6 minute read
Figure 5. Combined IEA-OECD estimate of support for fossil fuels
Figure 5. Combined IEA-OECD estimate of support for fossil fuels
USD Billion
700
600
500 USD/bbl (nominal)
140
120
100
400
300
200
100 80
60
40
20
0
2007 2008 2009 2010 2011 2012 2013 2014 2015
OECD area Countries outside the OECD area IEA average crude oil price
Note: This indicator covers 76 countries that are accountable for 94% of global carbon emissions in 2015. Source: Garsous (2019[13]) using data from OECD (2018[27]). 0
covering over 800 individual policies that support the production or consumption of fossil fuels. It is now available as an online database and includes a further two countries (Argentina and Colombia). To reconcile the OECD’s bottom-up estimates of government support to individual programmes, with the IEA’s topdown estimates of consumer price support, the latest Companion to the Inventory of Support Measures for Fossil Fuels suggested a solution to combine the two sets of estimates, and presents a single figure on support given to fossil fuels (Figure 5) (OECD, 2018[27]).
This inventory is now established as a unique source of information that is contributing to advancing analysis in a range of studies carried out at national and international levels. Indeed, for the first time the data captures policylevel detail for many types of support. Each iteration of the inventory brings in additional years of coverage and provides a clearer picture of policy change over time. Having such a comprehensive inventory has made it possible to carry out detailed analysis that would have been impossible otherwise and which has produced interesting findings, summarised below.
The new set of estimates for government support for fossil fuels was chosen as one of the trade and environment indicators recently developed for the JWPTE (Garsous, 2019[13]). This indicator was used in this first instance to help understand how support for fossil fuels, alongside an indicator measuring the enabling policy and regulatory environment for renewable energy, affected the energy mix and trade balances for environmental goods. Analysing trends in this indicator showed that estimates of global support to fossil fuels peaked in 2012 but have since declined, a trend driven by countries outside the OECD area where the slump in international oil prices decreased support linked to price controls, a policy instrument prevalent in these countries. The analysis also suggests that countries spending a larger share of their GDP to support fossil fuels seem to harm the competitiveness of their domestic industry producing renewable energy plant equipment, particularly in countries outside the OECD area (see Chapter 4).
The inventory has also made it possible to advance on analysis related to carbon pricing. The report on Improving economic efficiency and climate mitigation outcomes through international co-ordination on carbon pricing (Nachtigall, 2019[28]) presents the potential benefits and challenges of enhanced international coordination on carbon pricing and outlines the different types and levels of co-ordination that are available for national and sub-national governments. It considers carbon pricing schemes alongside effective carbon rates and efforts to phase out inefficient fossil fuel subsidies.
Fisheries
The topic of reform of government support for fisheries has been pushed up the international environmental agenda in recent years, largely due to the UN 2030 Agenda, agreed by Heads of State and Governments in 2015. As part of SDG 14, which sets the broader goal of
conserving and using sustainably the oceans, seas and marine resources, SDG 14.6 calls for “by 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing (IUU) and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation.”
In the Doha Round of multilateral trade negotiations, WTO negotiators worked “to clarify and improve WTO rules that apply to fisheries subsidies”. The negotiations were motivated by trade concerns as well as the need to improve the sustainability of fish stocks. At the 2017 WTO Buenos Aires Ministerial Conference, Ministers decided on a work programme to conclude negotiations started in 2005 with an agreement on fisheries subsidies by the subsequent Ministerial Conference (deferred from the summer of 2020 due to COVID-19), in keeping with SDG 14.6.
The OECD Fisheries Committee is contributing to the negotiations by providing a basis for identifying the characteristics of subsidies that could be subject to disciplines. Improved understanding of subsidies and their impact can also assist governments to reform their support policies to make fisheries sustainable. An inventory of support to fisheries in 35 countries has been completed.6 The next stage is to build an analytical tool to identify the effects of support on IUU fishing, overcapacity and overfishing – three of the central issues under negotiation. The OECD report Support to fisheries: Levels and impacts (OECD, 2017[29]) provides a preliminary analysis of the factors that determine how support can affect overcapacity and overfishing, including illegal fishing.
The follow up OECD report on The Relative Effects of Fisheries Support Policies is intended to provide policy makers with a way to compare the effect of different support policy approaches in more detail than had been previously possible (Martini and Innes, 2018[30]). The results of the model-based analysis show that all six fisheries support policies investigated can result in overfishing, encourage IUU fishing and increase fleet capacity. However, their effects vary significantly:
6. The OECD Fisheries Support Estimate (FSE) database can be accessed at https://stats.oecd.org/Index.aspx?datasetcode=FISH_FSE. l Support based on the costs of fishing, such as help to purchase fuel, gear or bait, can increase fishing effort more than other policy options and, in particular, increase IUU fishing effort leading to stock depletion.
l Such support also tends to favour larger fishers to the point where others in the fishery may be left worse off.
l Many support policies do little to improve fishers’ livelihoods even though fuel support can translate into real income gains, because in the medium term any potential benefit is lost to increased effort and lower fish stocks.
l By contrast, payments designed to support the profitability of fishing operations bring significant benefits to fishers with limited effect on effort and capacity. These payments include programmes to ensure capital markets provide working capital for operations, or those that improve the business or operational skills of fishers.
l Payments that directly target fishers’ incomes, such as disaster payments or employment insurance, also deliver benefits to all fishers.
The results also indicate that “it is possible to support the fishing sector and deliver benefits to fishers without unduly provoking overfishing or overcapacity”. The report concludes that moving existing support away from gear, fuel, vessels or other inputs towards helping fishers to improve their businesses and deal with disasters could significantly improve fishers’ income, reduce pressure on stocks and increase harvest by almost half a million tonnes per year.
In response to a G20 call to provide analysis on fossil fuel subsidies, the OECD published a study on Fuel Tax Concessions in the Fisheries Sector (Martini, 2012[31]). This report estimated the value of government transfers related to fuel use for fishing fleets in OECD Member countries, as well as non-member economies where data was made available. It also gave an initial assessment of the impacts of such support and the implications for the fishing industry of phasing it out. It concluded that when making the case for reform, it may be more useful to consider the policy objectives motivating support than the impacts of such support. While the impacts of fuel support are uncertain, there is considerable evidence in OECD policy research that better options exist to achieve most common policy objectives.
