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#energyefficientworld
Brian Dean, Energy Efficiency in Emerging Economies, IEA
Jakarta, 20 July 2018
Day 5
Energy Efficiency Training WeekFuel subsidies and energy efficiency workshop
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Without energy pricing that includes the full cost of
energy production and supply,
energy efficiency investments will not be attractive
to businesses or consumers
and
it will not be possible to access the full range of
economic and social benefits from energy efficiency
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Fossil fuel subsidies
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
0.0
50.0
100.0
150.0
200.0
250.0
Brunei Indonesia Malaysia Thailand Vietnam
% of GDP$/personAnnual Fossil Fuel Subsidies in Southeast Asia
Subsidy per capita ($/person) Total subsidy as share of GDP (%)
Source: WEO 2017
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Benefits of removing subsidies
0 200 400 600 800 1000 1200 1400
MENA + Pakistan
Sub-Saharan Africa
Com. Of Ind. States (CIS)
Emerging/Developing Asia
Emerging Europe
Advanced Economies
Latin America
Fiscal gain from removing subsidies,
(billion USD)
Coal Natural gas Electricity Petroleum
0.00 10.00 20.00 30.00 40.00
MENA + Pakistan
Sub-Saharan Africa
Com. Of Ind. States (CIS)
Emerging/Developing Asia
Emerging Europe
Advanced Economies
Latin America
Estimated Percent Reduction in
CO₂ Emissions
Coal Natural gas Petroleum
Source: IMF Working Paper, 2015
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Who are the real beneficiaries of subsidies?
Richest
20%,
53.80%
Upper-Mid,
20.80%
Middle,
12.60%
Lower-Mid,
7.60%
Lowest
20%, 4%
LPG
Richest 20%,
61.30%
Upper-Mid,
19.40%
Middle,
9.70%
Lower-Mid,
5.70%
Lowest 20%,
3%
Gasoline
Source: IMF Working Paper 2010
Global survey of energy subsidy beneficiaries
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Subsides can be switched to other forms of support
Switching support away from fossil fuel subsidies to energy efficiency and renewable energy
will improve sustainable development
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Key messages
• Energy subsidies are a significant draw on public budgets
- Around 261 billion USD around the world, with national share of GDP reaching
even as high as 14%
• Subsidy reform is progressing across the world
- Focus more on (larger) consumer subsidies rather than producer subsidies
- Reducing public expenditure often a primary driver, not efficiency
- Concerns centre on the poor and vulnerable, and industrial competitiveness
• Energy efficiency can reduce the impact of subsidy reform
- Few examples of formally reallocating fiscal savings to energy efficiency
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Break-out group exerciseFossil fuel subsidy reform strategies
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Breakout group exercise
• Group yourselves together by country or region
- 10-12 people per team
• The exercise:
- For countries with fossil fuel subsidies, the government wants to reduce or
remove fossil fuel subsidies and would like to come up with ways to reduce
energy consumption
- For countries without fossil fuel subsidies, the government wants to reduce
energy consumption
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Breakout group exercise
• In your groups, spend 40 minutes to:
1. Define priorities and objectives for your country
2. Select policy packages to meet those objectives
3. A good communication campaign to support it
• Don’t forget to have a catchy slogan
for your campaign!
• Nominate 2 spokespeople to present to everyone
- 5 minutes per group
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Agenda for the rest of the day
13:30 – 13:40 – complete the exercise
13:45 – 15:00 – team presentations
15:00 – 16:00 – closing remarks and awarding of certificates
16:00 – 16:30 – coffee & tea
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