The devil lies in the definition: competing approaches to fossil fuel subsidies at the IMF and the OECD

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Abstract

Fossil fuel subsidy reform has in recent years been addressed by international economic organizations including the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD). The two organizations have differed significantly in how they define fossil fuel subsidies. The IMF’s definition constitutes a radical break with previous definitions by including environmental externalities, while the OECD’s is more conventional. The article explores the factors that explain why these international economic organizations have approached fossil fuel subsidies so differently. The exact definition of fossil fuel subsidies is contested. Furthermore, fossil fuels subsidies can be framed in ways that emphasize, respectively, their macroeconomic, fiscal, environmental, and distributive consequences. The article finds that institutional interaction lifted OECD involvement in fossil fuel subsidies to a new level, whereas the impetus to address fossil fuel subsidies within the IMF came largely from the IMF staff. In both cases, the organization’s bureaucracy constituted the most important factor shaping how the organizations addressed such subsidies and hence the main reason why they differ in how they approach fossil fuel subsidies.

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Subject classification (UKÄ) – MANDATORY

  • Political Science (excluding Public Administration Studies and Globalization Studies)

Keywords

  • Bureaucratic politics, Fossil fuel subsidies, IMF, Institutional interaction, OECD, Subsidy reform
Original languageEnglish
Number of pages13
JournalInternational Environmental Agreements: Politics, Law and Economics
Early online date2017 Mar 24
Publication statusPublished - 2017 Mar 24
Publication categoryResearch
Peer-reviewedYes