Work

The evolution and implications of national energy cost shares

Year: 2025

Type: article

Abstract: Energy cost share is a key indicator to assess the importance of energy in an economy, to highlight the potential exposure of energy-importing countries to international price shocks, and to understand the implications for the national economy of introducing carbon pricing or energy subsidies reforms. We construct a global dataset to study the evolution of national energy cost shares over time and their relationship with energy prices. On these data we estimate a theoretically grounded econometric model and we obtain a wide set of findings that have important implications for policy. The main findings are that economies have a strong capacity to respond to higher energy prices also through technological innovation, but the time for this adjustment can be very long; the ability to reduce energy intensity in response to higher energy prices has improved over time; both energy efficiency policies and certain macroeconomic characteristics of the country can help in facilitating the adjustment avoiding an excessive increase in energy cost share.

Source: Energy Economics

DOI: 10.1016/j.eneco.2025.108616

Authors: Paolo Agnolucci, Vincenzo De Lipsis, Defne Gencer, Abraham Lartey, Michael Grubb

Institutions: World Bank, University College London, University of Southampton, University of London, SOAS University of London

Language: English

Topic: Energy, Environment, and Transportation Policies

Subfield: Renewable Energy, Sustainability and the Environment

Field: Energy

Domain: Physical Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $4,280