Europe and Central Asia Balancing Act : Cutting Subsidies, Protecting Affordability, and Investing in the Energy Sector in Eastern Europe and Central Asia Region

The cost of energy in Eastern Europe and Central Asia, as elsewhere, is an important policy issue, as shown by the concerns for energy affordability during the past harsh winter. Governments try to moderate the burden of energy expenditures that is experienced by households through subsidies to the energy providers, so that households pay tariffs below the cost recovery level for the energy they use. These subsidies result in significant pressures on government budgets when international prices rise. They also provide perverse incentives for the overconsumption of energy as households do not pay the true cost of energy, and therefore, have fewer incentives to save or to invest in energy efficiency. Balancing competing claims-fiscal and environmental concerns which would push for raising energy tariffs on the one hand and affordability and political economy concerns which push for keeping tariffs artificially low on the other-is a task that policy makers in the region are increasingly unable to put off. Addressing this issue is all the more pressing as the ongoing crisis continues to add stress to government budgets, and that international energy prices remain high. This is the first report to assess, at the micro level for the whole region, the distributional impact of raising energy tariffs to cost recovery levels and to simulate policy options to cushion these impacts.

Bibliographic Details

Main Author:	World Bank
Format:	Economic & Sector Work biblioteca
Language:	English en_US
Published:	Washington, DC 2012-06
Subjects:	AFFORDABLE ENERGY, ALTERNATIVE ENERGY, AVAILABILITY, BALANCE, CARBON, CARBON ECONOMY, CARBON EMISSIONS, CLIMATE, COAL, CONSUMER SURPLUS, CONSUMPTION PATTERNS, COST OF ENERGY, COST SAVINGS, COSTS OF ENERGY PRODUCTION, DEBT, DEMAND FOR ENERGY, DEMAND MANAGEMENT, DISTRIBUTION OF ENERGY, DISTRIBUTION OF GAS, DISTRICT HEATING, DRILLING, ECONOMIC GROWTH, ELECTRIC APPLIANCES, ELECTRIC POWER, ELECTRICITY, ELECTRICITY CONSUMPTION, ELECTRICITY PRICE, ELECTRICITY PRICES, ELECTRICITY PRODUCTION, ELECTRICITY SECTOR, ELECTRICITY TARIFF, ELECTRICITY TARIFFS, EMISSIONS, EMPIRICAL ANALYSIS, ENERGY BILLS, ENERGY CONSUMPTION, ENERGY COSTS, ENERGY DEMAND, ENERGY EFFICIENCY, ENERGY EFFICIENCY MEASURES, ENERGY EXPENDITURE, ENERGY EXPENDITURES, ENERGY GENERATION, ENERGY INTENSITY, ENERGY MARKETS, ENERGY NEEDS, ENERGY POLICIES, ENERGY PRICE, ENERGY PRICES, ENERGY PRICING, ENERGY PRODUCTS, ENERGY RESOURCES, ENERGY SOURCE, ENERGY SOURCES, ENERGY SUPPLY, ENERGY USAGE, ENERGY USE, ENVIRONMENTAL, ENVIRONMENTAL COSTS, ENVIRONMENTAL IMPLICATIONS, ENVIRONMENTAL TAX, ENVIRONMENTS, EXPENDITURES, EXPLOITATION, FUEL, GAS CONSUMPTION, GAS PRICES, GAS SECTOR, GROSS DOMESTIC PRODUCT, HEAT, HIGHER ENERGY PRICES, HOT WATER, HOUSEHOLD ENERGY, HOUSEHOLD SECTOR, HYDROPOWER, IMPROVEMENTS IN ENERGY EFFICIENCY, IMPROVING ENERGY EFFICIENCY, INCOME, INVESTMENT IN ENERGY EFFICIENCY, INVESTMENTS IN ENERGY, LIQUEFIED NATURAL GAS, LIQUEFIED PETROLEUM GAS, LIVING STANDARDS, MARKET PRICES, MEMBER STATES, NATURAL GAS, NATURAL MONOPOLIES, OIL, OIL MARKETS, OIL PRICES, PERVERSE INCENTIVES, PETROLEUM, PETROLEUM GAS, PIPELINE, POLICY MAKERS, POLITICAL ECONOMY, POWER, POWER GENERATION, POWER GENERATION CAPACITY, POWER SECTOR, PRESENT VALUE, PRICE CHANGES, PRICE OF ELECTRICITY, PRICE OF GAS, PRIMARY ENERGY, PRODUCTION COSTS, PURCHASING POWER, QUALITY OF ENERGY, RENEWABLE SOURCES, RESIDENTIAL ENERGY, RETROFITTING, SOCIAL COSTS, SPACE HEATING, SUSTAINABLE DEVELOPMENT, TARIFF LEVELS, TARIFF STRUCTURE, TARIFF STRUCTURES, UTILITIES, WELFARE LOSS, WORLD OIL, WORLD OIL PRODUCTION,
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16630389/europe-central-asia-balancing-act-cutting-subsidies-protecting-affordability-investing-energy-sector-eastern-europe-central-asia-region http://hdl.handle.net/10986/11910
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