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The purpose of this indicator is to measure and monitor fossil fuel subsidies and to ensure sustainable consumption and production patterns.

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.

Ministry of Finance (MOF)

Ministry of Finance (MOF)

Annual

US Dollars

The scale and impact of fossil fuel subsidies presents both challenges and opportunities for achieving the goals of the 2030 Agenda on Sustainable Development. For one, the use of fossil fuels, and their promotion through subsidy schemes, adversely affects the ability of governments to attain key goals, such as reducing poverty, improving health, reaching gender equality, providing access to energy, and addressing climate change. At the same time, there is a need to ensure that poor households that are particularly vulnerable to price increases obtain or retain access to energy. Energy-dependent sectors of the economy can be affected, particularly by abrupt changes in prices. Any successful reform therefore requires careful analysis and adapted mitigation measures. Awareness and understanding of existing subsidies based on credible data is necessary to increase transparency and inform decision-making. Reporting against a global indicator measuring consumer and producer fossil fuel subsidies provides a global picture that encompasses both consumer and producer subsidies. It allows for tracking of national and global trends and serve as an important guide for policy making.

• For this indicator, the definition of fossil fuels used is from IEA Statistics Manual, “Fossil fuels are taken from natural resources which were formed from biomass in the geological past. By extension, the term fossil is also applied to any secondary fuel manufactured from a fossil fuel.”
•  Use the terms set out in CPC Rev. 2.1 for the statistical classification of the individual products. 
• Include electricity and heat generated from fossil fuels in the scope of fossil fuels.
• Include non-energy uses with monitoring optional for the measuring of this indicator.

Because of the risk of double counting, the dataset should therefore provide disaggregated information on individual subsidy measures that will be reported as sub-indicators by category of subsidies.

This indicator can be calculated using the following formula:

Consumer price support = (adjusted net-of-tax reference unit price – local net-of-tax unit price) x units subsidized.

The indicator is used to measure fossil fuel subsidies at the national, regional and global level.

The monitoring and reporting of this indicator requires capacity within national statistical systems to evaluate direct and indirect transfers of government funds. Data collection by the statistical agencies from the sectoral ministries and state-owned enterprises, including at the sub-national level, which depends on their capacity. There is a need for additional training materials and sharing of experiences on the indicator.

The indicator methodology utilizes a phased monitoring to allow for countries with different capacities to engage in monitoring this indicator. The two phases include global monitoring based on price gap estimates plus national monitoring of direct and indirect transfers with optional monitoring of tax expenditure foregone.

All the metadata shown was gathered from United Nation Statistics Division. The metadata was extracted from https://unstats.un.org/sdgs/metadata/.