IMF: $5.3 Trillion Energy Subsidy Problem

The IMF direct blog writes [imf.org] about new estimations on the scope of energy subsidies, among which subsidies for energy derived from non-renewable resources. The blog has more links to technical papers.

US$5.3 trillion; 6½ percent of global GDP—that is our latest reckoning of the cost of energy subsidies in 2015. These estimates are shocking. The figure likely exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP, but for the different year of 2013. They correspond to one of the largest negative externality ever estimated. They have global relevance. And that’s not all: earlier work by the IMF also shows that these subsidies have adverse effects on economic efficiency, growth, and inequality.

Jacques Delors (Former President of the European Commission) on a European Energy Policy.

Jacques Delors writes [energypolicyblog.com] to back a new phase in European integration focussing on energy. His letter is backed by a report [delorsinstitute.eu] written by the Jacques Delors institute.

Some quotes, my emphasis.

Making this a priority in Europe involves placing energy efficiency on an equal footing with other energy resources, and to deal with them together as part of a single energy transition. To make this happen, a decisive step must be taken towards the transition, guided by a stable and credible carbon price. The optimum instrument, in particular against the backdrop of a downward trend in oil prices, remains EU-wide carbon taxation. At the same time, subsidies for fossil fuels must be phased out as soon as possible.

Apparently aware that some major energy producers are not in the EU, he writes

Relations with immediate neighbours must be strengthened with a view to creating a pan-European area already outlined by the European Energy Community, without forgetting the Mediterranean countries. Energy relations with Norway and Switzerland must be embodied in more extensive partnerships than that of ETFA or the EEA. Similarly, relations with Russia and Turkey must be taken to a strategic level that reflects the interdependence of our respective economies rather than counting on short-term actions lacking an overall vision.

Based on the report, Switzerland is singled out for being less integrated in the EU energy market than Norway, while there may be substantial advantages in integrating in the European energy network. Turkey features as a strategic partner as a major (future) transit country for gas.