Reforming Energy Subsidy in Kuwait: Maximizing Net Benefits and Equity Complying

The net benefits and public acceptance for a proposed reform to the current subsidization of energy in the State of Kuwait was investigated in this study. The proposed subsidization suggests that the government pays the consumers the subsidization cost in advance and in exchange for raising the subsidized tariffs to full price. The consumption will likely be reduced by a rate equals the over consumption due to the current subsidized tariffs in relative to the income. The net benefits is expected to be maximized and shifted to a pseudo-equilibrium point where both the governments and the consumers will be better off financially. The public acceptance toward the proposed strategy was examined using 274 voluntarily one-to-one interviews for gasoline and 121 for electricity and water. Also, a utilities meters reading program was conducted on 90 houses out of the 121 interviews for utilities. The interviews for gasoline and utilities indicated 57% and 66% of the respondents see no equity in the current subsidization, 55% and 80% admitted to overuse, and 11% and 21% averages of the over consumptions, and 67% and 66% of the respondents were willing to adopt the new strategy. The consumer is expected to save 912 USD/year from gasoline, and 8,198 USD/year from utilities. The estimated net benefits is 5,841 million USD annually with 62% attributed to utilities benefits and 38% to gasoline benefits.

The “My Electricity” Program as One of the Ways to Reduce CO2 Emissions in Poland

One way to reduce CO2 emissions is to replace conventional energy sources with renewable ones. In order to encourage prosumers to invest in renewable energy, EU Member States are developing renewable energy subsidy programs. In Poland, in the years 2019–2020, the “My Electricity” program was implemented, co-financing was up to 50% of eligible costs (max PLN 5000, i.e., EUR 1111), and the total cost of the program was 251 million euro. During this period, around 400,000 prosumer installations were created in Poland, including over 220,000 prosumer PV Installations under the My Electricity program. The total power of the installation under the “My Electricity” program was 1.295 GWp with an average installation power of 5.72 kWp. It is estimated that the micro-installations will produce approx. 1.4 TWh of electricity annually. Depending on the replaced source of electricity (coal, gas, mix), in the next 30 years, it will help to avoid 26.2–42.7 million Mg of greenhouse gases calculated as carbon dioxide equivalents (CO2eq). The coefficient of subsidy expenditure from the “My Electricity” program was 194 EUR/kWp, and in the next 30 years, it will be 6.52 EUR/MWh. The investment in PV will save EUR 1550 million, which would have to be incurred for the purchase of CO2 emission permits.

Towards a Systemic Assessment of Gendered Energy Transition in Urban Households

Assessment of gendered energy transition at an urban scale has emerged as a challenging issue for researchers, policy makers and practitioners. With municipalities becoming players in the energy markets, their involvement raises policy issues that need to be better assessed in supporting gendered energy transition. This paper, therefore, contributes to gendered energy transition assessments at urban household level from a policy maker perspective. We developed a system dynamics model to assess the effects of urban energy policy interventions on household energy consumption and gendered measures using Drakenstein Municipality as a case study. The study used secondary data from various sources for the model parameters. We tested three hypothetical policy scenarios: the business-as-usual, the energy subsidy policy and the energy efficiency policy. The results show that understanding the changes in urban household energy consumption and gendered measures due to energy transition interventions is essential for urban policy planning. The energy subsidy policy scenario was observed to increase total energy consumption but also resulted in socio-environmental impacts that might increase inequality and impair human health. Urban household energy transition interventions need to consider a systems approach to develop decision support tools that capture the cross-sector impacts and inform the development of interventions that promote gendered household energy transition.

Beirut’s energy subsidy policy will cause chaos

Headline LEBANON: Energy subsidy policy will cause chaos

Decomposition Factors Household Energy Subsidy Consumption in Indonesia: Kaya Identity and LMDI Approach

For decades, the subsidy had prompted excessive and wasteful while offering little motivation to boost energy efficiency or reduce domestic greenhouse gas emissions. This paper aimed to measure household subsidy energy by examining the relationship between the other ten variables. The Logarithmic Mean Divisia Index (LMDI) and decomposition index were deployed to recognize the determinant effects that drive household's subsidy energy consumption. This study also presented an ARDL model applied. The robustness of the Granger Causality, Long-run, and Short-run causality during 1990-2017 was assessed. Based on LMDI, we found out that Population, Income Per Capita, Ratio National Renewal Energy over Fuel Fossil, Gross Capital Stock, Urban Household Consumption, and Ratio Household Subsidy were the positive factors that aggravate the change in household energy subsidy. The negative sign of Ratio National Energy Intensity effect, Ratio Fossil Renewal Energy effect, Ratio Capital Labour substitution, and Ratio Household over Labour Force signified the decreasing significance of less household energy subsidy. On the panel ARD-ECM, we identified a negative sign speed-of-adjustment and significant at 1%. It implied that all the ten variable effects were converging in the long run after an experience shocks. The equation parameters were considered stable since the CUSUM gets inside the two critical lines. Additional RESET test of the stability to ascertain whether the estimated model was linear or correctly specified has been performed.

Efficiency and Equity Impacts of Energy Subsidies

Economic theory suggests that energy subsidies can lead to excessive consumption and environmental degradation. However, the precise impact of energy subsidies is not well understood. We analyze a large energy subsidy: the California Alternate Rates for Energy (CARE). CARE provides a price reduction for low-income consumers of natural gas and electricity. Using a natural field experiment, we estimate the price elasticity of demand for natural gas to be about −0.35 for CARE customers. An economic model of this subsidy yields three results. First, the natural gas subsidy appears to reduce welfare. Second, the economic impact of various policies, such as cap-and-trade, depends on whether prices for various customers move closer to the marginal social cost. Third, benefits to CARE customers need to increase by 6 percent to offset the costs of the program. (JEL C93, D61, H24, L94, L95, L98, Q48)