The Impact of the New Wave of Financial Regulation for European Energy Markets

The low price elasticity of demand for household energy given the lack of easy alternatives means that consumers will continue to purchase it even when prices rise drastically as we can see from extract A they did over the three year period. Furthermore the complex pricing structures in the energy market make it difficult for consumers to exercise any consumer sovereignty because they lack the information or indeed don’t know how to interpret it, to make a decision which is in their best interest.

The stage for a deeper integration of Renewable Energies in the UK was set by a number of these policies which has evolved over the years. These policies however were not delivering maximum efficiency when compared to other policies in other European countries. For instance, the inefficiency of some of the policy mechanisms when compared to those obtainable in Germany had been severally argued. The Energy White Paper 2003 was largely a response to the future of the UK Energy industry drawing from the failures of these past policy implementations.

Since 2004 the UK has been a net importer of natural gas, as the North Sea reserves have been exploited and nearly exhausted. Today, ten years later, the UK has become even more dependent on foreign gas with over 50% of demand for gas satisfied by foreign supply (Gloystein, 2013). This increasing dependence on foreign countries is a worrying trend, due to the adverse effects it can have, which include being subjected to price shocks, supply shortages and manipulation both economically and politically. Energy insecurity has arisen through a lack of investment in other

The cap on the market is set on carbon emissions, creating scarcity within the market. At the end of each year businesses within the scheme are required to ensure they have enough allowances to account for their installation’s actual emissions. Those firms that do not comply and pollute without sufficient permits are hit with heavy fines. (Euro 100 per ton). The aim of carbon trading is to create a market in pollution permits and put a price on carbon. In this way, policy can help internalise external costs of firms’ production and encourage lower emissions to tackle climate change. In a cap and trade system, the volume permits would gradually decline and total emissions, in theory, will diminish. The model of such can be shown as

CAP and Trade is a cost-effective method for reducing emissions. The world’s largest implementation of Greenhouse gas trading system is the European Union Emissions Trading System (EU ETS) and they have been environmentally ineffective. The result of price crash non-stability in California and Quebec are also environmentally ineffective. In 2016, the emphasis was on EU ETS’s fourth phase (2021-2030) which was what the European Commission, presented changes for. The purpose of the presented changes is to bring the cap into line with the EU's 2030 objective, reducing Greenhouse Gas emissions to at least 40% nationally by 2030. The EU provides a better goal of free allocation rules and further supports low-carbon innovation and energy sector transformation. To meet the legal requirements and to compensate for excess pollution EU ETS should reduce GHG emissions, and buy emission allowances in the carbon market. They could also reduce GHG emissions

In this final assignment for Environmental Policy, Regulation, and Law, I will discuss the Energy Policy Act. This discussion will be geared toward the current usage of renewable energy with reference to the incentives created in the Energy Policy Act. The introduction into this topic will include a brief synopsis of the act’s history. Following the history of the Energy Policy Act, there will be a discussion and argument for the act and its present incentives for the use of renewable energy sources. In conclusion, the expected future of the Energy Policy Act and the closing argument for its regulation will be covered.

The present midterm exam has as purpose to evaluate, comparing and contrasting how the Energy Policy Act (2005) got passed and signed, using as a guidance Kingdon (1995) and Smiths & Larimer’s (2013) concepts about agenda setting and decision making in public policy.

Here as well, an institutional problem particular to the U.S. has been an impediment for enacting smart renewable energy policies. Unlike Europe where the parliamentary systems allow the executives to have a majority of seats in the legislature branch, the U.S. system is known for being constantly governed by one party who controls one house of the U.S. Congress and the presidency and another party at the other house of Congress. This central schism in American politics has played an important role for national renewable energy policy because one party is generally opposed to government actions. Indeed, American politic history shows us how democrats generally seek to give cost-control power in the hands of centralized experts while Republicans are usually skeptical about experts ‘reliability.

With deregulation, consumers are now allowed to pick who the utility company purchases energy from. The utility company still owns the grids and still brings the energy to the building. The consumer can now choose which company based on lowest price. Competition within any industry drives prices down which means savings for the consumer and a more level playing field for up and coming producers.

Energy deregulation has been adopted by many states over the past several years as a way to allow for multiple energy providers to compete for customers based on price and a higher level of customer service, break the utility monopoly into separate companies or business unit that separate the "monopoly

There is a high level of uncertainty and volatility involved in energy markets [11, 12], the interactions

Cap and trade is usually the policy referred to when the literature uses the ambiguous phrase of ‘carbon pricing.’ While a carbon tax is functionally a pricing mechanism, the small quantity of available cases of implementation mean that cap and trade is the default mechanism for carbon pricing in the status quo. The primary benefit of the cap and trade approach is creating an almost infinitely scalable carbon market. Cap and trade accomplishes this by functioning simultaneously as a disincentive and an incentive. While exceeding the cap triggers a fine, registering under the cap allows for the difference in emissions to be auctioned off by the company. This means that companies always have an incentive not just to meet the cap, but to emit the least amount of pollutants possible to allow for more capital to trade in the carbon market, maximizing efficient distribution of emissions (Borghesi and Montini 2016).

Government incentives and policy factors serve as significant motivation for market entry especially in high-cost, highly competitive markets such as solar energy. Therefore, Nanosolar must take the types of incentives and the differences between them into consideration to ensure that they enter the best market. Government incentives are important because they not only provide reasons for consumers to switch over to solar energy from other less sustainable forms of electricity, but also attract solar power companies such as Nanosolar to enter the industry and provide those services. With this, Nanosolar is aware that European markets are highly profitable, especially in countries like Germany that enacted renewable energy laws that provide feed-in tariffs that required “utilities to buy solar electricity at a fixed price which allowed all key players to make enough profit”, in addition to France whom implemented tax credits and subsidies to entice citizens to shift to solar electricity, and Italy whom offered bonuses to schools and public health facilities that moved to solar electricity (Nanosolar, 10). Lastly, Nanosolar’s “existing relations with European power suppliers” and the assembly plant in Germany make Europe a more attractive industry because they can be “more price competitive” in Europe as a result (Nanosolar, 12).

Australia, much like the rest of the Western World, is becoming or has became a deregulated electricity sector. For our purposes, why a country deregulates can vary. As started in my previous essay, most of Australia’s privatization or deregulation of the utilities including electricity came down to two factors, one being money and following patterns of the other western countries who also have deregulated their electricity sectors and other utilities. However discussing only about deregulation and alternative energy portfolio standards is what we are focusing on.

This concise report summarizes the present analysis and important issues and provides better recommendation. In this report I have discussed the short and long term benefits and risks for the renewable energy industry. I have considered public education that allows noise levels and visual amenity to encourage establishment wind farms and other sources of renewable energy. And also a national system of feed-in tariff rates for all forms of renewable and sustainable energy in a policy setting that encourages community power schemes, small and medium businesses, and other