Gas Subsidy Research Articles

In praise of cooking gas subsidies: transitional fuels to advance health and equity * * Our title draws inspiration from Kirk R. Smith (2002) ‘In praise of petroleum?’ Science and Kirk R. Smith (2014) ‘In praise of power’ Science.

Households that burn biomass in inefficient open fires—a practice that results in $1.6 trillion in global damages from health impacts and climate-altering emissions yearly—are often unable to access cleaner alternatives, like gas, which is widely available but unaffordable, or electricity, which is unattainable for many due to insufficient supply and reliability of electricity services. Governments are often reluctant to make gas affordable. We argue that condemnation of all fossil fuel subsidies is short-sighted and does not adequately consider subsidizing gas for cooking as a potential strategy to improve public health and reduce greenhouse gas emissions.

Mapping the Wholesale Day-Ahead Market Effects of the Gas Subsidy in the Iberian Exception

Amidst the global energy crisis in 2022, the Spanish and Portuguese governments introduced a subsidy to natural gas (“the Iberian exception”), attempting to lower the wholesale electricity market prices, with the understanding that gas-fired-combined cycle gas turbines (CCGTs) are price-setting technologies most of the time, directly or indirectly. The subsidy succeeded in lowering the market price but induced several other effects, such as (1) the increase in cleared energy in the Spanish market (mostly produced with gas), (2) the bias in the import/export cross-border position between Spain and France (Spain became a net exporter to France immediately), or (3) the consequent increase in congestion rents, which serve to lightly finance the subsidy, among other effects. This paper provides a framework for clustering the different effects based on the market participation phases: the subsidy, the market bidding, the market results, and surplus and rents. Moreover, this paper builds on the theoretical market models, with and without subsidies, and with and without cross-border exchanges. Based on the real market bids, the subsidies, and the generators’ data, we reconstruct the supply and demand curves and simulate the counterfactual market scenarios in order to illustrate and quantify the effects. We highlight the quantification of the theoretical effect of the transfer of rents, from non-fossil to fossil fuel producers, induced by the gas subsidy.

Pelatihan Redesain Instalasi Listrik Untuk Program Konversi Kompor Gas LPG Ke Kompor Listrik Di Desa Nyurlembang

The allocation of LPG gas subsidies has increased, putting a burden on state finances, while surplus electricity production is not being utilized optimally. Electrical energy can replace LPG gas by replacing the gas stove with an electric stove. This conversion requires adequate installation to ensure the safe and secure operation of the electric stove. The implementation of the conversion program must be supported by community readiness regarding standard electrical installations for electric stoves in the form of training. Training activities were carried out in Nyurlembang Village, Narmada, West Lombok, as a community service activity. This activity aims to educate and train the public about repairing and redesigning electrical installations for electric stoves. Training methods include lecture, discussion and practice methods. Before and after the activity, participants are given a written test to determine the success of the training activity. The test results show an average score before and after training of 38.33 and 66.00 for the range 0-100. These results show that the training was quite effective with an increase in participants' theoretical and practical knowledge of 27.67.

Retraining investment for Alberta’s oil and gas workers for green jobs in the solar industry

If oil sands are to be eliminated from the energy market to protect the global environment, human health and long-term economic welfare, a significant number of workers will be displaced in the transition to renewable energy technologies. This study outlines a cost-effective and convenient path for oil and gas workers in Alberta to be retrained in the burgeoning solar photovoltaic (PV) industry. Many oil and gas workers would be able to transfer fields with no additional training required. This study examines retraining options for the remainder of workers using the most closely matching skill equivalent PV job to minimize retraining time. The costs for retraining all oil sands workers are quantified and aggregated. The results show the total costs for retaining all oil sands workers in Alberta for the PV industry ranges between CAD$91.5 m and CAD$276.2 m. Thus, only 2–6% of federal, provincial, and territorial oil and gas subsidies for a single year would need to be reallocated to provide oil and gas workers with a new career of approximately equivalent pay. The results of this study clearly show that a rapid transition to sustainable energy production is feasible as costs of retraining oil and gas workers are far from prohibitive.

