Energy Policy Analysis Research Articles

우리나라 에너지 정책의 전환적 특성: 전환관리 이론을 중심으로

우리나라 에너지 정책의 전환적 특성: 전환관리 이론을 중심으로

Investing in low-carbon transitions: energy finance as an adaptive market

The amount of capital required to transition energy systems to low-carbon futures is very large, yet analysis of energy systems change has been curiously quiet on the role of capital markets in financing energy transitions. This is surprising given the huge role finance and investment must play in facilitating transformative change. We argue this has been due to a lack of suitable theory to supplant neoclassical notions of capital markets and innovation finance. This research draws on the notion from Planetary economics: Energy, climate change and the three domains of sustainable development, by Grubb and colleagues, that planetary economics is defined by three ‘domains’, which describe behavioural, neoclassical, and evolutionary aspects of energy and climate policy analysis. We identify first- and second-domain theories of finance that are well established, but argue that third-domain approaches, relating to evolutionary systems change, have lacked a compatible theory of capital markets. Based on an analysis of electricity market reform and renewable energy finance in the UK, the ‘adaptive market hypothesis' is presented as a suitable framework with which to analyse energy systems finance. Armed with an understanding of financial markets as adaptive, scholars and policy makers can ask new questions about the role of capital markets in energy systems transitions.Policy relevanceThis article explores the role of financial markets in capitalising low-carbon energy systems and long-term change. The authors demonstrate that much energy and climate policy assumes financial markets are efficient, meaning they will reliably capitalise low-carbon transitions if a rational return is created by subsidy regimes or other market mechanisms. The authors show that the market for renewable energy finance does not conform to the efficient markets hypothesis, and is more in line with an ‘adaptive’ markets understanding. Climate and energy policy makers that design policy, strategy, and regulation on the assumption of efficient financial markets will not pay attention to structural and behavioural constraints on investment; they risk falling short of the investment levels needed for long-term systems change. In short, by thinking of financial markets as adaptive, the range of policy responses to enable low-carbon investment can be much broader.

Oil, illiberalism, and war: an analysis of energy and US foreign policy

Oil, illiberalism, and war: an analysis of energy and US foreign policy

Measurement of energy efficiency based on economic foundations

Energy efficiency policy is seen as a very important activity by almost all policy makers. In practical energy policy analysis, the typical indicator used as a proxy for energy efficiency is energy intensity. However, this simple indicator is not necessarily an accurate measure given changes in energy intensity are a function of changes in several factors as well as ‘true’ energy efficiency; hence, it is difficult to make conclusions for energy policy based upon simple energy intensity measures. Related to this, some published academic papers over the last few years have attempted to use empirical methods to measure the efficient use of energy based on the economic theory of production. However, these studies do not generally provide a systematic discussion of the theoretical basis nor the possible parametric empirical approaches that are available for estimating the level of energy efficiency. The objective of this paper, therefore, is to sketch out and explain from an economic perspective the theoretical framework as well as the empirical methods for measuring the level of energy efficiency. Additionally, in the second part of the paper, some of the empirical studies that have attempted to measure energy efficiency using such an economics approach are summarized and discussed.

Estimating state and sub‐state economic effects of a carbon dioxide tax policy: An application of a new multi‐region energy‐economy econometric model

AbstractThis paper discusses an innovative econometric approach for modelling how national or state‐level energy policies can affect state and sub‐state economic outcomes using the new Indiana scalable energy‐economy model (IN‐SEEM). This model – which can be modified and scaled to investigate other states and sub‐state regions – is used to analyse the economic effects of a carbon dioxide (CO2) tax on the state of Indiana and two of its most populous regions. Results of this analysis offer a proof‐of‐concept for an econometric approach that allows for sub‐state analysis of energy policies. Further, the policy analysis finds that without a mechanism for recycling CO2 tax revenues back into the economy, a CO2 tax of between $15 and $45 per ton will have a significant negative effect on the state economy and the two regions examined. While we find the tax to be an effective means of reducing energy consumption and thus CO2 emissions, total employment and gross state product per capita are forecast to decline 4.0 and 3.2 per cent, respectively, for the state given a $15 per ton CO2 tax in the year 2025.

China-U.S. cooperation on China's subnational low carbon planning toolkit development and application

In May 2011, the China-based Global Environmental Institute and the US-based Center for Climate Strategies successfully joined the China-U.S. EcoPartnership program. The cooperation aims to adapt a methodology and tools used for making U.S. state climate action plans to China's subnational and municipal contexts, in order to help subnational governments achieve carbon emission targets by making scientific and effective climate and energy policies. To achieve this objective, a China subnational low carbon planning toolkit including a systematic process of selection, design and analysis of climate and energy policies was developed and successfully demonstrated in Chongqing Municipality. Through technical exchange and training, the capabilities of Chinese officials and experts who cooperated with us to quantitatively analyze low carbon development policies have been improved. The cooperation also promoted exchange between Chinese provinces and U.S. states on climate and energy policy.

