Energy policy

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For the academic journal, see Energy Policy (journal).
File:TAP TANAP SCP Schah Denis.png
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 policies are the government's strategies and decisions regarding the production, distribution, and consumption of energy within a specific jurisdiction. Energy is essential for the functioning of modern economies because they require energy for many sectors, such as industry, transport, agriculture, housing. The main components of energy policy include legislation, international treaties, energy subsidies and other public policy techniques. The energy sector emits more greenhouse gas worldwide than any other sector.[1] Therefore, energy policies are closely related to climate policies. These decisions affect how high the greenhouse gas emissions by that country are.

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. Energy planning is more detailed than energy policy.

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. There are a number of elements that are contained in a national energy policy. Some important elements intrinsic to an energy policy include:[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 are the goals for future energy intensity, ratio of energy consumed to GDP
  • 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 net zero emissions?
  • What fiscal policies related to energy products and services should be used (taxes, exemptions, subsidies, etc.)?
  • What legislation affecting energy use, such as efficiency standards, emission standards, is needed?

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. Since about 2001 the term nuclear renaissance has been used to refer to a possible nuclear power industry revival, but nuclear electricity generation in 2012 was at its lowest level since 1999.[13] [14] Since then it had increased back to 2,653 TWh in 2021, a level last seen in 2006. The share of nuclear power in electricity production however is at a historic low and now below 10% down from a maximum of 17.5% in 1996.[15] Following the March 2011 Fukushima I nuclear accidents, China, Germany, Switzerland, Israel, Malaysia, Thailand, United Kingdom, and the Philippines are reviewing their nuclear power programs. Indonesia and Vietnam still plan to build nuclear power plants.[16][17][18][19] Thirty-one countries operate nuclear power stations, and there are a considerable number of new reactors being built in China, South Korea, India, and Russia.[20] As of June 2011, countries such as Australia, Austria, Denmark, Greece, Ireland, Latvia, Lichtenstein, Luxembourg, Malta, Portugal, Israel, Malaysia, and Norway have no nuclear power stations and remain opposed to nuclear power.[21][22]

Since nuclear energy and nuclear weapons technologies are closely related, military aspirations can act as a factor in energy policy decisions. The fear of nuclear proliferation influences some international nuclear energy policies.

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."[23] 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".[24]

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.[25] 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".[26] It also favors the near term over the long term, thereby showing limited concern for future generations.[26] Tax and subsidy shifting can help overcome these problems,[27] though is also problematic to combine different international normative regimes regulating this issue.[28]

Examples

China

This section is an excerpt from Energy policy of China.[edit]

China is both the world's largest energy consumer and the largest industrial country, and ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese Government since the founding of the People's Republic of China in 1949.[29] 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.[30] China is also the world's largest renewable energy producer (see this article), 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.[31]   

Being a country that depends heavily on foreign petroleum import for both domestic consumption and as raw materials for light industry manufacturing, electrification is a huge component of the Chinese national energy policy.

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,[32] with more focus on developing alternative sources of energy, particularly nuclear, solar and wind energy.[33][34] Net energy import dependency was 40.9% in 2021-22.[35] The primary energy consumption in India grew by 13.3% in FY2022-23 and is the third biggest with 6% global share after China and USA.[36][37][38] The total primary energy consumption from coal (452.2 Mtoe; 45.88%), crude oil (239.1 Mtoe; 29.55%), natural gas (49.9 Mtoe; 6.17%), nuclear energy (8.8 Mtoe; 1.09%), hydroelectricity (31.6 Mtoe; 3.91%) and renewable power (27.5 Mtoe; 3.40%) is 809.2 Mtoe (excluding traditional biomass use) in the calendar year 2018.[39] In 2018, India's net imports are nearly 205.3 million tons of crude oil and its products, 26.3 Mtoe of LNG and 141.7 Mtoe coal totaling to 373.3 Mtoe of primary energy which is equal to 46.13% of total primary energy consumption. India is largely dependent on fossil fuel imports to meet its energy demands – by 2030, India's dependence on energy imports is expected to exceed 53% of the country's total energy consumption.[40] About 80% of India's electricity generation is from fossil fuels. India is surplus in electricity generation and also a marginal exporter of electricity in 2017.[41] Since the end of the calendar year 2015, huge power generation capacity has been idling for want of electricity demand.[42] India ranks second after China in renewables production with 208.7 Mtoe in 2016.[43] The carbon intensity in India was 0.29 kg of CO2 per kWhe in 2016 which is more than that of USA, China and EU.[44] The total manmade CO2 emissions from energy, process emissions, methane, and flaring is 2797.2 million tons of CO2 in CY2021 which is 7.2% of global emissions.[37] The energy intensity of agriculture sector is seven times less than industrial sector in 2022-23 (see Table 8.9[36]) In 2020-21, the per-capita energy consumption is 0.6557 Mtoe excluding traditional biomass use and the energy intensity of the Indian economy is 0.2233 Mega Joules per INR (53.4 kcal/INR).[45][46] India attained 63% overall energy self-sufficiency in 2017.[43][47][48] Due to rapid economic expansion, India has one of the world's fastest growing energy markets and is expected to be the second-largest contributor to the increase in global energy demand by 2035, accounting for 18% of the rise in global energy consumption.[49] Given India's growing energy demands and limited domestic oil and gas reserves, the country has ambitious plans to expand its renewable and most worked out nuclear power programme.[50] India has the world's fourth largest wind power market and also plans to add about 100,000 MW of solar power capacity by 2022.[51][52] India also envisages to increase the contribution of nuclear power to overall electricity generation capacity from 4.2% to 9% within 25 years.[53] The country has five nuclear reactors under construction (third highest in the world) and plans to construct 18 additional nuclear reactors (second highest in the world) by 2025.[54] During the year 2018, the total investment in energy sector by India was 4.1% (US$75 billion) of US$1.85 trillion global investment.[55]

