfare gains accrue from energy price reform.
- Expected future shifts:
  - Appropriate value on carbon emissions will likely rise as mitigation efforts ramp up.
  - Underpricing for air pollution may decline with policies to reduce local air emission rates.
  - Large overall fossil fuel subsidies will likely persist for the foreseeable future.
- Recent international fossil fuel price surges reinforce the need to transition away from fossil fuels and do not substitute for durable energy price reform because:
  - Price surges misalign relative prices (e.g., natural gas to coal).
  - Prices are receding from peaks; a robust and progressively rising emissions price is needed to favor long-lived, low-emission technologies.
  - Falling energy prices provide an opportune time to lock in pricing of carbon and local air pollution emissions without necessarily raising energy prices above recently experienced levels (example: with a carbon price of $75 per tonne, international natural gas prices in 2030 would be well below peak levels in 2022).
- Policy design recommendations:
  - Accompany energy price reform with robust assistance for households targeted at low-income households and unrelated to energy consumption (to limit fiscal costs and preserve conservation incentives), e.g., means-tested transfer payments or lump-sum rebates in energy bills.
  - Where politically constrained, use non-pricing measures (feebates, tradable performance standards) as reinforcing policies.
- Analytical caveat:
  - Estimates are first-pass with simplifications due to broad country coverage; country authorities may disagree on assumptions and parameter values (e.g., value of mortality risks).
  - The analysis and associated online analytical tools aim to encourage refinement of country-level assessments of appropriate fossil fuel pricing, trade-offs with alternative instruments, and benefits from reform.

### Annex I — Further details on data and parameters
- Retail prices:
  - Expressed as annual averages and disaggregated by end-user (industrial, residential, power generation).
  - Weighted average fuel prices shown in Figure 3 top panels; end-user specific prices available in accompanying spreadsheet.
  - Sources: Eurostat, IEA, World Bank, Global Petrol Prices, Enerdata, IMF and World Bank country teams.
  - ETS price added on top of natural gas and coal retail prices for industry and power sectors.
  - Missing price data filling rules: use industrial price for power or vice versa; otherwise assume retail price equals supply cost plus known taxes and post-retail allowances.
  - Future prices projected using pass-through regression (historical retail prices 2014–2019; countries with fewer than 5 observations excluded; coefficient on spot prices constrained between 0 and 1). Pass-through rates average around 50 to 60 percent and are generally higher for oil products.
- Supply costs:
  - Finished petroleum products: port/hub prices from the IEA mapped to US, NW Europe, or Singapore hubs; LPG priced at a 30 percent discount to gasoline; shipping and distribution margin of $0.15-$0.22 per liter plus $0.10 per liter for land-locked and small island developing countries.
  - Coal and natural gas: average of export/import-parity prices and domestic post-tax production costs weighted by consumption shares. Export/import parity inferred by one of: (i) country-specific export/import prices; (ii) pre-tax end-user price; (iii) nearest hub price less estimated transportation for exporters.
  - Natural gas data more detailed via Argus, IEA, Enerdata; LNG exporters had liquefaction and shipping fee deductions to net-back prices.
  - Coal production costs from third-party sources and IMF capacity development; natural gas production costs from Rystad.
  - Mark-ups for transportation, processing, distribution applied with higher mark-ups for residential use: mark-ups of $1, $3, and $6 for coal and $2, $2, and $8 per GJ for natural gas used in power generation, industrial, and residential users, respectively; adjusted downwards by 50 and 25 percent for domestically produced coal and natural gas, respectively.
  - Electricity supply costs from IMF country desks or calculated using CPAT.
  - Constructed supply costs may differ from actual supply costs; minimal impact on subsidy estimates where retail price info absent (about 150 countries for coal and 120 for natural gas).
- Miscellaneous:
  - Consumption tax component of efficient energy prices computed using standard VAT or general sales tax applied to sum of supply and environmental cost for final consumption only.
  - Producer subsidy estimates by country from OECD and major energy producers (IEA, 2023b) held constant for projections.