Explaining the behaviour of small states: an analysis of Jordan's nuclear energy policy

Conventional analyses claim that small states bandwagon with leading international powers. The dominant view is that small states' vulnerabilities and limited power hinder their ability to pursue policy goals. This study critiques this position by investigating why and how Jordan continues to pursue a nuclear energy programme despite objections from the United States—its principal ally. By using theories of small states, this study analyses discursive practices in Jordanian policymaking. This approach is used to describe Jordan's nuclear energy policy and posit a logic of the effects that energy insecurity has on the government's perception of Jordan as a ‘small state’. I use this to create hypotheses concerning the conditions under which small states may not simply bandwagon with key international allies, but may have more freedom to pursue their goals than traditional analyses predict. Explanations that assume small states always have limited freedom to pursue policy goals without the backing of key allies are not supported by the evidence considered here.

Evaluating Renewable Portfolio Standards for In-State Renewable Deployment: Accounting for Policy Heterogeneity

Renewable portfolio standards (RPS) are the most common state-level policies for promoting renewable electricity in the United States. State RPS policies are heterogeneously designed, particularly with respect to their use of flexibility mechanisms that allow obligations to be met with renewable energy generated in other states. However, the renewable energy that is produced within an RPS-enacting state itself is of high political importance, making in-state renewable energy deployment an important evaluation metric for RPS policies. In this paper, we develop a novel dataset of state-level RPS policies and renewable energy deployment. We show that failing to effectively limit comparisons to similarly designed RPS policies may lead to the misperception that more stringent RPS policies do not necessarily lead to higher renewable deployment. We then show that after controlling for specific policy design features, states with more stringent RPS policies tend to have greater in-state renewable energy deployment. Specifically, we find that a 1 percentage point increase in the stringency of an RPS policy is associated with a 0.28-0.29 percentage point increase in the share of in-state renewable electricity capacity. Articulate modeling of policy variety has been largely lacking from past studies and is essential for accurate econometric analysis of heterogeneous energy policies.

Jean Tirole's Enduring Influence on Energy Policy Analysis

Jean Tirole, the recipient of the 2014 Nobel Prize in Economics, has made lasting contributions to many fields of economic analysis and policy. The present paper highlights the most important components of his contributions and their impact on developing new frontiers in energy policy analysis. We review the implications of his research in areas such as utilities regulation, environmental regulation and climate change, entry to upstream markets and energy markets, as well as the process of financing new energy projects. The paper ends by commenting on the impact of his recognition by the Nobel Prize Committee and how the future will not be the same.

Second-Best Analysis of European Energy Policy: Is One Bird in the Hand Worth Two in the Bush?

This paper studies policy instruments that correct insufficient learning-by-doing(LbD) and research and development (R&D) of renewable electricity technologies and insufficient investments in energy efficiency (EE) in the presence of carbon pricing. The theoretical model analysis shows how to re-adjust the first-best in second-best situations, in which one of the policy instruments is restricted. Calibrated to the European power sector, the first-best choice of all instruments reduces the climate policy cost by one third. Feed-in tariffs turn out to be good substitutes for LbD, but not for R&D or EE subsidies.

Second-Best Analysis of European Energy Policy: Is One Bird in the Hand Worth Two in the Bush?

This paper studies policy instruments that correct insufficient learning-by-doing (LbD) and research and development (R&D) of renewable electricity technologies and insufficient investments in energy efficiency (EE) in the presence of carbon pricing. The theoretical model analysis shows how to re-adjust the first-best in second-best situations, in which one of the policy instruments is restricted. Calibrated to the European power sector, the first-best choice of all instruments reduces the climate policy cost by one third. Feed-in tariffs turn out to be good substitutes for LbD, but not for R&D or EE subsidies.

