''Contributed by Ms. Kerryn Lang
Research Officer,
Global Subsidies Initiative
klang at iisd.org''


GSI Subsidy Estimation: A survey of current practice

GSI Policy brief - A How-to Guide: Measuring subsidies to fossil-fuel producers


Globally, subsidies to fossil fuels may be in the order of US$ 600 billion per year, of which the Global Subsidies Initiative (GSI) estimates about US$ 100 billion is provided to producers. Nobody knows the real number, however, because public information about how countries subsidize fossil-fuel producers, and to what extent, is scarce. How can societies decide whether subsidizing the production of fossil fuels is the best use of public funds if they do not know the scale of this support, who gets it and what its impacts are?

The GSI aims to improve estimates and forge a new global understanding about fossil-fuel subsidies by developing better guidance on methodologies used for estimating fossil-fuel subsidies.

In our March 2010 policy brief Defining fossil-fuel subsidies for the G-20: Which approach is best?, the GSI addressed how fossil-fuel subsidies can be defined, as the start of a 3-stage process for planning fossil-fuel subsidy reform: define, measure and evaluate. This policy brief, A How-to Guide: Measuring subsidies to fossil-fuel producers goes on to the second stage, identifying how different types of subsidy can be measured using different methodologies, referring readers to the relevant section of our in-depth technical manual for more information.

The manual Subsidy Estimation: a survey of current practice is addressed primarily to those individuals who are interested in preparing estimates of subsidies to particular products or sectors (not only fossil-fuels). It draws together the different valuation methods that are used and have been published, mainly by intergovernmental organizations and governments. While for most estimation methods the document quotes multiple sources, often the approaches do not actually differ fundamentally, and users may simply want to refer to the one that makes most sense to them and for which they have the available data.

These documents are also intended to kick-start a dialogue on reconciling differences between methods, providing guidance on when each should be used and establishing best-practice recommendations.

Coming soon... The GSI's detailed studies of subsidies for oil producers in Indonesia and Canada, which uses the three-stage process - define, measure and evaluate - to provide producer subsidy estimates in those countries, and guidance for others wishing to estimate national subsidies for fossil-fuels.

Read more here on other reports published.