The energy policy of India is characterized by trade-offs between four major drivers: A rapidly growing economy, with a need for dependable and reliable supply of electricity, gas, and petroleum products;[56] Increasing household incomes, with a need for an affordable and adequate supply of electricity, and clean cooking fuels; limited domestic reserves of fossil fuels, and the need to import a vast fraction of the natural gas, and crude oil, and recently the need to import coal as well; and indoor, urban and regional environmental impacts, necessitating the need for the adoption of cleaner fuels and cleaner technologies. In recent years, these challenges have led to a major set of continuing reforms, restructuring, and a focus on energy conservation.

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.[57] 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.[58] 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.[57] Currently, the state is in charge of all domestic activities regarding the refining and distribution of oil and oil products.[citation needed] The state-owned company, Petroecuador, oversees and executes all related operations.[59] The country is also seeing the construction of a new heavy crude refinery compound, operated by Refinery of the Pacific Eloy Alfaro but funded and built by Pertroecuador. Despite Ecuador’s large oil production, its main source of electricity is hydropower -for the year 2015, 13,096 GWh of electricity came from hydropower facilities as opposed to oil's 8,919 GWh.[60] The Ecuadorian government has also passed legislation incentivizing the growth of renewable energy markets; one example of such policy is the feed-in tariff, which is a contract guaranteeing agents investing in renewable technology a competitive return on investment.[61]

In 2023-24 there was electricity blackouts in Ecuador. New President Daniel Noboa appointed Andrea Arrobo as Minister of Energy in 2023. In April 2024, he asked for her resignation as a new schedule of blackouts was announced.[62]

European Union

File:RF NG pipestoEU.gif
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.[63] An increasingly important part of it is climate policy.[64] 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%.[65] 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.[66][67] 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.[68] The EU Treaty of Lisbon of 2007 legally includes solidarity in matters of energy supply and changes to the energy policy within the EU. Prior to the Treaty of Lisbon, EU energy legislation has been based on the EU authority in the area of the common market and environment. However, in practice many policy competencies in relation to energy remain at national member state level, and progress in policy at European level requires voluntary cooperation by members states.[69] In 2007, the EU was importing 82% of its oil and 57% of its gas, which then made it the world's leading importer of these fuels.[70] Only 3% of the uranium used in European nuclear reactors was mined in Europe. Russia, Canada, Australia, Niger and Kazakhstan were the five largest suppliers of nuclear materials to the EU, supplying more than 75% of the total needs in 2009.[71] In 2015, the EU imports 53% of the energy it consumes.[72] The European Investment Bank took part in energy financing in Europe in 2022: a part of their REPowerEU package was to assist up to €115 billion in energy investment through 2027, in addition to regular lending operation in the sector.[73] In 2022, the EIB sponsored €17 billion in energy investments throughout the European Union.[74][75]

The history of energy markets in Europe started with the European Coal and Steel Community, which was created in 1951 to lessen hostilities between France and Germany by making them economically intertwined. The 1957 Treaty of Rome established the free movement of goods, but three decades later, integration of energy markets had yet to take place.[76] The start of an internal market for gas and electricity took place in the 1990s.[77]

Russia

This section is an excerpt from Energy policy of Russia.[edit]

