Impacts of energy subsidy reforms on the industrial energy structures in the Malaysian economy

A computable general equilibrium approach

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

The objective of this study is to analyze the effects of fuel subsidy removal on the industrial energy structures, which are crude oil, natural gas and coal, electricity and gas and petroleum products. A computable general equilibrium model and social accounting matrix for the Malaysian economy in 2005 are employed. Simulations based on different groups of scenarios (removing fuel subsidies, energy tax subsidies and both fuel subsidies and energy tax subsidies) were developed. The results showed that the fuel and tax subsidy reform policy had a stronger effect on energy consumption structures, which successfully reduced total energy consumption by 3.56%. This meant that removing fuel and tax subsidies could increase the potential energy savings by 1286.35 ktoe. On the other hand, the higher fossil fuel price due to the subsidy removal encouraged the utilization of alternative energy, and consequently reduce dependency on fossil fuel. The energy subsidy reform policy not only significantly reduced the amount of the fossil fuel consumption, but simultaneously improved the real gross domestic product and fiscal deficit in the government’s budget. Importantly, the study concluded that the energy subsidy reform policy was found to be an efficient policy mechanism that supported the National Energy Efficiency Master Plan for 2010, as well as supported utilization of “fifth fuel” policy under the Malaysian Fuel Diversification Policy.

Original languageEnglish
Pages (from-to)88-97
Number of pages10
JournalInternational Journal of Energy Economics and Policy
Volume6
Issue number1
Publication statusPublished - 01 Jan 2016

Fingerprint

Taxation
Fossil fuels
Energy utilization
Petroleum products
Potential energy
Energy
Computable general equilibrium
Subsidies
Fuel consumption
Energy efficiency
Natural gas
Energy conservation
Electricity
Crude oil
Coal
Tax subsidies
Gases
Policy reform
Energy consumption
Energy tax

All Science Journal Classification (ASJC) codes

  • Energy(all)
  • Economics, Econometrics and Finance(all)

Cite this

@article{0f412110daf447fc927ef2f938f9e98f,
title = "Impacts of energy subsidy reforms on the industrial energy structures in the Malaysian economy: A computable general equilibrium approach",
abstract = "The objective of this study is to analyze the effects of fuel subsidy removal on the industrial energy structures, which are crude oil, natural gas and coal, electricity and gas and petroleum products. A computable general equilibrium model and social accounting matrix for the Malaysian economy in 2005 are employed. Simulations based on different groups of scenarios (removing fuel subsidies, energy tax subsidies and both fuel subsidies and energy tax subsidies) were developed. The results showed that the fuel and tax subsidy reform policy had a stronger effect on energy consumption structures, which successfully reduced total energy consumption by 3.56{\%}. This meant that removing fuel and tax subsidies could increase the potential energy savings by 1286.35 ktoe. On the other hand, the higher fossil fuel price due to the subsidy removal encouraged the utilization of alternative energy, and consequently reduce dependency on fossil fuel. The energy subsidy reform policy not only significantly reduced the amount of the fossil fuel consumption, but simultaneously improved the real gross domestic product and fiscal deficit in the government’s budget. Importantly, the study concluded that the energy subsidy reform policy was found to be an efficient policy mechanism that supported the National Energy Efficiency Master Plan for 2010, as well as supported utilization of “fifth fuel” policy under the Malaysian Fuel Diversification Policy.",
author = "{Mohamed Yusop}, {Nora Yusma} and {A. Bekhet}, Hussain",
year = "2016",
month = "1",
day = "1",
language = "English",
volume = "6",
pages = "88--97",
journal = "International Journal of Energy Economics and Policy",
issn = "2146-4553",
publisher = "EconJournals",
number = "1",

}

TY - JOUR

T1 - Impacts of energy subsidy reforms on the industrial energy structures in the Malaysian economy

T2 - A computable general equilibrium approach

AU - Mohamed Yusop, Nora Yusma

AU - A. Bekhet, Hussain

PY - 2016/1/1

Y1 - 2016/1/1

N2 - The objective of this study is to analyze the effects of fuel subsidy removal on the industrial energy structures, which are crude oil, natural gas and coal, electricity and gas and petroleum products. A computable general equilibrium model and social accounting matrix for the Malaysian economy in 2005 are employed. Simulations based on different groups of scenarios (removing fuel subsidies, energy tax subsidies and both fuel subsidies and energy tax subsidies) were developed. The results showed that the fuel and tax subsidy reform policy had a stronger effect on energy consumption structures, which successfully reduced total energy consumption by 3.56%. This meant that removing fuel and tax subsidies could increase the potential energy savings by 1286.35 ktoe. On the other hand, the higher fossil fuel price due to the subsidy removal encouraged the utilization of alternative energy, and consequently reduce dependency on fossil fuel. The energy subsidy reform policy not only significantly reduced the amount of the fossil fuel consumption, but simultaneously improved the real gross domestic product and fiscal deficit in the government’s budget. Importantly, the study concluded that the energy subsidy reform policy was found to be an efficient policy mechanism that supported the National Energy Efficiency Master Plan for 2010, as well as supported utilization of “fifth fuel” policy under the Malaysian Fuel Diversification Policy.

AB - The objective of this study is to analyze the effects of fuel subsidy removal on the industrial energy structures, which are crude oil, natural gas and coal, electricity and gas and petroleum products. A computable general equilibrium model and social accounting matrix for the Malaysian economy in 2005 are employed. Simulations based on different groups of scenarios (removing fuel subsidies, energy tax subsidies and both fuel subsidies and energy tax subsidies) were developed. The results showed that the fuel and tax subsidy reform policy had a stronger effect on energy consumption structures, which successfully reduced total energy consumption by 3.56%. This meant that removing fuel and tax subsidies could increase the potential energy savings by 1286.35 ktoe. On the other hand, the higher fossil fuel price due to the subsidy removal encouraged the utilization of alternative energy, and consequently reduce dependency on fossil fuel. The energy subsidy reform policy not only significantly reduced the amount of the fossil fuel consumption, but simultaneously improved the real gross domestic product and fiscal deficit in the government’s budget. Importantly, the study concluded that the energy subsidy reform policy was found to be an efficient policy mechanism that supported the National Energy Efficiency Master Plan for 2010, as well as supported utilization of “fifth fuel” policy under the Malaysian Fuel Diversification Policy.

UR - http://www.scopus.com/inward/record.url?scp=84954563282&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84954563282&partnerID=8YFLogxK

M3 - Article

VL - 6

SP - 88

EP - 97

JO - International Journal of Energy Economics and Policy

JF - International Journal of Energy Economics and Policy

SN - 2146-4553

IS - 1

ER -