Energy Subsidy Reform : Lessons and Implications

Energy Subsidy Reform : Lessons and Implications
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Series:
Books
Author(s):
Benedict Clements, David Coady, Stefania Fabrizio, Sanjeev Gupta, Trevor Alleyne, and Carlo Sdralevich
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
February 2014
DOI:
http://dx.doi.org/10.5089/9781484351765.071
ISBN:
9781484351765
Page:
198
Energy subsidies have wide-ranging economic consequences. Although they are aimed at protecting consumers, subsidies aggravate fiscal imbalances, crowd out priority public spending, and depress private investment, including in the energy sector. Subsidies also distort resource allocation by encouraging excessive energy consumption, artificially promoting capital-intensive industries, reducing incentives for investment in renewable energy, and accelerating the depletion of natural resources. Most subsidy benefits are captured by higher-income households, reinforcing inequality. Even future generations are affected through the damaging effects of increased energy consumption on global warming. 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.
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