Russia's energy policy is presented in the government's Energy Strategy document, first approved in 2000, which sets out the government's policy to 2020 (later extended to 2030). The Energy Strategy outlines several key priorities: increased energy efficiency, reducing the impact on the environment, sustainable development, energy development and technological development, as well as improved effectiveness and competitiveness. Russia's greenhouse gas emissions are large because of its energy policy.[78] Russia is rich in natural energy resources and is one of the world's energy superpowers. Russia is the world's leading net energy exporter, and was a major supplier to the European Union until the Russian invasion of Ukraine. Russia has signed and ratified the Kyoto Protocol and Paris Agreement. Numerous scholars posit that Russia uses its energy exports as a foreign policy instrument towards other countries.[79][80] In July 2008, Russia's president signed a law allowing the government to allocate strategic oil and gas deposits on the continental shelf without an auction procedure. On 17 February 2011, Russia signed a deal with China, stating that in return for $25 billion in Chinese loans to Russian oil companies, Russia would supply China with large quantities of crude oil via new pipelines for the next 20 years.[81] As of 2014, oil and gas comprise over 60% of Russia's exports and account for over 30% of the country's gross domestic product (GDP).[82] Russian energy policy of pumping 10.6 million barrels of oil a day[83] is nearly 4 billion barrels annually. Russia holds 54% of world reserves of gas, 46% of coal, 14% of uranium, and 13% of oil. Russian oil production and export increased significantly after 2000, and in 2006 briefly exceeded Saudi Arabia's production. Since 2016, Russia has been the top crude oil producer. Russia is also the world's largest energy exporter and fossil fuel exporter.[84] Russia is not a member of OPEC (Organization of Petroleum Exporting Countries) and presents itself as an alternative to Middle Eastern energy resources, asserting that it is in fact a "reliable energy supplier and that it only seeks to use its position as an important supplier to enhance global energy security".[85] However, in recent years it has cooperated increasingly closely with OPEC in the OPEC+ format.[86]

The Russian economy is heavily dependent on the export of natural resources such as oil and natural gas, and Russia has used these resources to its political advantage.[87][88] Meanwhile, the US and other Western countries have worked to lessen the dependency of Europe on Russia and its resources.[89] Starting in the mid-2000s, Russia and Ukraine had several disputes in which Russia threatened to cut off the supply of gas. As a great deal of Russia's gas is exported to Europe through the pipelines crossing Ukraine, those disputes affected several other European countries as well. Under Putin, special efforts were made to gain control over the European energy sector.[89] Russian influence played a major role in canceling the construction of the Nabucco pipeline, which would have supplied natural gas from Azerbaijan, in favor of South Stream (though South Stream was also cancelled).[90] Russia has also sought to create a Eurasian Economic Union consisting of itself and other post-Soviet countries.[91]

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.[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] The United Kingdom historically has a good policy record of encouraging public transport links with cities,[citation needed] despite encountering problems with high speed trains, which have the potential to reduce dramatically domestic and short-haul European flights. The policy does not, however, significantly encourage hybrid vehicle use or ethanol fuel use, options which represent viable short term means to moderate rising transport fuel consumption. Regarding renewable energy, the United Kingdom has goals for wind and tidal energy. The 2007 White Paper on Energy set a target that 20% of the UK's energy must come from renewable sources by 2020. The current energy policy of the United Kingdom is the responsibility of the Department for Energy Security and Net Zero (DESNZ), after the Department for Business, Energy and Industrial Strategy was split into the Department for Business and Trade and the Department for Science, Innovation and Technology in 2023. Energy markets are regulated by the Office of Gas and Electricity Markets (Ofgem).

Areas of focus for energy policy by the UK government have changed since the Electricity Act 1989 and the Gas Act 1986 privatised these utilities. The policy focuses of successive UK governments since the full liberalisation of gas and electricity markets in 1998 and 1999[92] have included managing energy prices, decarbonisation, the rollout of smart meters, and improving the energy efficiency of the country's building stock.

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,[93] 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.[94] Federal energy policies since the 1973 oil crisis have been criticized for having an alleged crisis-mentality, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities.[95][96] Americans constitute less than 5% of the world's population but consume 26% of the world's energy[97] to produce 26% of the world's industrial output. Technologies such as fracking and horizontal drilling allowed the United States to become the world's top oil fossil fuel producer in 2014.[98] In 2018, US exports of coal, natural gas, crude oil and petroleum products exceeded imports, achieving a degree of energy independence for the first time in decades.[99][100][101] In the second half of 2019, the US was the world's top producer of oil and gas.[102] This energy surplus ended in 2020.[103][104]

Various multinational groups have attempted to establish goals and timetables for energy and other climate-related policies, such as the 1997 Kyoto Protocol and the 2015 Paris Agreement.

By country

Energy policies vary by country, see tables below.

See also

References

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