This article's
lead sectionmay be too short to adequately
summarize the key points. Please consider expanding the lead to
provide an accessible overview of all important aspects of the article.(June 2022)
Energy is a core component of modern economies. These economies require energy for many sectors, such as industry, transport, agriculture, housing.
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 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.
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. The energy policy of a sovereign nation may include one or more of the following measures:
statement of national policy regarding
energy planning, energy generation, transmission and usage
legislation on commercial energy activities (trading, transport,
storage, etc.)
instructions for state-owned energy sector assets and organizations
active participation in, co-ordination of and incentives for mineral
fuels exploration (see
geological survey) and other energy-related research and development policy command
international energy sector treaties and alliances,
general international trade agreements,
special relations with energy-rich countries, including military presence and/or domination.
There are a number of elements that are naturally contained in a national energy policy, regardless of which of the above measures was used to arrive at the resultant policy. The chief elements intrinsic to an energy policy are:[5]
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 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]
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."[13] 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".[14]
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.[15]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".[16] It also favors the near term over the long term, thereby showing limited concern for future generations.[16] Tax and subsidy shifting can help overcome these problems,[17] though is also problematic to combine different international normative regimes regulating this issue.[18]
By country
Energy policies vary by country, see tables below.
The
energy policy of the European Union focuses on
energy security,
sustainability, and integrating the energy markets of member states.[31] An increasingly important part of it is climate policy. [32] 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%.[33] 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.[34][35] 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.[36]
This article needs to be updated. Please help update this article to reflect recent events or newly available information.(March 2022)
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.[37] 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.[38][39]
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,[40] 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.[41]
Federal energy policies since the
1973 oil crisis have been criticized over an alleged crisis-mentality, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities.[42][43]
^Farah, Paolo Davide; Rossi, Piercarlo (December 2, 2011). "National Energy Policies and Energy Security in the Context of Climate Change and Global Environmental Risks: A Theoretical Framework for Reconciling Domestic and International Law Through a Multiscalar and Multilevel Approach". European Energy and Environmental Law Review. 2 (6): 232–244.
SSRN1970698.
^Robert C. Armstrong, Catherine Wolfram, Robert Gross, Nathan S. Lewis, and
M.V. Ramana et al., "The Frontiers of Energy", Nature Energy, Vol 1, 11 January 2016.
^Farah, Paolo Davide; Cima, Elena (2013). "Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel". Journal of International Economic Law (JIEL), Georgetown University Law Center. 4.
SSRN2330416.
^Obrecht, Matevz; Denac, Matjaz (2013). "A sustainable energy policy for Slovenia : considering the potential of renewables and investment costs". Journal of Renewable and Sustainable Energy. 5 (3): 032301.
doi:
10.1063/1.4811283.