Energy subsidies: Evolution in the global energy transformation to 2050

Despite the prevalence of subsidies throughout the energy system, the sector lacks any systematically applied, standardised definition of what subsidies are. 

This Staff Technical Paper published by the International Renewable Energy Agency (IRENA) contributes to ongoing research and debate on how energy sector subsidies are calculated and the impact of different methodologies and definitions. It highlights the difficulty of determining true subsidy levels, considers the various sources for such analysis and outlines key results.

The breadth and complexity of support to different sub-sectors and fuels makes subsidies, along with unpriced externalities, hard to calculate in any case. Uncertainty about basic definitions only adds to this difficulty.

The paper examines recent estimates of total fossil-fuel subsidies worldwide, provides new estimates of support to renewable power generation and biofuels, and offers a first estimate of total global energy sector subsidies.

Finally, it outlines the possible evolution of total energy sector subsidies until 2050, based on IRENA’s analysis of a sustainable energy pathway consistent with the climate goals set out by the Paris Agreement.

Total energy subsidies by fuel/source (2017) and climate and health costs

Related publications: Global renewables outlook, Global energy transformation: A roadmap to 2050, Renewable power generation costs in 2018, Power system organisational structures for the renewable energy era