Energy Taxation and Subsidies in Europe: A Report on Government Revenues, Subsidies and Support Measures for Fossil Fuels and Renewables in the EU and Norway

18 June 2014
By Daniel Radov et al.

This report, commissioned by the International Association of Oil and Gas Producers (OGP), presents the results of analysis that compares the taxation and subsidy regimes applying to oil, gas, coal, wind, and solar power in all 28 EU Member States and Norway during the period 2007-2011. The motivation for the study is to provide a clear and transparent approach to understanding different estimates of subsidy and government support, and to put them in a broader context.

The NERA project team, led by Associate Director Daniel Radov, approaches the question of relative levels of "support" from a perspective that differs from those used in previous studies. NERA's report estimates the full range of financial flows both to and from different sources of energy as a result of government policy, including direct subsidies, other transfers of funds, and major taxes. This approach explicitly recognizes that government expenditures on subsidies have an obvious counterpart in government revenues from taxation. Whereas other approaches selectively choose a subset of taxes to benchmark against, NERA takes a more comprehensive approach, and estimates all material sources of revenue raised from different energy sources. This eliminates the need to select an arbitrary benchmark to compare to.

A major advantage of NERA's approach is that it allows us to make cross-sector, cross-energy, and cross-country comparisons and to calculate total transfers from taxes, subsidies, and other policies, which it is not possible to do under many of the other approaches used in the existing literature.