Subsidizing lower gas consumption

1) Why is all of the policy discussion in Europe focused on subsidizing consumption of gas rather than on subsidizing the reduction in consumption of gas. The latter approach is consistent with the German/European policy of moving to greater reliance on renewable energy. Subsidizing reduction in consumption also reduces the risk of shortages if the Northern winter is severe. The policy is straightforward to implement for households but is a little more difficult for to implement for businesses as some may profitably choose to reduce employment and or output which would be politically difficult. However, this problem can be remedied with he combination of, for example, an employment subsidy together with the subsidy paid for reduced use of gas.

That is from my email, from economist Don Harding.


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