Spatializing oil and gas subsidies in endangered caribou habitat: Identifying political‐economic drivers of defaunation

AbstractReforming environmentally harmful subsidies is an international priority under the UN Convention on Biological Diversity. Research that links industrial subsidies to negative ecological impacts, however, is limited. This paper contributes to the emerging agenda of global “subsidy accountability” research by linking oil and gas subsidies to the decline of endangered caribou herds in British Columbia, Canada. While existing research concretely attributes the decline of caribou herds to industrial activity, including oil and gas development, we suggest there is a need to identify the political‐economic structures which drive ongoing industrial development in caribou habitat, including public subsidies. We use government data to map oil and gas wells in critical caribou habitat and determine how many are run by operators receiving provincial fossil fuel “royalty credits”. Ultimately, we find that 1678, or 54%, of oil and gas wells located within critical caribou habitat are run by companies that have received benefits from one or both of BC's largest royalty credit programs. This paper points to the need for further analysis of subsidies as indirect drivers of biodiversity loss on a global scale, as well as increased emphasis on political‐economic drivers in conservation research. It also highlights the obstacles to implementing appropriate conservation solutions in political‐economic contexts dominated by resource extraction.

The Impact of Selected Subsidy Program on Household Poverty in Rural Area in Sabah

This study examined the impact of three different categories of subsidy on poverty in eight rural districts in Sabah in 2009 until 2016. The three categories of subsidy are selected consumer items (sugar, wheat flour, cooking oil-1kg in polybag, and rice), petrol and diesel, and liquefied petroleum gas (LPG) subsidy. Poverty is dependent variable, meanwhile selected consumer items, petrol and diesel, and liquefied petroleum gas (LPG) subsidies are used as independent variables. Random effect is chosen to examine the stationary of the data. From the test it was found that dependent variable has positive relationship with independent variables, which the increasing of subsidies will increase of number of poverty in household. There are many other factors that contribute to the positive relationship between poverty and subsidy. The delivery system of subsidy in rural areas is the main issue in this subsidy program. Leakages and middleman are main issue in the delivery system. Thus, as a recommendation a new approach is needed to make sure this subsidy program is more effective and reach the target group.

Analysis of Criminal Sanctions for Perpetrators of Mixing LPG (Liquified Petroleum Gas)

LPG has long been an alternative to kerosene. One of the objectives of the kerosene to LPG conversion program in 2007 was to supply fuel that is comfortable, clean, and efficient. Despite the government's intention to help the less fortunate with the LPG gas subsidy program, some individuals have used this as an opportunity to abuse it. Not only was the distribution misdirected, but these individuals misused it for personal gain. They deliberately buy as much subsidized LPG gas as possible and then resell it in mixed form by transferring the contents of the 3 kg of subsidized gas into 12 kg of non-subsidized gas cylinders (Irawan, 2020). Based on this description, the author feels the need to conduct an analysis of several articles that discuss criminal sanctions for mixing LPG. The method used in this study is a normative juridical method with a statutory approach that analyzes all articles related to criminal sanctions for mixing LPG (liquefied petroleum gas). Based on the results of the discussion, the act of mixing subsidized LPG gas cylinders into empty cylinders of 12 kg or 50 kg size is very detrimental and can be regarded as a criminal act. So based on Article 62 paragraph 1 of Law Number 8 of 1999 concerning Consumer Protection, which states that traffickers violate the provisions mentioned in Article 8, Article 9, Article 10, Article 13 paragraph (2), Article 15, Article 17 paragraph (1cerning Consumer Protection, which states that traffickers violate the provisions mentioned in Article 8, Article 9, Article 10, Article 13 paragraph (2), Article 15, Article 17 paragraph (1), letter a, letter b, letter c, letter e, paragraph (2), and number 18, the offender can be punished with imprisonment for a maximum of 5 (five) years or a fine of up to Rp. 2,000,000,000.00 (two billion rupiah).

A simulation-based optimization scheme for phase-out of natural gas subsidies considering welfare and economic measures

Energy subsidies are granted by many governments to alleviate energy poverty, support domestic industries, promote economic development, and improve welfare levels. These energy subsidies can lead to overconsumption of energy and an increase in CO2 emissions. Hence, it is crucial to continuously investigate the overall benefits of subsidies compared to their costs and plan for their phase-out if required. The gradual phase-out and the selection of optimal period over which to phase-out subsidies are crucial in minimizing possible adverse impacts. A simulation-based optimization model is developed to find the optimal period for natural gas subsidies removal from multiple consumption sectors. Implementing the model on the case study of Iran illustrates that if the reserved fund saved from subsidies removal is invested in the natural gas industry to promote export, and a part of it is allocated to only vulnerable residential consumers and strategic industries, the aggregate economic, environmental and welfare measures improve significantly. Another finding is that the optimal phase-out periods vary for different sectors and the industrial sector needs a longer phase-out period. The presented model quantifies the advantages of allocating subsidies only to targeted groups instead of subsidies on prices, and analyzes the tradeoffs between economic and welfare criteria.

