Do higher electricity prices raise firm energy efficiency? Evidence from Georgia’s tariff reform

Watch the recording here:

Presented by Matias Belacin
World Bank

Organized by the Private Sector Development Research Network
hosted by the International Finance Corporation (IFC)

Friday, 6th March 2025 from 9-10am EST
Click here to join virtually the day of the seminar

ABOUT THE SEMINAR

Energy subsidies weaken incentives for firms to conserve electricity and invest in efficiency, which can raise emissions and fiscal costs. Relying on a panel of firms covering the period 2013-2022, we study how Georgian firms adjusted to changes in electricity prices following the electricity tariff reform in January 2021. We find that firms reduce electricity use and improve electricity efficiency after the price increase. Based on our preferred estimates, a 1 percent increase in electricity prices reduces electricity consumption by about 0.74 percent. The reduction in electricity use is primarily explained by higher efficiency. A 1 percent increase in electricity prices is associated with a 0.92 percent rise in electricity efficiency. Remarkably,  we do not detect average employment losses although there is evidence of a reduction if profitability. Our findings underscore the importance of reducing price subsidies to create appropriate incentives for energy efficiency.

ABOUT THE SPEAKER

Matias Belacin (World Bank)

Matias Belacin is a STC and formerly ETC in the Finance, Competitiveness and Investment department for the Europe and Central Asia region. His work focuses on productivity, firm dynamics, international trade, and energy efficiency. Before joining the World Bank, Matias worked at the What Works Centre for Local Economic Growth and the Ministry of Labor and Production of Argentina. Matias holds a Master of Public Policy from the London School of Economics, a M.A. in Economics from the San Andres University and a B.A. from the University of Buenos Aires.