The trade effects of phasing out fossil-fuel consumption subsidies
Quoting a joint analysis undertaken by the OECD and the IEA, G-20 leaders committed in September 2009 to ―rationalize and phase out over the medium term inefficient fossil-fuel subsidies that encourage wasteful consumption. This report draws on previous OECD work to assess the impact on international trade of phasing out fossilfuel consumption subsidies provided mainly by developing and emerging economies. The analysis employed the OECD’s ENV-Linkages General-Equilibrium model and used the IEA’s estimates of consumer subsidies, which measure the gap existing between the domestic prices of fossil fuels and an international reference benchmark. It shows that a co-ordinated multilateral removal of fossil-fuel consumption subsidies over the 2013-2020 period would increase global trade volumes by a very small amount (0.1%) by 2020.