‘Give It Up!’: A Macro-Social Marketing Approach to India's Clean Cooking Fuel Access

This paper examines how the Government of India (GOI) used macrosocial marketing (MSM) to address the issues of clean cooking fuel accessibility and affordability and structural inequalities in subsidy redistribution. It highlights a novel MSM application to address chrematistics in marketing systems. Two initiatives established by the GOI are examined. “Give It Up” encourages wealthier households to surrender liquid petroleum gas (LPG) subsidies, leaving these to poorer families, and Pradhan Mantri Ujjwala Yojana (PMUY) installs LPG connections for poor, rural women. The research explores how the GOI has addressed economic inefficiencies and structural inequalities, focusing on institutional norms and affordability, accessibility, awareness, and acceptability (the “4As”). The research expands the theoretical boundaries of MSM in relation to poverty and identifies its capacity to affect individual and systemic change through formal and informal institutional changes. Although new institutional norms were adopted, PMUY could not address the ongoing affordability of LPG, despite the changes to LPG subsidies.

Two-level consensus modeling with utility and cost constraints

There exist many two-level group consensus problems with different psychological behaviors of decision makers. To deal with these group consensus problems and reach a stable consensus, based on the principles and methods of grey system, utility theory and group consensus, we use grey utility function to describe and reflect decision makers' opinion preferences in different subgroups and different levels, and then we construct a two-level group consensus method with a moderator, and exploit it to solve the negotiation problems of the natural gas subsidy.

Mega conversion from LPG to induction stove to achieve Indonesia's clean energy transition

The Indonesian government faces an increased burden on the state budget from the energy subsidy, especially from the Liquefied Petroleum Gas (LPG) subsidy for the residential sector. According to the Indonesia 2019 State Budget, the LPG subsidy for 3 kg (kg) cylinders was estimated to cost more than $ 4.9 billion in 2019. On the other hand, Indonesia is in the process to build many new power plants with a total capacity of up to 35,000 MW (megawatt). The added capacity will lead to an excessive power capacity due to the slowdown in economic growth. Therefore, Indonesia's government has launched an induction stove program to convert households to electric cooking to utilize the excess power while reducing the LPG subsidy. However, the literature review regarding the economics and policy of the development of induction stoves in Indonesia's electricity market is still limited. This research provides the economic assessment of induction stoves compared to the utilization of LPG stoves for each electricity and LPG tariff, i.e., subsidy and non-subsidy tariff. This research could also serve as an academic reference for energy sector stakeholders in Indonesia to implement the clean energy policy to shift cooking technology from LPG stoves to induction stoves.

Reforming fossil fuel subsidies requires a new approach to setting international commitments

Reforming fossil fuel subsidies requires a new approach to setting international commitments

Subsidy analysis and development trend forecast of China's unconventional natural gas under the new unconventional gas subsidy policy

In June 2019, China significantly changed its unconventional natural gas subsidy policy, changing the subsidy mode from a comprehensive quota standard mode to a competitive mode, aiming to reduce its subsidy pressure and channel subsidies to specific projects that are needed to increase annual and winter electricity production. Through a brief introduction of China's cleaner energy goals and a comparative analysis of the new and old subsidy policies, the orientations and impacts of the new policy are interpreted. By comparing the changes in subsidy quota, production and price of three kinds of unconventional natural gas (shale gas, tight gas and CBM) over the past ten years, in combination with the generalized Weng model, the impact of subsidy on unconventional natural gas production is quantified. The development trend of unconventional natural gas under the new policy is forecasted on the premise that the total amount of subsidy and sales price remain unchanged.. The sensitivity of three kinds of unconventional natural gas to different subsidies is analyzed. The impact of the new policy on the change in gas production curve is illustrated after comparing the optimal production plans for typical shale gas wells under the new and old policies. The results show that shale gas and CBM may be negatively affected, while the development of tight gas may be promoted; in the future, tight gas and shale gas will dominate, while the development of CBM will be tough. The new policy will stimulate the production enterprises to adopt the plan of high initial production and high decline rate, which may lead to a reduction in total gas production and resources utilization efficiency.