*IMF Working Papers — IMF Fossil Fuel Subsidies: 2023 Update*

### Annex II. Regional And Classification of

### Annex II. Regional And Classification of Countries

### Commonwealth of Independent States
- Armenia
- Azerbaijan
- Belarus
- Kazakhstan
- Kyrgyz Republic
- Moldova
- Russia
- Tajikistan
- Uzbekistan

### East Asia & Pacific
- Australia
- Brunei Darussalam
- Cambodia
- China
- Fiji
- Indonesia
- Japan
- Kiribati
- Korea
- Lao P.D.R.
- Malaysia
- Mongolia
- Myanmar
- Papua New Guinea
- Philippines
- Singapore
- Solomon Islands
- Thailand
- Tonga
- Vietnam

### Europe
- Albania
- Austria
- Belgium
- Bosnia and Herzegovina
- Bulgaria
- Croatia
- Cyprus
- Czechia
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Iceland
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Netherlands
- North Macedonia
- Norway
- Poland
- Portugal
- Romania
- Slovak Republic
- Slovenia
- Spain
- St. Lucia
- Sweden
- Switzerland
- Turkey
- Turkmenistan
- Ukraine
- United Kingdom

### Middle East & North Africa
- Algeria
- Bahrain
- Djibouti
- Egypt
- Iran
- Iraq
- Israel
- Jordan
- Kuwait
- Lebanon
- Libya
- Morocco
- Oman
- Qatar
- Saudi Arabia
- Tunisia
- United Arab Emirates
- Yemen

### Sub-Saharan Africa (listed in two columns across the source)
- Ghana
- Guinea
- Guinea-Bissau
- Kenya
- Lesotho
- Liberia
- Madagascar
- Malawi
- Mali
- Mauritania
- Mauritius
- Mozambique
- Namibia
- Niger
- Nigeria
- Rwanda
- Senegal
- Seychelles
- Sierra Leone
- South Africa
- Sudan
- Angola
- São Tomé and Príncipe
- Benin
- Tanzania
- Botswana
- Togo
- Burkina Faso
- Uganda
- Burundi
- Zambia
- Cabo Verde
- Zimbabwe
- Cameroon
- Central African Republic
- Chad
- Comoros
- Congo, Democratic Republic of the
- Congo, Republic of
- Côte d'Ivoire
- Equatorial Guinea
- Ethiopia
- Gabon
- Gambia, The
- Haiti

### Latin America & Caribbean
- Argentina
- Bahamas, The
- Barbados
- Belize
- Bolivia
- Brazil
- Chile
- Colombia
- Costa Rica
- Dominican Republic
- Ecuador
- El Salvador
- Guatemala
- Guyana
- Honduras
- Jamaica
- Mexico
- Nicaragua
- Panama
- Paraguay
- Peru
- St. Lucia
- Suriname
- Trinidad and Tobago
- Uruguay
- Venezuela

### Annex III. Total (Explicit and Implicit) Subsidies, Selected Countries, 2022

Sources: IMF staff calculations.

- Table structure: For each country three entries are reported as:
  - Total subsidies — US$ billion; % GDP; per capita US$
  - Implicit subsidies — US$ billion; % GDP; per capita US$
  - Explicit subsidies — US$ billion; % GDP; per capita US$

- Argentina
  - Total subsidies: 14; 2.5; 313
  - Implicit subsidies: 36; 6.4; 800
  - Explicit subsidies: 50; 8.9; 1,113

- Australia
  - Total subsidies: 8; 0.5; 302
  - Implicit subsidies: 40; 2.4; 1,519
  - Explicit subsidies: 47; 2.9; 1,821

- Brazil
  - Total subsidies: 2; 0.1; 11
  - Implicit subsidies: 67; 3.1; 310
  - Explicit subsidies: 69; 3.2; 321

- Canada
  - Total subsidies: 2; 0.1; 47
  - Implicit subsidies: 36; 1.9; 953
  - Explicit subsidies: 38; 2.0; 1,000

- China
  - Total subsidies: 270; 1.5; 189
  - Implicit subsidies: 1,966; 11.0; 1,379
  - Explicit subsidies: 2,235; 12.5; 1,568

