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Fossil Fuel Subsidies in Asia: Trends, Impacts, and Reforms: Integrative Report

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  • Asian Development Bank (ADB)
  • Asian Development Bank (ADB)

    (Economic Research and Regional Cooperation Department, ADB)

  • Asian Development Bank (ADB)

    (Economic Research and Regional Cooperation Department, ADB)

  • Asian Development Bank (ADB)

Abstract

Unsustainable budgetary cost of selling oil, gas, and coal at low prices has propelled energy subsidy reform in developing Asian economies. This report measures the size of associated subsidies on these fossil fuels including direct transfers, tax exemptions, subsidized credit, and losses of state enterprises in India, Indonesia, and Thailand. An analysis of complex interactions between economic, social, energy, and environmental issues shows that the initial rise in energy prices due to a reduction or removal of the subsidies will nudge households and businesses to shift to alternative fuels, make investment in clean energy attractive, increase energy supply, reduce energy shortages, and cut greenhouse gas emissions. Using the money freed up from subsidies to compensate poor households and to increase government budgets will offset the negative effects of the initial price rise, promote sustainable energy use, and help allay the fears of reform.

Suggested Citation

  • Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB), 2016. "Fossil Fuel Subsidies in Asia: Trends, Impacts, and Reforms: Integrative Report," ADB Reports RPT157816-2, Asian Development Bank (ADB).
  • Handle: RePEc:asd:wpaper:rpt157816-2
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    Citations

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    Cited by:

    1. Chepeliev, Maksym & van der Mensbrugghe, Dominique, 2017. "Global Energy Subsidies Reform: Inclusive Approaches to Welfare Assessment," Conference papers 332821, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Cecile Couharde & Sara Mouhoud, 2020. "Fossil Fuel Subsidies, Income Inequality, And Poverty: Evidence From Developing Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 981-1006, December.
    3. Biatna Dulbert Tampubolon & Ajun Tri Setyoko, 2019. "Controlling Policies on Fossil Fuels Subsidies to Overcome Climate Change," Energy Economics Letters, Asian Economic and Social Society, vol. 6(1), pages 1-16, March.
    4. Ian Coxhead & Corbett Grainger, 2018. "Fossil Fuel Subsidy Reform in the Developing World: Who Wins, Who Loses, and Why?," Asian Development Review, MIT Press, vol. 35(2), pages 180-203, September.
    5. Pacudan, Romeo & Hamdan, Mahani, 2019. "Electricity tariff reforms, welfare impacts, and energy poverty implications," Energy Policy, Elsevier, vol. 132(C), pages 332-343.

    More about this item

    Keywords

    India; Indonesia; Thailand; energy; fossil fuel subsidies; greenhouse gas emissions; energy use; economic impacts; social programs and developing Asia;
    All these keywords.

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