Introduces fossil fuel subsidies and the various attempts to address them on the domestic and particularly the international level, attempts that have taken off during the last ten years. The chapter outlines the different definitions of fossil fuel subsidies, definitions that have far-reaching political consequences, followed by an overview of the estimates of the size and scope of existing fossil fuel subsidies. Subsequently, the chapter discusses the domestic politics of fossil fuel subsidies and their reform, followed by an overview of the efforts to address fossil fuel subsidies of other institutions than the ones studied in this book, including the World Bank, the IEA, and non-state actors.

This chapter discusses various applications of the analytical framework here. First, we identify the Lindahl tax that serves as the fourth component adding to the triangular equivalence relationship. Under the Lindahl tax scheme, the Cournot-Nash equilibrium of SEEN or DEEN model renders the Lindahl equilibrium without transfers. We examine the quantity tools as well. To showcasing the relevance and importance of the theory in empirical works, we solve the Lindahl equilibrium without transfer and coalitional solutions in the influential RICE model. Lastly, we analyse the one-directional externality problem in a water pollution model. All cases of applications are supplemented with programming codes and/or numerical results.