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Energy Policy and Security under Climate Change pp 57–107Cite as

Palgrave Macmillan

Designing a Steady-State Energy Policy

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Abstract

This chapter sets out a description of a steady-state energy policy. It begins with a close look at the implications of a steady-state monetary, trade, tax, and investment policy for energy policy. Drawing from developments in the current energy transition (e.g. proliferation of micro-generation, deployment of smart grids, and the emergence of prosumers markets), the analysis presents hard and soft pathways, and singles out pitfalls derived from the transition’s embeddedness in growth-driven policy frameworks. The discussion subsequently places these processes within a steady-state policy framework and shows how they can up-scale the transformation of energy systems. The discussion extends to policy prescriptions to maximize energy efficiency, essentially calling for a switch from a supply-side to a demand-side paradigm.

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Notes

  1. 1.

    The switch from the increasingly scarcer and more costly light, sweet crude oil to the more common heavy crude creates additional problems for refineries, most of which have been built to refine the former type of oil. An additional layer of costs then regards building further refining capacity (see Kuzemko et al. 2015: 184).

  2. 2.

    One could counter-argue that once tax reform catches on and both corporations and citizens adjust to the new system, state revenues will plummet. That would be great news in the first place, since it would mean that unsustainable practices will have been removed and energy use will have been rationalized. Nevertheless, fossil energy use is unlikely to be eradicated altogether in the near future, this meaning that the state will retain considerable associated income. Tax-induced savings, moreover, would free up income to be consumed in further economic activities thus generating profits for the economy as a whole, part of which is taxed back into the state cashiers (Lawn 2007: 213–4).

  3. 3.

    Lower income taxes, on the other hand, would also mean higher purchasing power for citizens. This can act as stimulus for the rise of aggregate demand that remains low for years. More importantly, this demand would revolve around services, rather than products, further dematerializing the economy. Corporations, on their part, would be able to invest more in human labor and green technology. Lower unemployment and increased sustainability could thus ensue, and the linkage between growth and employment would be lessened (Lawn 2007: 271–81; Jackson 1996).

  4. 4.

    A significant caveat is that tax instruments ‘need and presuppose well functioning markets where many private actors will take advantage of them’ (Gunningham 2013: 311). Non-mature, weak and dysfunctional markets , to the contrary, are fraught with imperfect and asymmetric information, the principal/agent problem, seemingly non-rational responses and ensuing high risks of rent-seeking, speculation and even fraud. This raises the significance of the parallel need to develop resilient markets across sectors that will make optimal use of ecological tax instruments (Gunningham 2013: 307–10, 313).

  5. 5.

    Externalities, it should be stressed, are emphatically undemocratic and exclusionary, in that the largest, most affected and least well-off part of the population (including future generations that are unrepresented) shoulders the costs of economic activity and energy use that generates generous profits for the few at the top (Brown and Sovacool 2011: 56).

  6. 6.

    The profound changes under way, moreover, open up space for the establishment of a new corporate actor: aggregators. Aggregators can invest in renewable power generation, and/or contract quantities produced from a number of small energy producers. Since flexibility becomes a premium service in a complex power market where supply and demand balancing becomes more demanding, there is enough scope for aggregators to sell this aggregated electricity to utilities and energy companies in times of increased demand . These actors can thus contribute to the stability of the network and the delivery of energy services at all times (Boscán and Poudineh 2016: 2, 8).

  7. 7.

    This section has benefited from my brief engagement with the WiseGRID project.

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    Filippos Proedrou

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Proedrou, F. (2018). Designing a Steady-State Energy Policy. In: Energy Policy and Security under Climate Change. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-77164-9_3

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