THE OECD INVENTORY OF MEASURES SUPPORTING FOSSIL FUELS

Transcription

1 THE OECD INVENTORY OF MEASURES SUPPORTING FOSSIL FUELS Joint IISD-WWF Russia roundtable on Government support to oil and gas extraction in Russia Moscow, 3 July 2014 Jehan Sauvage OECD Trade and Agriculture Directorate

2 Outline of the presentation Why is the OECD involved? How is the OECD involved? New work on BRIICS countries: preliminary findings. OECD Trade and Agriculture Directorate 2

3 Recent years have seen increasing attention devoted to fossil-fuel subsidies OECD Trade and Agriculture Directorate 3

4 The politics & economics of FFS The reform of FFS gained political momentum with the G20 process. The 2009 Pittsburgh commitment and its aftermath The involvement of IGOs Meanwhile, the economics of FFS reform remains a no-brainer. Environmental arguments Fiscal arguments Economic-efficiency arguments OECD Trade and Agriculture Directorate 4

5 You can t reform what you can t measure Data availability at the time the G20 Pittsburgh commitment was made. The price-gap approach and its scope Country-based studies Towards more comprehensive and systematic data collection. OECD Trade and Agriculture Directorate 5

6 The OECD Inventory The Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels covers all OECD countries. It was released publicly in January It contains more than 550 support measures, covering both production and consumption, and includes sub-national jurisdictions in the case of federations (e.g., Australia, Canada, and the United States). An update is currently underway for release in OECD Trade and Agriculture Directorate 6

7 The OECD Inventory database The contents of the 2013 Inventory have been made available online on a joint OECD-IEA website ( 7

8 Summary results from the OECD Inventory 100,000 (USD millions, nominal) 80,000 60,000 40,000 20, Coal Petroleum Natural Gas Source: Inventory of estimated budgetary support and tax expenditures for fossil fuels OECD (2013) 8

9 Taxing Energy Use OECD work on energy use and taxation was published in Taxing Energy Use: A Graphical Analysis (January 2013). Systematically describes and illustrates taxes on all energy use using a graphical profile. Uses underlying data to draw intra- & intercountry comparisons of effective tax rates on energy. Applying the Taxing Energy Use model to a group of non-member countries (including Russia) is part of ongoing and future work. Countries intended for inclusion are Argentina, Russia, India, China, Indonesia, Brazil, and South Africa. OECD Trade and Agriculture Directorate 9

10 Gasoline (road) Diesel (road) Rail & marine fuels (domestic) Biofuels (road) Coal (ind., heat, energy transf.) [ETS-A] All oil fuels (res., comm.) Heavy fuel oil (ind., ag., heat, energy transf.) Diesel [ETS-P] (ag.) All other oil fuels (energy transf.) Natural gas (road) Aviation fuels (domestic) Diesel (ind., heat, energy transf.) [ETS-P] LPG (ind., ag., heat, energy transf.) [ETS-P] Natural gas (res., comm.) Natural gas (ind., ag., heat, energy transf.) [ETS-P] Biomass (res., comm.) Biomass (ind., ag.) Biomass (heat, energy transf.) Other gases (all use) Commercial & public services [ETS-A] Industry and agriculture [ETS-A] Residential [ETS-A] Residential (Northern Sweden) [ETS-A] Heat & energy transformation Example of graphical profile from TEU Tax rate expressed in SEK per GJ Tax Fuel tax credit or tax expenditure CO2 taxes shown below; other taxes above SWE Tax rate expressed in EUR per GJ 180 TRANSPORT HEATING & PROCESS USE ELECTRICITY [ETS-A] = all subject to the ETS Tax base energy use expressed in TJ [ETS-P] = partially subject to the ETS 10 Source: Taxing Energy Use: A Graphical Analysis OECD (2013)

11 Main findings of the extension to BRIICS countries (i) Brazil Both production and consumption are supported through tax concessions mostly. Support for production is generally provided through special tax regimes for inputs used in the extraction process. On the consumption side, two measures account for the bulk of support: reductions in the CIDE tax support the consumption of motor fuels while the Fuel Consumption Fund encourages the burning of diesel fuel in certain power plants. China Most support concerns the consumption of petroleum products and is provided in the form of direct budgetary transfers. Some tax concessions encourage the extraction of hydrocarbons, including unconventional ones like coal-bed methane and shale gas. India India provides little support for production. Instead, measures concern mostly the underpricing of petroleum products by downstream oil companies, representing almost a trillion INR in 2012 (about USD 17 billion). OECD Trade and Agriculture Directorate 11

12 Main findings of the extension to BRIICS countries (ii) Indonesia Most of the support is in the form of budget transfers enabling the consumption of petroleum products and fossil-fuel-generated electricity at a discounted price. Domestic Market Obligations (DMO) also mandate coal producers to sell a share of their output at below-market prices. On the production side, refineries benefit from crude-oil inputs obtained at below-market prices. Oil and gas extraction is encouraged through various tax exemptions. Russia Almost all the measures reported encourage the extraction of hydrocarbons. Support often takes the form of partial or full exemptions from the federal extraction tax for fields located in particular regions (e.g., Arctic region or Eastern Siberia). Direct budgetary assistance also supported the construction of Gazprom s Sakhalin- Khabarovsk-Vladivostok pipeline. South Africa Almost all reported measures encourage the consumption of fossil fuels. Support is mainly provided through tax exemptions (VAT, the Fuel levy, and the Road Accident Levy) for petroleum products. OECD Trade and Agriculture Directorate 12

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