A How-to Guide: Measuring subsidies to fossil-fuel producers

This 2010 guide by the International Institute for Sustainable Development (IISD) outlines methodologies for measuring subsidies provided to fossil-fuel producers. It highlights that such subsidies likely exceed $100 billion U.S. annually, contributing to environmental degradation. The guide categorizes producer subsidies into direct transfers, government revenue foregone, and provided goods/services, while noting significant data transparency challenges in countries like China, Indonesia, Germany, and the United States. It advocates for the development of standardized accounting practices and the potential creation of an independent subsidy accounting standards board.

• The Global Subsidies Initiative (GSI) estimates that annual subsidies to fossil-fuel producers are likely to be at least $100 billion U.S., which contributes to the depletion of resource bases and causes global and local environmental impacts by encouraging the excess use of fossil fuels.
• Producer subsidies are categorized into three broad types of preferential treatment: support for selected companies (such as national oil companies), support for a specific sector or product compared to others, and support for sectors or products in one country compared to international standards, such as incentives to attract foreign investment.
• The GSI identifies common producer subsidies in the fossil-fuel sector as primarily consisting of reduced royalty payments and government revenues foregone, including accelerated depreciation allowances and reduced VAT for services and goods.
• Measuring producer subsidies can be adapted from the Organisation for Economic Co-operation and Development (OECD) Producer Support Estimate (PSE) and Consumer Support Estimate (CSE) approach used in agriculture, which captures net market and budgetary transfers.
• Consumer subsidies are typically measured using a "price-gap" approach, which calculates the difference between the observed price of an energy commodity and a reference "free market" price. For example, the IEA calculated consumer subsidies in 20 non-OECD countries to be $310 billion U.S. in 2007, and $557 billion U.S. across 37 countries in 2008.
• Significant challenges exist in measuring subsidies due to poor data quality and availability. In Germany, tax expenditures use outdated definitions and municipal data is inconsistent; in the United States, federal data is often reported as multi-industry aggregates; in China, disaggregated information is lacking despite available aggregate data; and in Indonesia, confidential production-sharing contracts obscure the benefits received by state-owned companies.
• To improve subsidy estimation, the GSI suggests that experts develop preferred methodologies for each subsidy type and proposes the long-term establishment of an independent subsidy accounting standards board to create common methods and best practices.

APA

International Institute for Sustainable Development (2010). A How-to Guide: Measuring subsidies to fossil-fuel producers. https://www.iisd.org/gsi/sites/default/files/pb7_ffs_measuring.pdf

Chicago

International Institute for Sustainable Development. A How-to Guide: Measuring subsidies to fossil-fuel producers. 2010. https://www.iisd.org/gsi/sites/default/files/pb7_ffs_measuring.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=A How-to Guide: Measuring subsidies to fossil-fuel producers |date=July 2010 |url=https://www.iisd.org/gsi/sites/default/files/pb7_ffs_measuring.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2010howto, author = {{International Institute for Sustainable Development}}, title = {{A How-to Guide: Measuring subsidies to fossil-fuel producers}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = jul, url = {https://www.iisd.org/gsi/sites/default/files/pb7_ffs_measuring.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }