The importance of measuring fossil fuel subsidies has been recognized in the SDG process which created a dedicated indicator of measuring fossil fuel subsidies, 12.c.1 – ‘Amount of fossil fuel subsidies per unit of GDP (production and consumption’). As custodian agency for the SDG indicator 12.c.1, UN Environment has developed a methodology to measure fossil fuel subsidies so as to provide guidance to UN member countries reporting on this indicator.
In order to measure fossil fuel subsidies at the national, regional and global level, three sub-indicators are recommended for reporting on this indicator: 1) direct transfer of government funds; 2) induced transfers (price support); and as an optional sub-indicator 3) tax expenditure, other revenue foregone, and under-pricing of goods and services.The definitions of the IEA Statistical Manual (IEA, 2005) and the Agreement on Subsidies and Countervailing Measures (ASCM) under the World Trade Organization (WTO) (WTO, 1994) are used to define fossil fuel subsidies. Standardised descriptions from the United Nations Statistical Office’s Central Product Classification should be used to classify individual energy products. It is proposed to drop the wording “as a proportion of total national expenditure on fossil fuels”.
This report Measuring Fossil Fuel Subsidies in the Context of the Sustainable Development Goals provides methodological guidance for measuring fossil fuel subsidies in the context of Sustainable Development Goal (SDG) indicator 12.c.1: “Amount of fossil fuel subsidies per unit of GDP (production and consumption)”.
This methodology is intended for use by National Statistical Systems in compiling national estimates of fossil fuel subsidies. It also includes an elaboration of how fossil fuel subsidies can be measured at the global level.
More information can be found here in the blog.