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Do energy subsidies or taxes influence the nexus between energy vulnerability and human development?

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  • Gainetdinova, Anna
  • Babina, Ekaterina
  • Sohag, Kazi

Abstract

Energy vulnerability is widely recognized as a barrier to human development, but the role of government intervention—through taxes or subsidies—in mitigating this relationship remains an empirical question. This study examines the impact of energy vulnerability on the Human Development Index (HDI) and its three key dimensions: health, education, and income, while considering the type of energy policy implemented in each country. Our findings show that energy vulnerability significantly impedes human development, particularly in the health and income dimensions. However, this detrimental effect is less pronounced in countries that have implemented fossil fuel subsidies. The most effective fiscal measure to mitigate the negative impact of energy vulnerability is the imposition of fossil fuel taxes. Not only does this tax reduce the harmful effects of energy vulnerability, but it also appears to have a positive influence on education, possibly through the redistribution of tax revenues generated from excessive fossil fuel consumption.

Suggested Citation

  • Gainetdinova, Anna & Babina, Ekaterina & Sohag, Kazi, 2026. "Do energy subsidies or taxes influence the nexus between energy vulnerability and human development?," Energy, Elsevier, vol. 342(C).
    • Handle: RePEc:eee:energy:v:342:y:2026:i:c:s0360544225052740
    DOI: 10.1016/j.energy.2025.139632
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    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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