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Energy Price Reform: A Guide for Policymakers

Author

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  • David Coady
  • Ian Parry
  • Baoping Shang

Abstract

This essay reviews the conceptual and quantitative literature on the efficient system of fossil fuel energy prices in different countries for reflecting supply and environmental costs, as well as the environmental, fiscal, and economic benefits from energy price reform. Drawing on recent experiences in numerous countries, the ingredients for successful reform are then discussed (e.g., the need for a comprehensive reform strategy and for compensating vulnerable groups). Low energy prices, fiscal pressures, and momentum for climate action provide an especially conducive environment for price reform and much is happening rapidly on the ground, however there is a long way to go to reap the enormous benefits at stake (e.g., at the global level, over a 20 percent reduction in carbon emissions and revenues gains of 4 percent of GDP).

Suggested Citation

  • David Coady & Ian Parry & Baoping Shang, 2017. "Energy Price Reform: A Guide for Policymakers," CESifo Working Paper Series 6342, CESifo.
  • Handle: RePEc:ces:ceswps:_6342
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6342.pdf
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    References listed on IDEAS

    as
    1. Mr. David Coady & Baoping Shang & Louis Sears & Ian W.H. Parry, 2015. "How Large Are Global Energy Subsidies?," IMF Working Papers 2015/105, International Monetary Fund.
    2. Parry, Ian W. H. & Bento, Antonio M., 2000. "Tax Deductions, Environmental Policy, and the "Double Dividend" Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 67-96, January.
    3. Vivien Foster & Cecilia Briceno-Garmendia, 2010. "Africa's Infrastructure : A Time for Transformation [Infrastructures africaines]," World Bank Publications - Books, The World Bank Group, number 2692, November.
    4. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
    5. Margaret Grosh & Carlo del Ninno & Emil Tesliuc & Azedine Ouerghi, 2008. "For Protection and Promotion : The Design and Implementation of Effective Safety Nets," World Bank Publications - Books, The World Bank Group, number 6582, November.
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    Cited by:

    1. World Bank Group, 2018. "Commodity Markets Outlook, April 2018," World Bank Publications - Books, The World Bank Group, number 29721, November.
    2. Shmelev, Stanislav E. & Speck, Stefan U., 2018. "Green fiscal reform in Sweden: Econometric assessment of the carbon and energy taxation scheme," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 969-981.
    3. Lucas W. Davis & James M. Sallee, 2020. "Should Electric Vehicle Drivers Pay a Mileage Tax?," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 65-94.

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    More about this item

    Keywords

    energy price reform; efficient taxation; environmental externalities; reform experiences;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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