Cross-Country Analysis of Energy Subsidies Efficiency

Abstract

The subject of the research is energy subsidies of states for fossil fuels that remain high, which constitutes according to IMF 6.5% of the world GDP and is used by many states as an important instrument for agriculture and industry development, for job creation, as well as for energy safeguarding. However, energy subsidies often cause energy overconsumption, natural resources exhaustion acceleration and decrease stimuli for investments into green power engineering and renewable energy, which resulted in the 2009 agreement of G20 countries to start stage-by stage reducing fossil fuels subsidies.The purpose of the article is developing a model for quantitative assessment of oil extraction public support. On the basis of the empirical model developed, a cross-country analysis of comparative oil extraction public support efficiency in five countries (three of them developed economies: the USA, Canada, Norway; two countries with developing economies and emerging markets: Brazil, Russia) in 2000–2017 using analysis of the functioning surroundings Data Envelopment Analysis (DEA) that allows to uncover not only technical, but also cost effectiveness of budgetary oil extraction support. The data for the empirical model are selected from the statistical database of OECD.The results obtained demonstrate that the intensifying of oil and gas sector development practically does not correlate with public policy actions in Russia, and urgent measures to eliminate ineffective energy subsidies are necessary.