This is the second edition of the India Fossil-Fuel Subsidy Review, a biannual publication of the International Institute for Sustainable Development’s (IISD) Global Subsidies Initiative. Part One of this edition outlines economic and policy developments affecting key fuels (diesel, liquefied petroleum gas, kerosene and natural gas), and analyzes the dynamics of each market. Part Two features analysis by guest authors on issues related to energy subsidy policy reform. Also in this edition, articles examine potential reform paths for India’s LPG subsidy system, and lessons from a pilot program for electronic transfer of kerosene subsidies.
This research investigates the profitability of biofuels production in Africa, taking Ethiopia as a case in point, and suggests an oil price threshold beyond which biofuel may be profitable. Specifically, the study analyzes the viability of bioethanol from molasses and biodiesel from other feedstock in the context of Ethiopia, using data from a biofuels investment survey by EEPFE/EDRI in 2010, and makes estimates based on field visits.
This discussion paper hypothesizes that these findings were at least partly driven by the tendency of FSC certification to attract already- sustainably managed forests and by the governance challenges of community forestry in developing countries. One implication is that policymakers using FSC certification to generate environmental benefits may want to target forests with less-than-stellar management—particularly in the case of reduced emissions from deforestation and degradation (REDD) initiatives that emphasize improvement beyond business-as-usual—and to build the community and legal institutions needed for sustainable forestry.
Because the effectiveness of payment for ecosystem services (PES) programs depends on landowners’ engagement, understanding the relationship between the type of payment and participation is a key issue. This paper reports on a choice experiment that quantifies landowners’ preferences for cash and educational in-kind payment. The main results indicate a positive correlation between participation in a PES contract and the magnitude of the cash payment, while participation seems uncorrelated with the magnitude of the educational in-kind payment. In addition, we investigate the mix of payment types and heterogeneity in preferences, which can help policymakers design strategies to increase participation.
One method to reduce greenhouse gas emissions is to subsidize emissions-reducing activities. The question is how to allocate such subsidies. Allocation through auctions is an emerging mechanism. In a controlled experimental market setting, this paper compares the effects of a variety of auction mechanisms for allocating subsidies for carbon emissions reduction in China. Besides the conventional auction mechanisms, this discussion paper place particular focus on testing the actual performance of the auction mechanism proposed by Erik Maskin (2011). The authors find that, while the Maskin auction mechanism spends the most from a fixed subsidy budget and leads to the largest emissions reduction, its per-unit emissions reduction cost is higher than that of discriminatory and uniform-price auction mechanisms. Both the Maskin and uniform-price auctions outperform discriminatory auctions in price discovery. Furthermore, from the government’s perspective, the Maskin auctions exhibit the strongest improvement tendency with repeated auctions.