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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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