An Analytical Study of Aadhar based Information System via Big Data’s MapReduce Framework

Aadhaar is a 12-digit identification number provided to every Indian individual which also includes children and infants. This is used to identify every Indian individual uniquely. This is issued by UIDAI (The unique Identification Authority of India) for free of cost. This unique identification number carries many wonderful advantages. Firstly, it provides a unique identity to every individual whom everybody can trust, no matter in which state they are, in whole country. This unique number can be used to avail different schemes like Pradhan mantri ujjwala yojna and gas subsidy, to open bank accounts and for other government transactions or benefits. This paper shows the use of Aadhaar data set to answer several queries which can be very useful for the government or the concerned authority in various scenarios. Since the Aadhaar data set of all citizens of Indian is a huge data set, big data with its different methods such as Map and Reduce algorithm is very useful in fetching the required query’s answer in a more efficient and faster way.

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)

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% to offset the costs of the program. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Does natural gas pricing reform establish an effective mechanism in China: A policy evaluation perspective

China's natural gas consumption has grown rapidly over the years, but the price mechanism was distorted by cross-subsidy and price inversion for a long time. In June 2013, nationwide pricing reform was implemented in the non-residential sector. To explore the effect of the reform on price distortion, this paper uses monthly data from 27 key cities to estimate the scale and rate of natural gas price subsidy from 2008 to 2017. The results show that the natural gas subsidy remains a large scale, but varies across sectors. The time interval in the implementation of the policy provides a quasi-natural experiment for studying the reform. The difference-in-difference-in-difference estimations prove that the natural gas pricing reform has significantly eliminated the subsidy rate in the non-residential sector, and an effective terminal pricing mechanism has been conducted. Considering that energy subsidy is a global issue, the experience of the pricing reform in China may be extended to emerging and developing countries.

Shale gas production in China: A regional analysis of subsidies and suggestions for policy

With the increasing dependence on imported natural gas, China has to develop unconventional natural gas resources, such as shale gas. However, the increasing shale gas production has brought about more pressure for governmental subsidies. We analyzed whether shale gas companies need subsidies by calculating the economic value of shale gas development in China from the perspective of enterprises, and estimated the maximum subsidy quota for shale gas development by measuring its economic, environmental, and social benefits from the country's perspective. Based on the principle of beneficiaries should pay, we clarified the sources of shale gas subsidy and calculated the required subsidy duration. The results indicate that some new development target areas and pre-invested target areas still need subsidies, which should be jointly provided by the central government, local finance departments, and other heavy-polluting enterprises. The subsidy duration and subsidy quota show a power function relation. On this basis, we put forward suggestions for shale gas subsidy policy.

Substitution Effect of Natural Gas and the Energy Consumption Structure Transition in China

A crucial problem which China faces is how to improve its energy consumption structure. In this paper, a system dynamic model of energy substitution based on energy capital and putty-clay theory is adopted, in order to explore the substitution effect of natural gas on the energy consumption structure transition in China. The results demonstrate that the huge capital stocks of coal and oil capacities effectively delay the progress of natural gas substitution for optimizing the energy structure, resulting in a limited effect of natural gas substitution in the short term and a large cumulative effect in the long term. Further scenario analyses indicate that natural gas subsidies and carbon price policies have positive effects on the growth of natural gas consumption and the optimization of the energy structure. We also found that a higher pressure of safety supply may emerge to meet the demand for energy consumption in the energy transition. Recommendations are given for improving the energy consumption structure in China from three aspects: allocating capital investment to natural gas, reducing the transition cost between natural gas and other energy sources, and awareness of the systemic risks in energy consumption.

Household heterogeneity impact of removing energy subsidies in China: Direct and indirect effect

Reforming subsidies for fossil fuels is a challenging prospect for many governments. The impact of such a reform on households is a major concern for the government. This paper investigates the heterogeneous impacts of eliminating energy subsidies on households in China from direct and indirect perspectives. The results of the direct effects show that the removal of energy subsidies, particularly for removing electricity and gas subsidies, has a greater negative impact on the poor than on the rich. From an indirect perspective, this article shows that the lower the per capita disposable income, the higher the proportion of consumption to disposable income, and the greater the indirect impact of eliminating subsidies. Meanwhile, the impact is not only related to household income but consumer goods. Moreover, the indirect effects of eliminating subsidies on households differ across energy types. Specifically, eliminating electricity subsidies has the greatest effect on households, followed by transportation fuel and gas. We suggest that targeted supportive measures need to be taken towards the implementation of subsidy reform, particularly in countries with greater inequality, to minimize the negative effects on the poor.