Measurement of Energy Efficiency Based on Economic Foundations

Energy efficiency policy is seen as a very important activity by almost all policy makers. In practical energy policy analysis, the typical indicator used as a proxy for energy efficiency is energy intensity. However, this simple indicator is not necessarily an accurate measure given changes in energy intensity are a function of changes in several factors as well as ‘true’ energy efficiency; hence, it is difficult to make conclusions for energy policy based upon simple energy intensity measures. Related to this, some published academic papers over the last few years have attempted to use empirical methods to measure the efficient use of energy based on the economic theory of production. However, these studies do not generally provide a systematic discussion of the theoretical basis nor the possible parametric empirical approaches that are available for estimating the level of energy efficiency. The objective of this paper, therefore, is to sketch out and explain from an economic perspective the theoretical framework as well as the empirical methods for measuring the level of energy efficiency. Additionally, in the second part of the paper, some of the empirical studies that have attempted to measure the energy efficiency using such an economics approach are summarised and discussed.

How China’s current energy pricing mechanisms will impact its marginal carbon abatement costs?

Economic and social costs and benefits are critical factors affecting greenhouse gas abatement activities. Recognizing that energy prices are one of the most important factors influencing abatement costs, this study improved the basic China Energy and Environmental Policy Analysis (CEEPA) model by introducing a current energy pricing mechanism for China. The improved model was applied to generate marginal abatement cost (MAC) curves for China including the current energy pricing mechanism and to analyze MACs for the whole country and main abatement sectors in China under different energy pricing mechanisms. The results show that China MACs are sensitive to pricing mechanisms for electricity and refined oil. Ignoring the current regulation of these prices will lead to MAC underestimation, and price liberalization of these two energy sources could lead to a decrease in China MACs. Under a 50 % emission reduction target, if the electricity price regulation is ignored, the China MAC is underestimated by almost 16 %. Energy pricing reforms will lead to variations in sectoral abatement costs and overall abatement potential, and these impacts are projected to be large in the electricity sector. Under a 50 % reduction target, if the electricity price regulation is liberalized, MAC for the electricity sector nearly will decrease 50 %.

Integrated technological-economic modeling platform for energy and climate policy analysis

CGE (computable general equilibrium) and bottom-up models each have unique strengths and weakness in evaluating energy and climate policies. This paper describes the development of an integrated technological, economic modeling platform (HYBTEP), built through the soft-link between the bottom-up TIMES (The Integrated MARKAL-EFOM system) and the CGE GEM-E3 models. HYBTEP combines cost minimizing energy technology choices with macroeconomic responses, which is essential for energy-climate policy assessment. HYBTEP advances on other hybrid tools by assuming ‘full-form’ models, integrating detailed and extensive technology data with disaggregated economic structure, and ‘full-link’, i.e., covering all economic sectors. Using Portugal as a case study, we examine three scenarios: (i) the current energy-climate policy, (ii) a CO2 tax, and (iii) renewable energy subsidy, with the objective of assessing the advantages of HYBTEP vis-à-vis bottom-up approach. Results show that the economic framework in HYBTEP partially offsets the increase or decrease in energy costs from the policy scenarios, while TIMES is very sensitive to energy services-price elasticities, setting a wide range of results. HYBTEP allows the computation of the economic impacts of policies in a technological detailed environment. The hybrid platform increases transparency of policy analysis by making explicit the mechanisms through which energy demand evolves, resulting in high confidence for decision-making.

Strategic Eurasian natural gas market model for energy security and policy analysis: Formulation and application to South Stream

The mathematical formulation of a strategic Eurasian natural gas market model is presented. The model represents horizontal oligopolistic relationships among producers, bilateral market power between producer (Russia) and transit (Ukraine) countries, detailed transport constraints, and operation decisions over a 20year time horizon. To demonstrate the model's capabilities, a financial and market analysis of the proposed South Stream gas pipeline from Russia via the Black Sea to South Europe is summarized. Insights obtained include the following. First, expectations of high demand growth in Europe and/or transit risks do not justify the construction of the South Stream pipeline because under all demand and Ukraine transit interruption scenarios, the net benefits to the South Stream participants are negative (the NPV ranges from −$1.9billion (bn) to −$7.4bn). Second, Ukraine's perception of high transit market power vis-à-vis Russia may trigger the construction of the otherwise unprofitable South Stream project. Thus, under Ukraine's high transit market power scenario, the NPV of South Stream ranges between $2.4bn and $24.5bn. Third, we find that the South Stream investment increases the efficiency of the European gas market under the following conditions: (i) when gas demand in Europe grows 2% per year up to 2030, (ii) when Ukraine poses high transit market power, or (iii) under a combination of severe transit risks through Ukraine and low demand scenarios in Europe. It should be noted that the value of South Stream to both its project sponsors and the market as a whole is much higher when Ukraine exercises transit market power than under the high demand scenario. Therefore, whether Ukraine is likely to wield market power is crucial to the success of the South Stream project because that is the only scenario in which the project yields both a positive expected NPV to its sponsors and the highest value to the market as a whole.

