Energy policy

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.

For the academic journal, see Energy Policy (journal).
Example of energy policy decisions: The goal of the Southern Gas Corridor, which connects the giant Shah Deniz gas field in Azerbaijan to Europe, is to reduce Europe's dependency on Russian gas.

Energy policy is closely related to climate change policy because totalled worldwide the energy sector emits more greenhouse gas than other sectors.[1]

Purposes

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 "human dimensions" of energy use are of increasing interest to business, utilities, and policymakers. Using the social sciences to gain insights into energy consumer behavior can help policymakers to make better decisions about broad-based climate and energy options.[3] This could facilitate more efficient energy use, renewable-energy commercialization, and carbon-emission reductions.[4]

Approaches
See also: Sustainable energy § Government policies

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.

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. 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.)
  • legislation affecting energy use, such as efficiency standards, emission standards
  • 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
  • fiscal policies related to energy products and services (taxes, exemptions, subsidies, etc.)
  • energy security and international policy measures such as:
    • international energy sector treaties and alliances,
    • general international trade agreements,
    • special relations with energy-rich countries, including military presence and/or domination.

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
  • Do you want to develop and promote a plan for how to get the world to zero CO2 emissions?
  • What future consequences there will be for national security and foreign policy

Relationship to other government policies
Further information: climate change policy and environmental 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 is closely related to climate change policy because totalled worldwide the energy sector emits more greenhouse gas than other sectors.[1]

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]

By type of energy

Nuclear energy
This section is an excerpt from Nuclear energy policy.[edit]
Nuclear energy policy is a national and international policy concerning some or all aspects of nuclear energy and the nuclear fuel cycle, such as uranium mining, ore concentration, conversion, enrichment for nuclear fuel, generating electricity by nuclear power, storing and reprocessing spent nuclear fuel, and disposal of radioactive waste. Nuclear energy policies often include the regulation of energy use and standards relating to the nuclear fuel cycle. Other measures include efficiency standards, safety regulations, emission standards, fiscal policies, and legislation on energy trading, transport of nuclear waste and contaminated materials, and their storage. Governments might subsidize nuclear energy and arrange international treaties and trade agreements about the import and export of nuclear technology, electricity, nuclear waste, and uranium.

Renewable energy
This section is an excerpt from Renewable energy commercialization § Public policy landscape.[edit]

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.

Examples

China
This section is an excerpt from Energy policy of China.[edit]
Ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese Government since the founding of People's Republic of China in 1949.[19] Since the country's industrialization in the 1960s, China is currently 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 only the world's 51st largest emitter of greenhouse gases in 2016.[22] China is also the world's largest renewable energy producer (see this article),[23] and the largest producer of hydroelectricity, solar power and wind power in the world. The energy policy of China is connected to its industrial policy, where the goals of China's industrial production dictate its energy demand managements.[24]   

India
This section is an excerpt from Energy policy of India.[edit]
The energy policy of India is to increase the locally produced energy in India and reduce energy poverty,[25] with more focus on developing alternative sources of energy, particularly nuclear, solar and wind energy.[26][27] Net energy import dependency was 40.9% in 2021-22.[28]

Ecuador
This section is an excerpt from Energy policy of Ecuador.[edit]
Energy policy in Ecuador is driven by its need for energy security as a developing country as well as its conservation efforts.[29] Despite past and ongoing attempts to take charge in energy sustainability (as with the now defunct Yasuni-ITT initiative), oil production and exportation still supports its small $5,853 GDP/capita economy at an average of 549,000 barrels/day in 2016.[30] The push and pull between energy independence/nationalism and appeasement of conservationist groups (representing the concerns of environmentalists and indigenous groups) has been evident in the country’s shifting stance on renewable energies and fossil fuels.[29]

European Union
Russia was a key oil and gas supplier to Europe (map from 2013). This changed with the Russian invasion of Ukraine in 2022.
This section is an excerpt from Energy policy of the European Union.[edit]
The energy policy of the European Union focuses on energy security, sustainability, and integrating the energy markets of member states.[31] An increasingly important part of it is climate policy. [32] A key energy policy adopted in 2009 is the 20/20/20 objectives, binding for all EU Member States. The target involved increasing the share of renewable energy in its final energy use to 20%, reduce greenhouse gases by 20% and increase energy efficiency by 20%.[33] After this target was met, new targets for 2030 were set at a 55% reduction of greenhouse gas emissions by 2030 as part of the European Green Deal.[34][35] After the Russian invasion of Ukraine, the EU's energy policy turned more towards energy security in their REPowerEU policy package, which boosts both renewable deployment and fossil fuel infrastructure for alternative suppliers.[36]

Russia
This section is an excerpt from Energy policy of Russia.[edit]
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 in number because of its energy policy.[37] Russia is 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 identified that Russia uses its energy exports as a foreign policy instrument towards other countries.[38][39]

United Kingdom
This section is an excerpt from Energy policy of the United Kingdom.[edit]
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. 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).

United States
This section is an excerpt from Energy policy of the United States.[edit]

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 legislation, regulation, court decisions, public participation, and other techniques.

Federal energy policy acts were passed in 1974, 1992, 2005, 2007, 2008, 2009,[40]2020, 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.[41]

Federal energy policies since the 1973 oil crisis have been criticized over an alleged crisis-mentality, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities.[42][43]

See also

References
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