Energy Subsidies – Moving ahead on reform

2 October 2013

Peter Wooders, Senior Economist, IISD & Programme Leader, Global Subsidies Initiative

What we do

Support reform of energy subsidies…..

….which act against sustainable development

By being a trusted partner and expert advisor…..

…..ideally to governments

Propose sustainable alternatives (renewables, green economy, energy intensive industry & CC)

Recent work examples

Subsidies that undermine sustainable development

ECONOMIC: inefficient use of scarce public resources; perverse market

distortions; increased volatility

ENVIRONMENTAL: can incentivize waste, resource depletion, pollution; and absolve producers of liability for accidents

SOCIAL: inefficient welfare policies; can damage poor producer competitiveness;

environmental impacts deepen poverty; can lead to rent-seeking and corruption

Fossil FuelsUS$400-700 bn/year - oil

consumers keyBut >US$100 bn to

producers, including in OECD Biofuels

>US$20 bn/yearMostly developed

countries, but growing worldwide

NuclearScale unknown

Industry depends on subsidy

AgricultureUS$384 bn in 2009Over-production in

developed countries very trade-distorting

IrrigationScale unknown

GSI estimates US$1 bn in Spain, >US$0.5 bn in

4 Indian States

FisheriesUS$15-35 bn/year –

25% of industry revenueUS$50 bn/year lost from

depleted stocks

International attention continues to increase

GSI Country Work-plans

Examples of partnerships in Indonesia

Public Dialogue: University of Gadjah Mada

Building support

• Organize internally• Gather information and understand

perceptions• Raise awareness and change

attitudes

Assess adequacy of internal organisation and promote improvementsConduct research to identify and map stakeholder groups and opinionsRaise awareness

The IISD Global Subsidies Initiative

Fossil-Fuel Subsidies: International

GSI’s objectives and role: 1. Support government forums to address FFS

reform• GSI officially engaged by Friends group to provide

support• Input to G20 and APEC processes• Identify opportunities in UNFCCC and other forums

2. Facilitate civil society dialogue and cooperation• Co-chair of Civil-20 Energy & Environment GroupOpportunities: role for IISD as “thought leader” to give

vision, strategy and better coordinate CSO strategies and actions

Note: others increasingly moving into the field including IOs and international civil society groups – need to partner effectively

Options for a G20 peer review on FFSR:Review teams

Host country should select review team (or joint selection)

• G20 members only

• G20 members + 3rd parties:

• Other countries: APEC or “Friends” members

• Experts: OECD, IEA, GSI or independent

Countries with similar circumstances (e.g. energy exporters) could review each other

FFS: Producers – Ministries typically split on reform

GSI unique role: • The detail of GSI investigations is unsurpassed: bottom-

up inventories for Canada, Indonesia, Russia and Norway

• Nobody except GSI has even tried to quantify producer subsidies in developing countries.

This year: improving methodology and applying it now at project level (case studies)

Forthcoming: • Developing the Arctic dimension of producer subsidies

work, especially given Canada’s presidency of the Arctic Council in 2013–2015

• Further work in Canada

Moving ahead - Supporting national reform

1. Good research in not enough to achieve influence; need to invest in communications and good partnerships to address the politics of reform

2. It takes time to build trust and credibility with government and CSOs

3. Think of reform as a process that rarely (and usually shouldn’t) happen over-night; therefore, need a longer term perspective

Thank you! www.iisd.org/gsi