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Lessons Drawn from Reforms of Energy Subsidies
Report

Lessons Drawn from Reforms of Energy Subsidies

Mohammed I. Al Hammadi
World Economic Forum, 2013
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

“Once in place, energy subsidies are extremely difficult to remove.” So states the committee, established by the World Economic Forum and led by energy industry executive Mohammed I. Al Hammadi, tasked with finding the best subsidy reform practices among nations. getAbstract recommends its report, brimming with practical case studies, to regulators, politicians and energy executives interested in the consequences of energy reform.

Summary

Energy subsidies are “any government action that lowers the cost of energy production, raises the revenues of energy producers or lowers the price paid by energy consumers.” Though designed to shield domestic energy consumers and producers from price volatility, energy subsidies may have negative ramifications: Supply-side subsidies protect producers from competition but distort market prices, fund projects that may not otherwise be viable, deter investment in green energy and discourage energy firms from becoming more efficient. Demand-side subsidies make fuel affordable but disincentivize efficient energy use. In 2009, G20 leaders pledged to “rationalize and phase out over...

About the Author

Mohammed I. Al Hammadi is CEO of Emirates Nuclear Energy Cooperation.

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