Tracking fossil fuel subsidies in APEC economies: toward a sustained subsidy reform
In November 2015, the leaders of Asia-Pacific Economic Co-operation (APEC) economies, reaffirmed their landmark 2009 commitment to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption while recognizing the importance of providing those in need with essential energy services”. Reforming fossil fuel subsidies is never an easy task, with great political sensitivity attached to changing energy prices that can affect people’s daily life. However, many APEC economies have made an effort to phase out subsidies, and momentum toward further reforms continues in the region. In an effort to provide guidance for APEC economies to implement subsidy reform further, this report provides an updated status of fossil fuel subsidies in APEC economies, tracking major recent subsidy reforms made in APEC economies, estimating value of fossil fuel subsidies in the region to identify where the challenge remains to further reform subsidies. The report also presents a Subsidy Reform Case, which assumes complete removal of fossil fuel subsidies in APEC by 2025, in order to see the impact of subsidy reform on the regional energy demand and CO2 emissions.