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The Role of Taxes and Subsidies in the Clean Cooking Transition: A Review…
The Role of Taxes and Subsidies in the Clean Cooking Transition: A Review of Relevant Theoretical and Empirical Insights
Introduction
SDG for clean cooking- United Nations Sustainable Development Goal (SDG) 7.1 aims to ensure universal access to affordable, reliable, and modern energy services by 2030.
The brief discusses the role of subsidy and tax policies—levied on both the supply and demand side of this market—in affecting progress toward universal access to clean cooking in LMICs.
It regards cost barriers as the most significant challenge against the adoption of clean cooking fuels/technology in LMICs.The brief focuses on stove and fuel price policies, which affect improved cooking technology's affordability.
Two strategies discussed in the brief for overcoming the affordability challenges by countries are as follows:
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Subsidizing LPG: Indonesia, India, Ecuador and Peru
Arguments for price interventions aimed at altering households’ use of improved efficiency cooking stoves and clean fuels
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2nd- It is based on the need to overcome the significant affordability challenges that reduce willingness to pay for clean solutions, especially among the poor.
When taxing polluting stoves is impractical, providing subsidies for efficient stoves is an alternative. This encourages households to adopt cleaner options, leading to positive societal benefits. Taxing improved stoves exacerbates market inefficiency, hampering their adoption further.
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