How a government or business deals with the physical property used for work
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Energy policy is the manner in which a given entity (often governmental) has decided to address issues of energy development including energy conversion, distribution and use as well as reduction of greenhouse gas emissions in order to contribute to climate change mitigation. The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques. Energy is a core component of modern economies. A functioning economy requires not only labor and capital but also energy, for manufacturing processes, transportation, communication, agriculture, and more. Energy planning is more detailed than energy policy.
Access to energy is critical for basic social needs, such as lighting, heating, cooking, and healthcare. Given the importance of energy, the price of energy has a direct effect on jobs, economic productivity, business competitiveness, and the cost of goods and services.
Frequently the dominant issue of energy policy is the risk of supply-demand mismatch (see: energy crisis). Current energy policies also address environmental issues (see: climate change), particularly challenging because of the need to reconcile global objectives and international rules with domestic needs and laws.[2]
The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques.
Economic and energy modelling can be used by governmental or inter-governmental bodies as an advisory and analysis tool (see: economic model, POLES).
Policy contexts
National energy policy
Some governments state an explicit energy policy. Others do not but in any case, each government practices some type of energy policy.
Measures used to produce an energy policy
USAID's Mission Director to Pakistan, John Groarke in a group photo with the live-line trainers for Energy Policy Program - September, 2015.
A national energy policy comprises a set of measures involving that country's laws, treaties and agency directives. The energy policy of a sovereign nation may include one or more of the following measures:
statement of national policy regarding energy planning, energy generation, transmission and usage
legislation on commercial energy activities (trading, transport, storage, etc.)
instructions for state-owned energy sector assets and organizations
active participation in, co-ordination of and incentives for mineral fuels exploration (see geological survey) and other energy-related research and development policy command
international energy sector treaties and alliances,
general international trade agreements,
special relations with energy-rich countries, including military presence and/or domination.
Factors within an energy policy
There are a number of elements that are naturally contained in a national energy policy, regardless of which of the above measures was used to arrive at the resultant policy. The chief elements intrinsic to an energy policy are:[5]
What is the extent of energy self-sufficiency for this nation
Where future energy sources will derive
How future energy will be consumed (e.g. among sectors)
What fraction of the population will be acceptable to endure energy poverty
What are the goals for future energy intensity, ratio of energy consumed to GDP
What is the reliability standard for distribution reliability
What environmental externalities are acceptable and are forecast
What form of "portable energy" is forecast (e.g. sources of fuel for motor vehicles)
How will energy efficient hardware (e.g. hybrid vehicles, household appliances) be encouraged
How can the national policy drive province, state and municipal functions
What specific mechanisms (e.g. taxes, incentives, manufacturing standards) are in place to implement the total policy
Energy policy sometimes dominates and sometimes is dominated by other government policies. For example energy policy may dominate, supplying free coal to poor families and schools thus supporting social policy,[6] but thus causing air pollution and so impeding heath policy and environmental policy.[7]: 13 On the other hand energy policy may be dominated by defense policy, for example some counties started building expensive nuclear power plants to supply material for bombs.[8] Or defense policy may be dominated for a while, eventually resulting in stranded assets, such as Nord Stream 2.
Energy policy decisions are sometimes not taken democratically.[9]
Corporate energy policy
In 2019, some companies “have committed to set climate targets across their operations and value chains aligned with limiting global temperature rise to 1.5°C above pre-industrial levels and reaching net-zero emissions by no later than 2050”.[10] Corporate power purchase agreements can kickstart renewable energy projects,[11] but the energy policies of some countries do not allow or discourage them.[12]
Public policy has a role to play in renewable energy commercialization because the free market system has some fundamental limitations. As the Stern Review points out: "In a liberalised energy market, investors, operators and consumers should face the full cost of their decisions. But this is not the case in many economies or energy sectors. Many policies distort the market in favour of existing fossil fuel technologies."[13] The International Solar Energy Society has stated that "historical incentives for the conventional energy resources continue even today to bias markets by burying many of the real societal costs of their use".[14]
Fossil-fuel energy systems have different production, transmission, and end-use costs and characteristics than do renewable energy systems, and new promotional policies are needed to ensure that renewable systems develop as quickly and broadly as is socially desirable.[15]Lester Brown states that the market "does not incorporate the indirect costs of providing goods or services into prices, it does not value nature's services adequately, and it does not respect the sustainable-yield thresholds of natural systems".[16] It also favors the near term over the long term, thereby showing limited concern for future generations.[16] Tax and subsidy shifting can help overcome these problems,[17] though is also problematic to combine different international normative regimes regulating this issue.[18]
By country
Energy policies vary by country, see tables below.
Ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese government since 1949.[19] The country is the world's largest emitter of greenhouse gases, and coal in China is a major cause of global warming.[20] However, from 2010 to 2015 China reduced energy consumption per unit of GDP by 18%, and CO2 emissions per unit of GDP by 20%.[21] On a per-capita basis, it was the world's 51st largest emitter of greenhouse gases in 2016.[22]China is also the world's largest renewable energy producer.[23] China is the largest producer of hydroelectricity, solar power and wind power in the world. The energy policy of China is connected to its industrial policy. The goals of China's industrial policy dictate its energy needs.[24]
Although the European Union has legislated, set targets, and negotiated internationally in the area of energy policy for many years, and evolved out of the European Coal and Steel Community, the concept of introducing a mandatory common European Union energy policy was only approved at the meeting of the European Council on October 27, 2005 in London. Following this the first policy proposals, Energy for a Changing World, were published by the European Commission, on January 10, 2007. The most well known energy policy objectives in the EU are 20/20/20 objectives, binding for all EU Member States. The EU is planning to increase the share of renewable energy in its final energy use to 20%, reduce greenhouse gases by 20% and increase energy efficiency by 20%.[33]
Russia
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Russia's energy policy which is set out in the government's Energy Strategy document, first approved in 2000, which sets out the government's policy to 2020 (later prolonged up to 2030). The Energy Strategy outlines several key priorities: an increase in energy efficiency, reducing the impact on the environment, sustainable development, energy development and technological development, as well as improved effectiveness and competitiveness. Greenhouse gas emissions by Russia are large because of its energy policy.[34] Russia, one of the world's energy superpowers, is rich in natural energy resources, the world's leading net energy exporter, and a major supplier to the European Union. While Russia has also signed and ratified the Kyoto Protocol numerous scholars note that Russia uses its energy exports as a foreign policy instrument towards other countries.[35][36]
United Kingdom
This article needs to be updated. Please help update this article to reflect recent events or newly available information. (October 2016)
The energy policy of the United Kingdom refers to the United Kingdom's efforts towards reducing energy intensity, reducing energy poverty, and maintaining energy supply reliability. The United Kingdom has had success in this, though energy intensity remains high. There is an ambitious goal to reduce carbon dioxide emissions in future years, but it is unclear whether the programmes in place are sufficient to achieve this objective.[citation needed] Regarding energy self-sufficiency, UK policy does not address this issue, other than to concede historic energy security is currently ceasing to exist (due to the decline of North Sea oil production).[citation needed]
United States
The energy policy of the United States is determined by federal, state, and local entities. It addresses issues of energy production, distribution, consumption, and modes of use, such as building codes, mileage standards, and commuting policies. Energy policy may be addressed via include legislation, regulation, court decisions, public participation, and other techniques.
Federal energy policy acts were passed in 1974, 1992, 2005, 2007, 2008, 2009,[37] 2021, and 2022, although energy-related policies have appeared in many other bills. State and local energy policies typically relate to efficiency standards and/or transportation.[38]
^Farah, Paolo Davide; Rossi, Piercarlo (December 2, 2011). "National Energy Policies and Energy Security in the Context of Climate Change and Global Environmental Risks: A Theoretical Framework for Reconciling Domestic and International Law Through a Multiscalar and Multilevel Approach". European Energy and Environmental Law Review. 2 (6): 232–244. SSRN1970698.
^Robert C. Armstrong, Catherine Wolfram, Robert Gross, Nathan S. Lewis, and M.V. Ramana et al., "The Frontiers of Energy", Nature Energy, Vol 1, 11 January 2016.
^Hamilton, Michael S. 2013. Energy Policy Analysis: A Conceptual Framework. Armonk, NY: M.E. Sharpe, Inc.
^Farah, Paolo Davide; Cima, Elena (2013). "Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel". Journal of International Economic Law (JIEL), Georgetown University Law Center. 4. SSRN2330416.
^Obrecht, Matevz; Denac, Matjaz (2013). "A sustainable energy policy for Slovenia : considering the potential of renewables and investment costs". Journal of Renewable and Sustainable Energy. 5 (3): 032301. doi:10.1063/1.4811283.
