Path dependence in energy systems and economic development

Energy systems are subject to strong and long-lived path dependence, owing to technological, infrastructural, institutional and behavioural lock-ins. Yet, with the prospect of providing accessible cheap energy to stimulate economic development and reduce poverty, governments often invest in large engineering projects and subsidy policies. Here, I argue that while these may achieve their objectives, they risk locking their economies onto energy-intensive pathways. Thus, particularly when economies are industrializing, and their energy systems are being transformed and are not yet fully locked-in, policymakers should take care before directing their economies onto energy-intensive pathways that are likely to be detrimental to their long-run prosperity

The European Union energy transition: key priorities for the next five years

Over the last decade, the EU has pursued a proactive climate policy and has integrated a significant amount of renewables into the energy system. These efforts have proved successful and continuing along this pathway, increasing renewables and improving energy efficiency, would not require substantial policy shifts. But the EU now needs a deeper energy transformation to decarbonise in line with the Paris agreement and to seize the economic and industrial opportunities offered by this global transformation. A full-fledged energy transition is becoming economically and technically feasible, and its cost would be similar to that of maintaining the existing system, if appropriate policies and regulations are put in place. In short, the EU could benefit from deep decarbonisation irrespective of what other economies around the world do. The transition can also be socially acceptable, if the right policies are put in place to control and mitigate the distributional effects of deeper decarbonisation. The time to act is now, as policy choices made up to 2024 will define the shape of the EU energy system by 2050. This article outlines the key priorities that, in our view, should drive the EU energy and climate policy making for the new institutional cycle 2019\u20132024

Incentives to quality and investment : evidence from electricity distribution in Italy

This paper investigates the relationship between output-based incentives for service quality and the use of capital and non-capital resources to meet regulatory targets in the electricity industry. To conduct the empirical analysis we use a dataset collected with the support of the Italian energy regulatory authority, comprising micro data on monetary incentives and physical assets for the largest electricity distribution operator in Italy (86 % of the market). Our results show that physical assets and operational expenditures do affect service quality. Moreover, when we investigate causality in the relationship between incentives to quality and the use of capital and non-capital resources, we find that incentives Granger-cause capital expenditures ( and not vice-versa). Finally, our results reveal an asymmetric effect of rewards and penalties on capital expenditures' decisions across areas with different quality levels. From these findings, we derive several policy implications.Italian Regulatory Authority for Electricity, Gas and Wate