Energy Price Reform: A Guide for Policymakers

28 Pages Posted: 15 Mar 2017

See all articles by David P. Coady

David P. Coady

International Monetary Fund (IMF)

Ian Parry

International Monetary Fund (IMF)

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: February 21, 2017

Abstract

This essay reviews the conceptual and quantitative literature on the efficient system of fossil fuel energy prices in different countries for reflecting supply and environmental costs, as well as the environmental, fiscal, and economic benefits from energy price reform. Drawing on recent experiences in numerous countries, the ingredients for successful reform are then discussed (e.g., the need for a comprehensive reform strategy and for compensating vulnerable groups). Low energy prices, fiscal pressures, and momentum for climate action provide an especially conducive environment for price reform and much is happening rapidly on the ground, however there is a long way to go to reap the enormous benefits at stake (e.g., at the global level, over a 20 percent reduction in carbon emissions and revenues gains of 4 percent of GDP).

Keywords: energy price reform, efficient taxation, environmental externalities, reform experiences

JEL Classification: Q310, Q350, Q380

Suggested Citation

Coady, David P. and Parry, Ian and Shang, Baoping, Energy Price Reform: A Guide for Policymakers (February 21, 2017). CESifo Working Paper Series No. 6342. Available at SSRN: https://ssrn.com/abstract=2932762

David P. Coady

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Ian Parry (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Baoping Shang

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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