Energy Law and Economics

Abstract

This book offers an edited volume for all readers who wish to gain an in-depth grasp of the economic analysis of recent developments in energy law and policy in Europe and the United States. In response to waning resources and heightened environmental awareness, many countries are now seeking to redefine their energy mix. Several energy sources are available: coal and oil, natural gas, and a variety of renewables. Yet which of them are capable of addressing core energy-related concerns? Reliability, security, affordability, fairness, and sustainability all have to be taken into account. Further, once a target mix has been identified, two challenges remain for legal scholars: what role does the law play in achieving a specified energy mix, and, how can the law best fulfill that role? The essential energy concerns are just as important in defining the way we shape our energy mix as they are in defining the mix itself. An example of current challenges in energy law and policy can be seen in the pursuit by the German and Swiss governments of the so-called "Energiewende" (energy transition). These policies are intended to enable the transition from a non-sustainable use of fossil and nuclear energy to a more sustainable approach based on renewable energies. On the one hand, the goal is to achieve a decarbonization of the energy economy by reducing the use of fossil energy sources such as petroleum, carbon and natural gas. On the other, and in response to the Fukushima nuclear accident, a phase out is intended to eliminate the dangers of nuclear technologies. Achieving these goals poses tremendous challenges for the two countries' energy policies - partly because the energy transition will not only affect energy production, but also energy consumption. From a Law and Economics perspective, a number of questions arise: to what extent is it justifiable to rely on markets and continued technological innovation, especially with regard to the present exploitation of scarce resources? To what extent is it necessary for states to intervene in energy markets? Regulatory instruments are available to create and maintain more sustainable societies: command and control regulations, restraints, Pigovian taxes, emission certificates, nudging policies, and more. If regulation in a certain legal field is necessary, which policies and methods will most effectively spur the sustainable consumption and production of energy in order to protect the environment while mitigating any potential negative impacts on economic development? Do neoclassical and behavioural economics provide us with a suitable framework for predicting the market's complex reactions to a changing energy policy? This book provides theoretical insights as well as empirical findings in order to answer these vital questions. Intro; Foreword; Preface; Introduction; Contents; Contributors; Part I: Energy Transition; Sustainability Strategies and the Problem of the Rebound Effect; 1 Introduction; 2 Efficiency Strategy; 3 Consistency Strategy; 4 Sufficiency Strategy; 5 Conclusion; References; Energy Transition Law and Economics; 1 Costs of the Energy Transition; 2 A Short History of Energy Transitions; 3 Policy Choices: The Legal/Constitutional Framework; 3.1 Energy Supply and Sovereignty; 3.2 Policy Choices in Europe; 3.2.1 Market Liberalisation; 3.2.2 Climate Change and Carbon Free Energy. 3.2.3 Phasing Out Nuclear Energy4 Examples of Limiting Individual Choices in the Energy Market; 4.1 The Emissions Trading Scheme; 4.2 Contributing to the Costs of the Supply Net; 4.3 Mechanism for Cost Allocation of Renewable Energies; 4.4 Exclusion of Foreign Electricity Producers from the Cost Covering Feed-in Tariff; 4.5 Allocating the Exit from Nuclear Energy Costs; 5 Prospects for a Law and Economics Approach?; 6 The Legal Duty for an Economic Analysis; References; Energy Transition in Switzerland; 1 Introduction; 1.1 Most Utilized Energy Forms. 1.2 Decarbonization and Withdrawal from Nuclear Energy1.3 Market Challenges; 2 Governmental Incentives; 2.1 Overview; 2.2 Current Feed-in Tariff System (``KEV System)́́; 2.3 New Market Incentives According to the Energy Strategy 2050; 2.3.1 Main Goals of the Energy Strategy 2050; 2.3.2 First Measure Package; 2.3.3 Second Measure Package (2021-2050); 3 Appraisal; References; The Interplay Between Liberalization and Decarbonization in the European Internal Energy Market for Electricity; 1 Introduction; 2 The Materialization of the EU Internal Energy Market. 3 Liberalizing the EU Electricity Sector: Decarbonization as a Positive Externality?4 EU Renewable Energy Policy: Legal Instruments Correcting for Market Failures; 5 Conclusion; References; The Temperature Target of the Paris Agreement and the Forgotten Aspects of a Meaningful Energy Transition; 1 Problem; 2 The Paris Temperature Limit and the Structure of the Paris Agreement; 3 Frictions with the Current Energy Transition; 4 Purely Technical Approaches Versus Sufficiency; 5 Motivations for Energy Transition; 6 Governance Problems; 7 Economic Governance Approaches; References. A Shocking Truth for Law and Economics: Consumer Welfare Explains the Internal Market for Electricity Better Than Total Welfare1 Introduction; 2 Efficiency Hypothesis as Internal Explanation of the Law; 3 Parallel Circuits: Building Blocks for Total and Consumer Welfare; 3.1 Preliminary Remarks; 3.2 Distribution, Deadweight Loss, and Productive Efficiency; 3.3 The Focus on Energy-Only Pricing Methods; 4 Alternating Currents in Economically-Informed Research; 4.1 Axiological Commitments in Legal Economically-Informed Research in Electricity Market(s).