26 de julho de 2012

IEI International Energy Initiative

July, 2012




Best Paper 2011

The International Energy Initiative (IEI) is proud to announce the winner of the 2011 Amulya K.N. Reddy Prize. The winner was selected as the best article accepted for publication in Energy for Sustainable Development (Elsevier) during 2011, on topics/issues that were studied by the late Professor Reddy, co-founder of IEI.

This annual prize is made possible as a result of a generous donation from Professor José Goldemberg.

The winner is Narasimha D. Rao, and the winning paper is:

“Kerosene Subsidies in India: When Energy Policy Fails as Social Policy.” Energy for Sustainable Development 16 (1) (March 2012): 35–43. doi:10.1016/j.esd.2011.12.007.

Opinion of the Prize Committee

This paper analyses three issues that have been of great importance in all Prof. Amulya K.N. Reddy’s energy work: India, poverty and cooking energy. One of Amulya’s last activities was to start a major effort on clean cooking fuels.

The author provides a thorough analysis of kerosene subsidies using primary data collected from urban households in the state of Maharashtra. The paper is well researched and impeccably structured, presenting the recent literature, quantitative data on cooking energy consumption of the population studied, with details that are hard to find in other similar papers from developing countries. His research was able to determine the main drivers for kerosene demand and more importantly how the subsidies to kerosene really reach the target population.

His effort to measure the impact of such public policy showing the distortion of the end-result where only 26% of the amount of subsidy really reach the poor households, the rest being diverted into a black market, certainly have implications for improving public policies. His research method, recommendations for improved policy design, and the topic chosen in our view make the paper a very good example to be followed.

In our view this should be the paper to receive the Amulya K. Reddy Prize.

Best Paper 2011: "Kerosene Subsidies in India: When Energy Policy Fails as Social Policy"


Kerosene subsidies intended for Indian households have been known for their poor targeting and high fiscal costs. However, the distributional benefits to the 160 million households that use kerosene are not well understood. In this paper, the kerosene subsidy is formally assessed as an instrument of income redistribution. The subsidy incidence, progressivity and efficacy of the kerosene subsidy are calculated for the state of Maharashtra, under actual and ideal implementation conditions.

The analysis shows that kerosene subsidies are regressive and of minimal financial value to poor rural households. This is in part because household quotas are based on cooking needs, but kerosene is used predominantly for lighting. In urban areas, subsidies are progressive, and provide benefits of up to 5 to 10% of household expenditure among poorer households which lack affordable access to LPG and biomass. Overall, only 26% of the total subsidy value directly reaches households. This analysis suggests that subsidies targeted only to kerosene-dependent urban areas would have a higher efficacy than broad-based subsidies.

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