Political Frame Conditions for Energy Policy Lutz Mez - PowerPoint PPT Presentation

“Energy Policy Research in the Caspian Region - State of the Art and Perspectives” October 11-12, 2005, Khazar University, Baku, Azerbaijan Political Frame Conditions for Energy Policy Lutz Mez Environmental Policy Research Centre Freie Universität Berlin

Outline • Energy Policy Arenas • International Energy Policy • Energy Policy – Policy Styles • Energy / Environmental Policy • Emergence and characteristics of ESI • State Intervention & Regulation of ESI

Energy Policy Arenas • Fossil fuels • Nuclear energy and the environment • Renewable energy sources • Energy efficiency • Electricity (and gas) deregulation and the environment • Converging or diverging approaches to meet energy/environmental challenges?

International Energy Policy • Comparison and contrast of the roles played by EU/Germany, Japan, and the U.S. in developing countries - energy needs and pollution problems • Germany/the EU plays a central role in Central Europe and Russia • Japan plays a central role in China and Asia • U.S. has strong interest in policy developments in Central and Latin America as well as playing a strong global role

International Energy Policy • Financing instruments („traditional“, unilateral, and newly founded like GEF) • Role within various international organizations and regimes • Common challenges in addressing energy/ environmental issues in developing countries, similarities and differences in responses

Traditional vs. modern Energy Policy traditional modern • supply-side oriented • demand-side oriented • few actors • large number of actors • fossil or nuclear energy • sustainable energy sources sources • promotion and/or • useful energy substitution of one • new instruments energy source • new institutions

Energy Policy - Policy Styles • Institutionalized and non-institutionalized approaches taken to political problems • Process of policy formulation and design of programs (open vs. closed, authoritative- hierarchical vs. discourse-driven etc.) • Differences in policy design and successes and failures of energy programs

Energy Policy – Framing of Policies and Programs • What is the social-economic, political- ideological context of the policies? • What environmental and political discourse shapes public and political attitudes? • Identify underlying patterns of political reasoning and public „justification“ or rationale for policy programs

Energy & Environmental Policy - New Directions • Successful environmental policies are interrelated to choices in energy policy • Traditional energy policy-making does not take this into account and contradicts environmental targets • Can instances or elements be identified with respect to an „inter-policy“ exchange between energy and environmental policy? • How is the inter-face reflected in institutional and procedural structures and innovations?

Emergence of ESI • ESI emerged in the 1880s • Electricity as artificial form of energy • Edison‘s vision • Electro-technical industry’s strategy • Lenin „Electrification & Soviet power“ • Nuclear age

Industrial and social organisation of ESI • State in the State • Lenin‘s illusion • The Energy Syndrome • State failure, economy failure, social failure, system failure • The Nuclear State • The Solar Age

Technology • Thermal power stations with generators • Gas turbines • Fossil and nuclear fuels • CHP • Hydro power • Wind turbines • Photovoltaic cells • Fuel cells

Economies of Scale & Efficiency • Efficiency law • Enlarging power stations reduces the price of electricity • Aircraft turbines as stationary gas turbine power stations • CHP • Alternative technologies

Environmental impact • Limited resources (fossil fuels, uranium etc.) • Ecological problems create pressure • Objective & subjective problems • RES-E impacts

State intervention & Regulation • Ownership (different levels) • State control (investment, tariffs etc.) • Regulation & regulatory bodies • Soft regulation (e.g. voluntary agreements) • No need for regulated open access?

Core regulatory functions Economic (1 st order) regulation Political (2 nd order) regulation Creation and maintenance of a Enforcement of public service competitive market obligations and implementation of public policies => Competition regulation => Public service regulation Supervision and regulation of natural Management of public investments monopoly elements and production and public ownership processes => Sectoral regulation => Public ownership regulation

The need for economic regulation of ESI for the different market stages and different stages of competition Market Stage Transition Period to Fully Developed Competition Wholesale and Retail Competition Generation no need (if the stranded no need investment issue is solved) Transmission / System strong need strong need Services (prices/revenues; quality (prices/revenues; quality of service; security of of service; security of Natural supply) supply) Wholesale Market no need no need monopolies Distribution strong need strong need (prices/revenues; quality (prices/revenues; quality of service; security of of service; security of supply) supply) Supply Market (Delivering, still need low need Metering, Billing etc.) (prices/revenues; quality of (quality of service) service)

Frame Conditions for ESI Regulative Frame Economic Stabile Monopoly Frame Forced competition Stabile Marked Structured Forced Marked Competition & Cooperation Organised Marked Energy Energy Technology Regional Demand Supplyer Innovator Catalyst Manager Stage of Activity

Actors and process of a regulation framework P o litic a l S ec to ra l C o m p etitio n (1 ) s e t u p th e o b je ctiv e s a u th o rities a n d th e ru le s o f re g u la tio n re g u la to r re g u la to r (2 ) e x e rc ize p o litic a l su p e r v isio n (3 ) im p le m e n t th e ru le s a n d o b je c tiv e s th ro u g h o w n e rsh ip o f re g u la tio n C o u rts a n d (4 ) a r e d ire c t c o m p e tito rs S ta te-o w n e d P riv a te n o n ju d ic ia l E n terp ris e s C o m p a n ies settle m en t in stitu tio n s (5 ) p ro d u c e a n d c o m m e rc ia lize (6 ) se ttle d isp u te s C itiz en s P u b lic S erv ic e s G o o d s a n d s erv ic es fo r U s ers fo r C u sto m e rs

Thank you for your attention! PD Dr. Lutz Mez Environmental Policy Research Centre umwelt1@zedat.fu-berlin.de http://www.fu-berlin.de/ffu/