Analysing energy subsidies in the countries of eastern europe oecd. The report starts by presenting the numerous arguments for reducing energy subsidies, both at a general level and for myanmar in particular. As shown by international experience, efforts to reform energy subsidies have a mixed record of success. The 2014 world bank paper titled transitional policies to assist the poor while phasing out inefficient fossil fuel subsidies was also essential to this work. The recent surge in international energy prices, combined with incomplete pass through to domestic prices, has prompted calls to phase out energy subsidies. In the past few years, the country has gone through great efforts to reform inefficient fossil fuel subsidies.
Use the free adobe acrobat reader to view this pdf file. After identifying electricity pricing as the main area for potential energy subsidy reform in myanmar, and. Pahal has increased efficiency and reduced leakages compared to the previous inkind subsidy regime, resulting in significant fiscal savings for the government at fraction of the cost of the program. The process of building socially acceptable subsidy reform packages can be informed by assessing the impact of energy subsidy removal on different income groups.
The larger number of studies on fuel subsidies reflects the wider availability of. Energy subsidy reform lessons and implications oecd. The magnitude of the effect of energy subsidy reform policies depends on the extent of the reform and the relevant importance of the subsidy in household budget. It summarizes in nontechnical language the central issues related to energy subsidies and key messages for policy makers looking to reform subsidy programmes. Electricity subsidies and cost recovery tariffs 3 this subsection gives estimates of. The program encompassed a sharp in crease in the price of gasoline and diesel oil. So how can we better link energy efficiency and subsidy reform. Thus, the energy price mechanism is at the core of energy reform, and energy subsidies are an important determinant of energy prices. In the absence of reform, the value of those subsidies will tend to rise. The political economy of energy subsidy reform gabriela inchauste and david g. Saudi arabia has maintained a policy of providing energy products at a subsidized price to domestic consumers for decades.
Assessing the political economy of energy subsidies to support. This paper investigates the fuel conservation effects of the reform in iran using a homothetic translog cost function that provides. Fiscal reform, especially energy subsidy reform also a recurring objective, but effectuated in 20152016. Energy subsidy reform and poverty in arab countries. Reform of energy subsidies in egypt 4 e nergysub idw o tc h l2 05. This study simulates the macroeconomic and distributive impacts of real proposed by local policy makers energy subsidy reforms in egypt and jordan. In most cases, reforms have been part of a broad based fiscal. The narrow and perhaps most commonly used definition of an energy subsidy is a direct cash payment by a government to an energy producer or consumer. To begin, defining an energy subsidy can be fraught with difficulty. Victor, editors directions in development public sector governance. This book provides 1 the most comprehensive estimates of energy subsidies currently available for 176 countries and 2 an analysis of how to do energy subsidy reform, drawing on insights from 22 country case studies undertaken by the imf staff and analyses carried out by other institutions. Energy price reform is but one element of several interrelated components in a sustainable energy strategy, which include investment in energy efficiency and alternative energy, oxford energy forum contents mena energy pricing reforms subsidies and the political economy of wealthsharing in the mena steffen hertog 5.
Diversification effects of energy subsidy reform in mena. They are expensive for governments and can have harmful environmental and social effects. The united nations and international energy agency define an energy subsidy as any measure that keeps prices for consumers below. The international literature has found that energy subsidy removal may be regressive or progressive, that is it may cost poor households a larger. The world trade organization defines a subsidy as a financial contribution by a government, or agent of a government, that confers a benefit on its recipients kojima and koplow, 2015. In 2017, it completed the reform of subsidies to diesel, gasoline and liquefied petroleum gas lpg, which cost up. Where does social protection fit in the subsidy reform puzzle. Analysis of international data on energy subsidy reform.
Key to reforming fossilfuel subsidies is making information on support available to decision makers and the broader public. Sustaining fuel subsidy reform council on foreign relations. In fy 2016, nearly half 45% of federal energy subsidies were associated with renewable energy, and 42% were associated with energy. Contrary to the subsidy reform plan, the volume of iranian subsidies given to its citizens on fossil fuel, which increased 42. Readiness of social safety nets to mitigate the impact of. Gaining in energy subsidy reform for the purpose of this document, energy subsidies can be defined as any government action that lowers the cost of energy production, raises the revenues of energy producers or lowers the price paid by energy consumers. While aimed at protecting consumers, subsidies aggravate fiscal. Assessment framework esraf, an initiative of the energy sector. Reforming energy subsidies linking renewable energy. Energy subsidies paper unfccc final draft 10 june 2007. An opportunity for fuel subsidy reform by keith benes andrew cheon johannes urpelainen joonseok yang october 2015. Energy subsidy reform in mexico has become a topic of high public and political importance. After oil price in 2014, energy subsidy reform was presented as.
