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To raise or not to raise? Impact assessment of Russia's incremental gas price reform

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  • Heyndrickx, Christophe
  • Alexeeva-Talebi, Victoria
  • Tourdyeva, Natalia

Abstract

The growing momentum for gas price liberalization in Russia is increasingly constrained by fears of potentially strong adverse impact that market-based price setting principle will have on the economy. Based on a novel multi-regional, multi-sector and multi-household computable general equilibrium (CGE) model of the Russian Federation, this paper presents a simple yet a flexible framework for evaluating gas price reform. We found that the reform is feasible at low economic cost, without greater disparities in terms of increased inequity within and between country's federal districts. Large redistributive impacts can arise from specific mechanisms to recycle revenues. In terms of global environmental credentials, gas price liberalization can bring Russia on a substantially more sustainable path. The potential to foster adoption of energy efficiency measures by exploiting the revenue-recycling effect is, however, limited.

Suggested Citation

  • Heyndrickx, Christophe & Alexeeva-Talebi, Victoria & Tourdyeva, Natalia, 2012. "To raise or not to raise? Impact assessment of Russia's incremental gas price reform," ZEW Discussion Papers 12-052, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:12052
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    Cited by:

    1. Orlov, Anton, 2017. "Distributional effects of higher natural gas prices in Russia," Energy Policy, Elsevier, vol. 109(C), pages 590-600.
    2. Anton Orlov, 2017. "Distributional effects of higher natural gas prices in Russia," EcoMod2017 10186, EcoMod.
    3. Orlov, Anton & Aaheim, Asbjørn, 2017. "Economy-wide effects of international and Russia's climate policies," Energy Economics, Elsevier, vol. 68(C), pages 466-477.
    4. Daneshzand, Farzaneh & Asali, Mehdi & Al-Sobhi, Saad A. & Diabat, Ali & Elkamel, Ali, 2022. "A simulation-based optimization scheme for phase-out of natural gas subsidies considering welfare and economic measures," Energy, Elsevier, vol. 259(C).
    5. Orlov, Anton, 2015. "An assessment of proposed energy resource tax reform in Russia: A static general equilibrium analysis," Energy Economics, Elsevier, vol. 50(C), pages 251-263.
    6. Orlov, Anton, 2015. "An assessment of optimal gas pricing in Russia: A CGE approach," Energy Economics, Elsevier, vol. 49(C), pages 492-506.

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    More about this item

    Keywords

    regional general equilibrium model; sustainable development; natural gas pricing; Russia;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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