This report summarises the main findings of the analysis of existing fossil-fuel subsidy schemes in the six European Union’s Eastern Partner (EaP) countries – Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova and Ukraine. It briefly introduces the methodology used to identify and estimate government support for fossil-fuel production and consumption. It also discusses the main energy pricing and taxation policies that underline discussion on government support in the region’s energy sector.

It is now well-documented that subsidies to fossil-fuel production and consumption distort costs and prices and lead to inefficiencies in the economy. In addition, the combustion of fossil fuels results in high levels of CO2 and other greenhouse gas (GHG) emissions, as well as air pollution and related health problems. These can inflict a high cost on society.

This chapter introduces some of the main issues that frame the analysis of and the debate on fossil-fuel subsidies and their reforms. It examines the need to monitor and measure fossil-fuel subsidies, including the difficulty of removing them once they are in place. Subsequently, it looks at drivers of fossil-fuel subsidy reform, including international frameworks such as the Sustainable Development Goals, the Paris Summit on Climate Change and the European Green Deal. Next, it discusses two complementary databases developed by the OECD and IEA to track government support to fossil-fuel production and consumption. The chapter ends with reflections on the COVID-19 crisis and its impact on energy markets and fossil-fuel subsidies.

This chapter summarises the main findings of the analysis of fossil-fuel subsidy schemes in the European Union’s six Eastern Partner (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova and Ukraine). It introduces the methodology used to identify and estimate government support for fossil-fuel production and consumption. It also discusses some of the major fossil-fuel subsidy reforms that have been implemented in the EaP region since the first assessment of energy subsidies by the OECD. The chapter ends with the short-term responses of the EaP governments to the COVID-19 crisis in the energy sector and their possible impact on the evolution of fossil-fuel subsidies.

This chapter focuses on the main energy pricing and energy taxation policies in the six European Union’s Eastern Partner (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova and Ukraine) with direct or indirect impact on the evolution of fossil-fuel subsidies. It also reviews the main macroeconomic trends that characterise the economies of these countries in light of the most recent developments caused by the COVID-19 crisis. Finally, it discusses the energy mix and energy productivity of the EaP economies, as well as recent changes in the energy pricing and taxation policies and their significance for the reforms of fossil-fuel subsidies.