Page 5 - AsiaElec Week 10 2023

AsiaElec COMMENTARY AsiaElec

they were still a significant drain on fiscal businesses and industrial consumers. In India,
resources, with over $500bn in extra spending the Pradhan Mantri Ujjwala Yojana subsidy
committed to reducing energy bills in 2022. scheme, which supports access to liquefied petro-
The IEA logged various ways of fixing prices leum gas (LPG) for the poorest segments of the
or capping price increases. population, saw its cost reach $820mn.
The Peruvian government decided in April In Germany, the government implemented
2022 to temporarily include a number of trans- several additional payments to help vulnerable
port fuels in the State Fuel Price Stabilisation communities pay their heating bills (households
Fund to reduce the rise in prices. Thailand on housing benefits, apprentices and students
introduced a diesel price cap of THB30 ($0.85) with student loans). In South Korea, vouchers for
per litre. energy expenses – including electricity, gas, LPG
El Salvador introduced price caps for gas- and heating – were provided to around 1.2mn
oline and diesel products. Egypt extended the vulnerable households in 2022, and the voucher
period for subsidising electricity, while it had amounts were raised twice during the year.
previously been planning to stop doing so by Phasing out fossil fuel subsidies is crucial for
the end of the fiscal year 2021-2022. a successful clean energy transition, as empha-
France enacted a ‘tariff shield’ that ini- sised in the Glasgow Climate Pact, stressed the
tially froze electricity and gas retail tariffs for IEA. However, the current global energy crisis
households and then limited the possibility for highlights the political challenges involved in
increases in price. doing so.
Exemptions from various taxes and levies Although high and volatile fossil fuel prices
were common. The South African govern- emphasise the unsustainability of the current
ment froze the general fuel levy on petrol and energy system and underscore the benefits of
diesel from February 2022, and reduced it by energy transitions, the volatility comes with sig-
ZAR1.50 ($0.9) per litre from April to June nificant economic and social costs. High fossil
2022. fuel prices hit the poor the hardest, but subsidies
Guyana removed the excise tax on gasoline tend to benefit the better-off, making effective
and diesel in March. The United Kingdom cut targeting essential.
fuel duty, and Belgium reduced the VAT on Well-designed policies should prevent fuel
electricity bills from 21% to 6%. supply from getting too far out of step with
demand, with resources deployed to provide
Policy solutions lasting protection against volatile fuel prices.
Easing payment terms or banning disconnec- This means anchoring market-based prices in a
tions were also in evidence. Japan eased gas and broader suite of policies and measures that ena-
electricity payment terms for those struggling ble households and industries to make cleaner
to pay. In Spain, a “vital minimum supply” obli- energy choices. High-efficiency and low-emis-
gation for utilities was enacted from September sions equipment and services must be readily
2021, ensuring vulnerable households unable to available, and poorer consumers need support to
pay their electricity bills would still get supplied manage their upfront costs.
for a period of 10 months. Governments should focus on structural
In some countries, compensation mecha- changes that reduce fossil fuel demand, rather
nisms have been adopted for different affected than emergency relief when fuel prices rise, con-
groups of consumers, including households, cluded the IEA™

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