亚开行-化石燃料补贴与温室气体排放：来自亚洲发展中国家的企业级经验证据（英）-2023.12-24页_977kb

Summary of "Fossil Fuel Subsidies and GHG Emissions: Firm-Level Empirical Evidence from Developing Asia"

Authors: Dina Azhgaliyeva and Hai Le
Working Paper Number: 1424
Date: December 2023
Institution: Asian Development Bank Institute (ADBI)

Abstract

This study investigates the impact of fossil fuel subsidies on firms' greenhouse gas (GHG) emissions across seven developing Asian countries: China, India, Indonesia, Malaysia, Pakistan, Thailand, and Vietnam. Using a dataset of 3,359 firms from 2010-2021, the research demonstrates that fossil fuel subsidies increase both absolute GHG emissions and emission intensity, with oil subsidies having the most significant effect due to higher emissions per unit of energy consumed. The findings show heterogeneity: subsidies positively affect emissions in Southeast Asia but not in China or South Asia; they also indirectly impact low-energy consumption sectors due to limited low-carbon substitutes. Policy recommendations emphasize phased removal of subsidies, coupled with targeted support and complementary policies to facilitate emission reductions.

Introduction

The study addresses G7 and G20 commitments to phase out fossil fuel subsidies, which are criticized for contributing to climate change by reducing energy costs and disincentivizing low-carbon alternatives. Drawing on substantial empirical evidence from developing Asia, it highlights the environmental consequences and policy challenges, noting that subsidy reforms alone may not ensure emission reductions due to economic and technological barriers.

Methodology

The analysis utilizes firm-level data from seven countries, measuring emissions and subsidies at both absolute and intensity levels. Key variables include subsidies per unit of energy or as a share of GDP, along with control variables for firm characteristics. Econometric models employ fixed-effects regressions to assess the relationship between subsidies and emissions, accounting for lags and robustness checks for accuracy.

Results

Fossil fuel subsidies consistently increase GHG emissions and intensity, with crude oil subsidies exerting the strongest influence due to higher GHG emissions per energy unit compared to gas and electricity. Heterogeneous effects are observed across regions (notably in Southeast Asia) and sectors (low-energy consumption sectors respond more sensitively), attributed to limited low-carbon alternatives and non-energy emissions. Subsidy reductions did not show significant emission decreases in all regions, underscoring the need for integrated policies.

Policy Implications

Policy recommendations include phasing out fossil fuel subsidies gradually, prioritizing crude oil subsidy reductions for maximum emission impact, and replacing them with targeted support for clean energy adoption. Governments should address energy poverty and public resistance through education and efficient transition plans, but additional research is needed for low-carbon technologies. Limitations include reliance on country-level subsidy data and potential data inaccuracies.

Limitations

The study's data on subsidies are country-level, with no firm-specific information, limiting precise attribution. Additionally, measurement methods may introduce biases, and findings may not fully account for rapid changes in energy markets or technological advancements.