“The link between subsidies, consumption of energy and climate change has added a new dimension to the debate on energy subsides,” David Lipton, IMF first deputy managing director, said in prepared remarks at a Washington event hosted by the Peterson Institute for International Economics.
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The White House and congressional Democrats want to remove about $4 billion in annual tax provisions awarded to the oil-and-gas industry.
Oil-and-gas interests, and their Republican allies, say the provisions are cost-recovery mechanisms and business deductions that other industries also claim.
In 2011, nations doled out roughly $480 billion of “pre-tax” incentives, which are “when consumers pay less than supply cost of energy,” Lipton explained. They are generally found in emerging economies, according to an IMF report released Wednesday.
And “post-tax” subsidies — the sum of pre-tax and tax incentives — hit $1.9 trillion. About 40 percent of those subsidies were awarded in advanced economies, with the U.S. leading the way at $502 billion.