Energy Subsidies and Sustainability: A Comparative Analysis of India and China

Purpose: Energy subsidies significantly impact a nation's energy landscape, with the potential to enhance energy access, affordability, and security. However, when these subsidies are directed at fossil fuels, they can disrupt markets and impede sustainability goals. This paper's primary purpose is to compare energy subsidies in India and China, two rapidly growing and densely populated economies. It seeks to comprehend how these subsidies influence their respective energy sectors, economic trajectories, and sustainability objectives. Methods: The study employs a policy and economic perspective, relying on a combination of data analysis, case studies, and policy evaluations. This methodological approach allows us to investigate the operation and objectives of energy subsidy programs in India and China. Results and Conclusion: In this comparative analysis, we find that India and China share common policy goals related to energy access, affordability, security, and sustainability. However, their approaches differ significantly. India places a strong emphasis on cleaner cooking fuels, while China prioritizes market-based pricing and leadership in adopting renewable energy sources. Despite these variations, both countries grapple with fiscal burdens, market distortions, and environmental challenges due to subsidies for fossil fuels. Policy Implications: Based on the study's findings, a series of policy recommendations emerge. These include the need to refine subsidy targeting, expedite the adoption of clean energy sources, encourage market-driven pricing mechanisms, enhance environmental regulations, and continue playing active roles in international climate negotiations. Furthermore, there is a pressing necessity to reevaluate and adjust energy subsidies to ensure their alignment with broader sustainable development goals.