Energy Policy

what are some arguments for government intervention in energy markets?

externalities, transaction costs, poor future orientation

externalities

energy prices do not reflect the range of costs and benefits associated with energy use

transaction costs

adpition costs, market barriers prevent uptake

poor future orientation

market, investors, and consumer only focus on the present

what are policies are needed for the transformation of our energy system?

decreasing fossil-fuel use and deforestation

increase in non-carbon energy

increasing energy efficiency

electrifying end-use sectors

supporting energy innovation

end-use sectors

transportation, residential energy use

market based mechanisms

taxes adnd subsidies

regulations

command-and-control requirements, fines for non-compliance

command-and-control requirements

sets specific pollution limits that companies must follow

what are the stages of the model of Adoption Diffusion of Energy-Efficient Technologies?

innovators → early adopters → early majority → late majority → laggards

what is an example of the model of adoption diffusion of energy-efficient technologies

innovators: fluorescent light bulbs - not taken up

early adopters: government provided publicity if these bulbs saved money

late majority: LED light bulbs with incandescent usage decrease

the chasm

the obstacle/barrier to growth of emerging technology and energy efficiency

what are some regulations to promote energy market transformation?

product efficiency standards, production standards, environmental regulations, energy price controls

what government programs correspond to the model of Adoption Diffusion of Energy-Efficient technologies?

innovators: R&D and screening

Early Adopts, majority, Late Majority: screening, deployment, commercialization programs

Laggards: codes and standards

product efficiency standards

demand side standards

building codes, appliance and vehicle fuel efficiency standards

production standards

supply side standards

Renewable Portfolio Standards RPS) - require each electric utility to provide a share of power from renewables

environmental regulations

reduce impacts of energy production, transport, use

feed-in tariffs (FITs)

give long-term contracts that guarantees a price over time for power “fed in” to grid

what are drawbacks of FITs?

locks consumers in with old, pricey technology

what are economic energy market transformation measures?

energy txes and surcharges, energy investment tax credits, energy production tax credits, energy R&D tax credits, energy investment and production deductions

what are industrial policies for energy market transformation?

EV charging station subsidies

carbon-tax

tax on extracted fossil fuels

easy to implement, not feasible

regressive

carbon cap-and-trade system

emitters can buy rights to emit

only for large stationary point sources

politically feasible but effectiveness varies

energy investment tax credits

encourage investment in energy efficiency and renewable production

energy production tax credits (PTC)

federal tax credit for electricity generated by qualified RE resources

why is the carbon tax regressive?

inequitable since wealthier people sacrifice less proportion of their income to shoulder tax

revenue neutral carbon tax

taxes GHG where they are mined; returns tax revenue to citizens at equal proportions

not regressive since poor people who use less GHG pay less

contrast PTC for wind power in US vs China

US: stop and go - expiration of PTC means large drop in wind production

China: consistent and stead rise in wind installation

how does china’s economy promote renewable energy?

unitary government allows for planned economy and government subsidies for renewables

rebate

financial reimbursement for installing energy efficient technology

feebates

combines fee with rebate

loan guarantees

reduces investment risk by allowing partial loan repayment if returns are not met

EU 20-20-20 strategy

reduces GHG from at least 20% of 1990 levels

increase renewable energy to at least 20% of consumption

reducing primary energy consumption by at least 20% below BAU

exceeded

China energy policy

carbon neutrality by 2060

halt overseas investments in new coal power

how will China’s total emissions progress

will likely be high because stability instead of rapid decline is predicted after pea

Obama American Recovery and Reinvestment Act (ARRA)

$787 billion in short-term spending - $31 billion went to clean energy

Consolidated Appropriations Act

extended taxcredits for wind, solar, electric vehiles, biofuels

Inflation Reduction Act

new federal spending was allocated to reduce emissions

investment tax credits for clean electricity, fuel cells, heat pumps, energy storage

PTCs for clean hydrogen, nuclear, renewable, biomass, hydroelectric

clean vehicle credits for EVs, hybrids, hydrogen fuel cell

CCS tax credits

forest management

offshore wind, oil, gas

methane emissions reduction

residential energy efficiency credits

revenue neutral

Bipartisan Infrastructure Law

investments in transportation, EVs, infrastructure

What is unique about California climate policy?

can set stricter vehicle emissions standards which other states can follow

due to pre-1967 air quality regulations