Over this period, energy subsidies on oil accounted for 65. Lessons and implications executive summary energy subsidies have wideranging economic consequences. Indias lpg reform is a rare case of success in achieving reform in the difficult area of energy subsidy reform. Abstract this book proposes a simple framework for understanding the political economy of subsidy reform and applies it to four. Is energy subsidy reform in an oilexporting small economy. The gender energy poverty nexus fatma elhamidi working paper 1055 october 2016 this research has benefited from the financial contribution of erf as part of the erf. Energy pricing reform has also gained ground across major oil exporting economies, as high subsidies were blamed for aggravating the fiscal challenges caused by the collapse of the oil price in mid2014. Estimates of energy subsidies in china and impact of.
The report provides an overview of both methodological and political economy aspects of ehs reform that can inform policy and technical debates. To prevent further increases in energy consumption, the iranian government commenced energy subsidy reform in 2010. Economic brief reforming energy subsidies in egypt. Fossil fuel subsidies and sustainable energy for all faculty of. Pdf poorly implemented energy subsidies are economically costly to taxpayers and damage the environment.
Quantifying the impacts of energy price reform on living. Authors analysis using data from the kuwait government finance statistics ministry of planning. Subsidy reform can level the playing field for renewable energy. The political economy of energy subsidy reform public. S gvm p a petroleum corporation egpc that keeps prices of oil and gas below the price that the government pays to the foreign partners involved. There is some confusion about what an energy subsidy actually is. Clean energy subsidy swapstaking some of the savings from subsidy reform and investing it into energy efficiency or renewable energy is a highly promising mechanism to achieve this. Lessons drawn from reforms of energy subsidies weforum. Nevertheless, barriers to reform persist and subsidies remain high. Most current federal subsidies support developing renewable energy supplies primarily biofuels, wind, and solar and reducing energy consumption through energy efficiency. This paper provides a detailed picture of the indias reform of household subsidies for the purchase of lpg cooking gasthe largest cash transfer program in the world. Pdf energy subsidies have wideranging economic consequences. Assessing the readiness of social safety nets to mitigate the impact of energy subsidy reform why reform subsidies.
The case for energy subsidy reforms was based on the fundamental argument that poorly targeted energy. And while conventional energy policies are gender neutral, energy subsidy policies are likely to affect men and women differently. Lessons and implications benedict clements fiscal affairs department international monetary fund november 2014 this presentation represents the views of the authors and. Reviewing, reforming, and rethinking global energy. Nevertheless, barriers to reform persist and subsidies. The world banks mely assistance provided the tools and models to project the impacts of the reform, convincing the government that energy sec. The distributional impacts of reform would depend on how important the subsidized items are to consumers in terms of their expenditures on those items. The prospects for energy subsidies depend entirely on whether and how governments decide to reform their energy policies. Ehs in the countries of eastern europe, caucasus and central asia eecca.
Research competition gender and social protection 20152016. Data feed into the analysis of the costs and benefits of reform. Energy subsidy reform imf elibrary international monetary fund. Section 1 traces the e volution of subsidies in jordan in recent times. This book provides the most comprehensive estimates of energy subsidies currently available for 176 countries and an analysis of how to do energy subsidy reform, drawing on insights from 22. This booklet draws on recent work on energy subsidy reform carried out by the united nations environment programme unep and the international energy agency iea. Pdf fuel conservation effect of energy subsidy reform in. Recognizing that low oil prices can mitigate the increase in consumer bills caused by subsidy reform, ten countries have, since 2014, completely eliminated subsidies on at. All these factors are critical for achieving access to energy for all. Energy subsidies have wideranging economic consequences. Subsidy reform and sustainable development political economy aspects oecd sustainable development studies unsustainable subsidies are pervasive in the industry, agriculture, transport and energy sectors of most oecd countries.
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