The role of policy in energy transitions: lessons from the energy liberalisation era

The aim of this paper is to discuss the period of energy privatisation and liberalisation which began in the 1980s within its wider historical context. The key issues are: what has been learned from this recent period, and; how significant is it in the light of an energy transition to low carbon energy system by 2050? Energy liberalisation has led to positive and globally widespread but modest efficiency gains but a lack of clearly visible direct benefits to households in many countries. It has significantly improved the governance of monopoly utilities (via independent regulators), the prospects for competition and innovation, and the quality of policy instruments for environmental emissions control (through the emergence of trading mechanisms). We conclude that it is not liberalisation per se that will determine the movement towards a low carbon energy transition, but the willingness of societies to bear the cost, which will be significant no matter what the extent of liberalisation

A Global Carbon Market?

This paper explores the prospects for a global carbon market as the centrepiece of any serious attempt to reach the ambitious goal for greenhouse gas (GHG) reductions set by climate scientists. My aim is to clarify the extent to which we know what policy might best support global decarbonisation. I begin by discussing what we might mean by a global carbon market and its theoretical properties. I proceed to discuss the EU Emissions Trading System experience and the recent experience with the Australian carbon tax. Next, I assess the evolving carbon market initiatives in the US and in China. In the conclusion, I apply some principles of 'good' energy policy making to the prospects for a successful global carbon market

In Search of 'Good' Energy Policy: The Social Limits to Technological Solutions to Energy and Climate Problems

This paper seeks to explore the nature of 'Good' Energy Policy by offering a multi-disciplinary social science and humanities perspective on policy making. The objective in doing this is to understand how to get from where we are today to a 'better' energy policy. We begin by discussing what we mean by 'policy'. We then go on to characterise and challenge the technologists' approach to energy policy. Next we discuss some key intellectual starting points that explain why policy making in this area is so difficult. We then turn to a set of multi-disciplinary social science and humanities perspectives on energy policy that together form promising areas for research. These are: perception; quantification; well-being; public trust; role of the state; competence and hubris in delivery; and parallels with healthcare. We close by discussing how these perspectives can illuminate whether a policy is 'good', 'bad' or something in between

The Further Economic Consequences of Brexit: Energy

The UK left the European single market in energy on 31 December 2020, having been a leading light in its promotion. It entered into a new energy relationship with the EU-27 as outlined in the EU-UK Trade and Cooperation Agreement (TCA) on 1 January 2021. This paper discusses what has happened to the UK energy sector since the Brexit referendum of June 2016. Since our previous paper on this topic in 2017, there has been a significant clarification in the impact of Brexit on the energy sector in the UK. We outline what the TCA says about energy. We then discuss the current and potential future effects of Brexit on the UK electricity and gas systems in turn. We observe that the likely economic welfare impacts on electricity are larger than the impacts on gas, but the overall microeconomic impact appears likely to be modest (but negative). We offer a number of concluding observations

International Spillovers and Carbon Pricing Policies

Globally coordinated climate action has resulted in sub-optimal emissions reductions and unilateral (second-best) climate policies have so far provided the bulk of emissions reductions. This paper argues that the development of new unilateral carbon pricing policies was fostered by international signalling and technological spillover effects. The strength of both effects hinges, for each jurisdiction, on trade relations with other CO2-abating jurisdictions. We provide a stylised theoretical discussion in support of our proposition and investigate it using data on a panel of 121national jurisdictions over the period 1990-2014. Results show a strong positive association between import-weighted exposure to CO2-pricing partners and domestic environmental policy. The analysis also supports the technological spillover channel: trade-weighted installed capacity of wind and solar energy seems to prompt implementation of and more stringent carbon pricing policies

Identifying Innovative Actors in the Electricicity Supply Industry Using Machine Learning: An Application to UK Patent Data

The recent history of the Electricity Supply Industry (ESI) of major western economies was marked by two fundamental changes: a transition toward liberalised electricity markets and a policy-led push to decarbonise the electricity generation portfolio. These changes not only affected the pace and nature of innovation activity in the sector but also altered the set of innovative actors. The present paper provides a methodology to identify these actors, which we apply to priority patents filed at the UK Intellectual Property Office over the period 1955-2016. The analysis also indicates that (i) the recent increase in innovation activity originates overwhelmingly from upstream Original Equipment Manufacturers and (ii) innovation activity in `green' electricity supply technologies slowed down in recent years

Multinationals in Developing Communities: how EU Multinationals build Social Capital in Poland

Corporate Social Responsibility (CSR) is usually an area that does not lend itself easily to inter-company or cross-country analysis. This paper is an attempt to provide some metrics of multinational CSR drawing on the recent literature on social capital. We look at the self-reporting of social engagement in Poland by European multinational firms with operations there, mapping the configurations of declared engagement. Such social engagements are an important component of how these companies contribute to social capital in the communities within which they operate. We find high performance by some firms, with stronger performance depending upon the multinational’s country of origin. Two case studies - on Bayer and Danone - detailing different but successful approaches to social capital building are given.Social Capital, Corporate Social Responsibility, Business Ethics, Poland, Multinational companies.

Network Procurement Auctions

In most network asset procurement exercises, network configurations are predefined by the auctioneers. Bidders can neither propose different network configurations nor can they submit bids on a group of network links. We believe the market itself can be designed better. We present a lot structure and an auction design where bidders might propose and build different network configurations and where bidding for packages is a possibility. We demonstrate why the auction design in this paper should be considered for future network procurement exercises through an example, inspired by UK offshore electricity transmission assets, to illustrate our idea

Overcoming barriers to electrical energy storage: Comparing California and Europe

Multiple market drivers suggest that electrical energy storage (EES) systems are going to be essential for future power systems within the next decade. However, the deployment of the technology is proceeding at very different rates around the world. Whereas the sector is progressing quickly in California, it is not gaining much traction, so far, in Europe. This research aims to clarify why the prospects for energy storage in Europe are not as good as they are in California. The market and regulatory framework in California and Europe are analysed critically, and changes to overcome the main barriers are recommended. The research shows that the main barriers are: inadequate definition and classification of EES in legislation; lack of markets for some ancillary services; inadequate market design that benefits traditional technologies; and the lack of need for EES in some jurisdictions. The prospects are better in California because regulation is more advanced and favourable for the technology, and regulators are collaborating with developers and utilities to analyse barriers and solutions for the technology. In Europe, there is a need to clarify the definition of EES, create new markets for ancillary services, design technology-neutral market rules and study more deeply the necessity of EES

Determining the optimal length of regulatory guarantee: A Length-of-Contract Auction

One of the biggest challenges in the area of infrastructure investment is the provision of funding to finance activities. This paper presents an auction design which can reduce the financing cost of infrastructure investments by allowing the length of the regulatory funding period to be determined via an auction. The auction allows bidders to submit bids against a payment for periods of varying length. Thus instead of, for example, a fixed 20-year contract period, some bidders might want to bid for financing over a longer period, say 25 or 30 years. This can be desirable in terms of securing more favourable terms in the financial markets. Our auction design can secure efficiency and lower financing costs. Our auction is motivated by the auctions currently being undertaken by the UK energy regulator (Ofgem) for financing offshore transmission assets. Although the auction was designed with electricity transmission in mind, the auction could be used in other areas of infrastructure investment