Measuring potential harmful subsidies and effective carbon rates in the Netherlands
Conference
65th ISI World Statistics Congress 2025
Format: IPS Abstract - WSC 2025
Keywords: environmental-economics, system of national accounts
Session: IPS 858 - Measuring Environmentally Harmful, Including Fossil Fuel, Subsidies
Tuesday 7 October 8 a.m. - 9:10 a.m. (Europe/Amsterdam)
Abstract
Subsidies and income transfers are usually meant to support certain groups or favorable developments in society. For example, in periods of exceptionally high energy prices, governments may (partly) counterbalance their impact via income transfers, with the objective to protect the most vulnerable (low income) groups. The downside of such measures is their unintended negative impact on other policy goals. For example, lower fossil energy prices may eventually turn out being an obstacle in the energy transition and moving towards a net zero CO2 economy. Up to date, the statistical methodology underlying the measurement of potentially harmful subsidies is limited. The international accounting standard for environmental accounting (SEEA-CF, 4.147) does not provide a definition. Eurostat is developing a data collection program among EU member states, however, how the notion of ‘potentially damaging’ must be understood is still subject to further thought and experimentation. Although t The key focus of Eurostat is on subsidies on fossil fuels, as the consequences of fossil combustion are evidently harmful. But it is acknowledged that harmful subsidies may also be found in other environmental domains. Our paper starts with the broader perspective by examining the full list of policy measures (subsidies, income and capital transfers) of two Dutch ministries, agriculture and economic affairs. The aim is to evaluate which of these policy measures may embody a negative environmental impact and could for that reason be classified as potential environmentally harmful. Subsequently, the paper looks at the issue of measuring fossil fuel subsidies. As most of them take the form of tax exemptions and discounts, we evaluate how the concept of harmful subsidies may apply to particularly these implicit fossil fuel subsidies. We also evaluate the required underlying assumptions. Finally, the paper discusses the measurement of fossil fuel and carbon tax rate difference as way to quantify the often substantive tax level differences in an economy. Our tentative conclusion is that from an ‘official statistics’ point of view the measurement of tax rate differences is quite feasible while the measurement of potential harmful subsidies seems conceptually less robust.