The evolution and implications of national energy cost shares

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

Energy Economics, 2025, vol. 148, issue C

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 from 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 adapt to higher energy prices 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 can help in facilitating the adjustment avoiding an excessive increase in energy cost share.

Keywords: Energy cost share; Energy income share; Energy subsidies; Energy Intensity; Energy price elasticity; Energy efficiency; carbon price (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325004438

DOI: 10.1016/j.eneco.2025.108616

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