Research Paper: Inventory of Energy Subsidies in the EU’s Eastern Partnership Countries

Research Paper: Inventory of Energy Subsidies in the EU’s Eastern Partnership Countries

CESD Research has been published by the OECD Press

Governments have long relied on energy subsidies to advance specific development goals or address market failures. The most common argument for introducing and maintaining energy subsidies is that they support important domestic policy objectives, such as rural and industrial development, job creation, improved energy access, energy security and independence, and poverty alleviation. However, the economic cost of energy subsidies can represent a significant burden on a country’s finances, weaken its growth potential and encourage wasteful energy consumption. Analysis shows that energy subsidies tend to accrue not to those with the lowest income, but rather to the largest and most economically powerful recipients, thus increasing profits for well-connected investors or industries. By encouraging use of fossil fuels and discouraging production of low-carbon fuels, energy subsidies can lead to increased emissions of carbon dioxide and other greenhouse gas emissions.

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