Abstract

The increase in international energy prices and the environmental damage caused by excessive energy use have brought the issue of energy subsidies into focus in recent years. While some economists and policy makers were in favor of subsidies to the energy sector, others were against them, considering the burden that they imposed on government finances and the environmental impact of indiscriminate energy use. The case dis-cusses some of the different aspects of energy subsidies and the impact, both positive and negative, of withdrawing energy subsidies. The case ends with a discussion on recent studies on energy subsidies.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Learn about energy subsidies and the forms that they assume
• Understand the impact of energy subsidies on the economy and on the environment
• Analyze the rationale behind extending subsidies to the renewable energy sector
• and Analyze the impact of withdrawing subsidies to the non-renewable energy sector.

Keywords

Energy subsidies, Subsidized fuel, Effect of subsidies on economy, Renewable energy, Environmental impact of subsidies, Inflation, Over-consumption of energy, Eliminating subsidies