- Germany
  - Total subsidies: 43; 1.0; 520
  - Implicit subsidies: 86; 2.0; 1,028
  - Explicit subsidies: 129; 3.0; 1,548

- France
  - Total subsidies: 18; 0.6; 278
  - Implicit subsidies: 46; 1.5; 714
  - Explicit subsidies: 64; 2.1; 992

- India
  - Total subsidies: 32; 1.0; 23
  - Implicit subsidies: 314; 9.6; 223
  - Explicit subsidies: 346; 10.6; 245

- Indonesia
  - Total subsidies: 78; 6.2; 285
  - Implicit subsidies: 116; 9.2; 422
  - Explicit subsidies: 194; 15.4; 707

- Italy
  - Total subsidies: 10; 0.4; 162
  - Implicit subsidies: 54; 2.4; 910
  - Explicit subsidies: 63; 2.8; 1,072

- Japan
  - Total subsidies: 34; 0.6; 274
  - Implicit subsidies: 276; 5.2; 2,224
  - Explicit subsidies: 310; 5.8; 2,498

- Mexico
  - Total subsidies: 15; 1.1; 115
  - Implicit subsidies: 83; 6.5; 657
  - Explicit subsidies: 98; 7.6; 772

- Russia
  - Total subsidies: 71; 4.0; 488
  - Implicit subsidies: 351; 19.6; 2,423
  - Explicit subsidies: 421; 23.6; 2,912

- Saudi Arabia
  - Total subsidies: 129; 13.8; 3,579
  - Implicit subsidies: 124; 13.2; 3,418
  - Explicit subsidies: 253; 27.0; 6,996

- South Africa
  - Total subsidies: 5; 1.2; 85
  - Implicit subsidies: 56; 12.8; 934
  - Explicit subsidies: 61; 13.9; 1,019

- Korea
  - Total subsidies: 65; 3.2; 1,250
  - Implicit subsidies: 97; 4.8; 1,870
  - Explicit subsidies: 162; 8.1; 3,120

- Turkiye
  - Total subsidies: 59; 5.9; 694
  - Implicit subsidies: 93; 9.3; 1,098
  - Explicit subsidies: 152; 15.2; 1,792

- United Kingdom
  - Total subsidies: 19; 0.6; 275
  - Implicit subsidies: 55; 1.7; 823
  - Explicit subsidies: 74; 2.3; 1,098

- United States
  - Total subsidies: 3; 0.0; 9
  - Implicit subsidies: 754; 3.2; 2,234
  - Explicit subsidies: 757; 3.2; 2,243

- Jamaica
  - Total subsidies: 0; 0.0; 0
  - Implicit subsidies: 1; 3.4; 195
  - Explicit subsidies: 1; 3.4; 195

- Costa Rica
  - Total subsidies: 0; 0.1; 19
  - Implicit subsidies: 2; 2.9; 415
  - Explicit subsidies: 2; 3.0; 435

- Vietnam
  - Total subsidies: 7; 1.7; 67
  - Implicit subsidies: 50; 12.6; 507
  - Explicit subsidies: 56; 14.3; 574

- Ethiopia
  - Total subsidies: 4; 3.6; 33
  - Implicit subsidies: 4; 3.8; 34
  - Explicit subsidies: 8; 7.4; 67

- Iran
  - Total subsidies: 63; 10.5; 711
  - Implicit subsidies: 100; 16.7; 1,131
  - Explicit subsidies: 163; 27.2; 1,842

- Morocco
  - Total subsidies: 1; 1.0; 38
  - Implicit subsidies: 13; 8.9; 340
  - Explicit subsidies: 14; 9.9; 378

- Total subsidies / Implicit subsidies / Explicit subsidies (table headings reaffirmed)
  - Total subsidies
  - Implicit subsidies
  - Explicit subsidies

*IMF Working Paper No. WP/2023/169, IMF Fossil Fuel Subsidies: 2023 Update*

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_Source: https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023169-print-pdf.pdf_