Green Alert: The Need to Rescue New York's Renewable Energy Portfolio Standard

New York is set to miss the 2015 Renewable Energy Portfolio Standard deadline, due in a large part to over-reliance on in-state generation projects. Although much of the current discussion and articles written about New York energy policies are focused on hydrofracking, clean and renewable energy should not be lost in the discussion and the state cannot afford to miss a major energy policy goal. This article provides an analysis of the current energy policies of the Cuomo administration and highlights a major out-of-state generation project, the Champlain Hudson Power Express.

Will export rebate policy be effective for CO2 emissions reduction in China? A CEEPA-based analysis

China has adopted cancellation of export tax rebate policies on many occasions to push ahead energy conservation and emission reduction since 2007. By applying a CEEPA (China Energy & Environmental Policy Analysis system) model, this paper simulates the impacts of the cancellation of export rebates on CO2 emissions and socio-economic consequences in different scenarios so as to figure out whether it works. This paper covers three export rebate scenarios and makes comparisons between the impacts of export rebates on emission reduction effects and that of carbon tax policies. The conclusions are: 1) the current policy which cancels export rebates for key sectors can cut emissions at huge economic cost, yet it is unsustainable; 2) the policy which cancels export rebates for key sectors and meanwhile subsidizes sectoral outputs yields double dividends in the short term, thus can facilitate emission reduction yet the boost is limited; 3) the policy which cancels export rebates and boosts domestic demand helps improving residents' welfare in the short term while it may inflict pronounced social and economic impacts in the long run. So policy of this kind should be adopted with great caution; 4) export rebates generate far more economic costs than carbon tax policies in the long term, and don't contribute to optimizing the energy mix as well as the latter. In summary, canceling export rebates should not be regarded as a priority to encourage emission reduction.

European decarbonisation pathways under alternative technological and policy choices: A multi-model analysis

This paper explores in a systematic manner the required energy system transformations and the associated costs incurred for the EU in order to meet the decarbonisation targets as specified in the EU Roadmap 2050, i.e. the 80% GHG emissions reduction target and the equivalent carbon budget by 2050. Seven large-scale energy-economy models, namely PRIMES, TIMES-PanEu, GEM-E3, NEMESIS, WorldScan, Green-X and GAINS, which have been extensively used in EU climate and energy policy analysis are employed for the simulation and quantification of alternative EU decarbonisation pathways under technological limitations and climate policy delays. The multi-model perspective provides valuable insights for the formulation of robust policies. The model results show that the EU emissions reduction target is feasible with currently known technological options at low costs (lower than 1% of GDP in the period 2015–2050). Models confirm the EU Roadmap priorities for 2050 with regard to accelerated energy efficiency, transport electrification and supply-side restructuring with high RES, CCS and nuclear deployment. Decarbonisation targets are found feasible even in cases with technological limitations regarding CCS and nuclear technologies and delays in transport electrification albeit with higher costs. Delaying emission reduction action until 2030 has significant adverse effects on energy system costs and stresses the system capabilities for decarbonisation.

An analysis of UK policies for domestic energy reduction using an agent based tool

This paper introduces a new agent-based model, which incorporates the actions of individual homeowners in a long-term domestic stock model, and details how it was applied in energy policy analysis. The results indicate that current policies are likely to fall significantly short of the 80% target and suggest that current subsidy levels need re-examining. In the model, current subsidy levels appear to offer too much support to some technologies, which in turn leads to the suppression of other technologies that have a greater energy saving potential. The model can be used by policy makers to develop further scenarios to find alternative, more effective, sets of policy measures. The model is currently limited to the owner-occupied stock in England, although it can be expanded, subject to the availability of data.

A scenario-based mixed integer linear programming model for composite power system expansion planning with greenhouse gas emission controls

In this paper, the influence of uncertain factors in the power supply system is considered by applying scenario-based programming techniques. A multi-period network design model for composite power system expansion planning is formulated as a mixed integer programming model. This model aims to identity the allocations of fossil fuel, cleaner energy sources, and nuclear power as well as the corresponding to construct transmission network to account for all scenarios of the uncertain factors of the power system. Electricity demands, a limitation of greenhouse gas emissions, and other operational constraints are deliberated in this model. This model is solved using CPLEX, and the Taiwan electric power system is used to illustrate the proposed model. Feasibility analysis of nuclear power energy policies and a low carbon power policy is also been conducted. Corporately implementing the low carbon energy policy increases the feasibility that Taiwan will gradually become nuclear free and more environmentally friendly. The cost per ton of carbon dioxide is estimated to be about NT$ 470.