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Price floors in greenhouse gas emissions trading schemes can guarantee minimum abatement efforts if prices are lower than expected, and they can help manage cost uncertainty, possibly as complements to price ceilings. Provisions for price floors are found in several recent legislative proposals for emissions trading. Implementation however has potential pitfalls. Possible mechanisms are government commitments to buy back permits, a reserve price at auction, or an extra fee or tax on acquittal of emissions permits. Our analysis of these alternatives shows that the fee approach has budgetary advantages and is more compatible with international permit trading than the alternatives. It can also be used to implement more general hybrid approaches to emissions pricing.

Abstract Energy storage offers the flexibility needed to integrate renewable generation into electricity systems. One decentralized option is to install battery packs in homes and offices. Yet storage owners might operate their device autonomously to minimize their own electricity costs, but this could be inefficient from a wider electricity system perspective. Using a novel agent-based power system model, ESMA, we explore the economic trade-offs of aggregator-led (centralized) and consumer-led (decentralized) coordination in the UK over the period 2015–2040. We consider the deployment of storage in the domestic, commercial and industrial sectors. Centralized scheduling leads to the lowest power system cost, reducing mean electricity prices by up to 7% relative to decentralized scheduling. This could avoid annual bill increases of up to 407 £m/year and could decrease electricity price volatility by up to 60%, depending on the installed storage capacity on the grid. We show that aggregators could reduce the disparity between private and system value by financially incentivizing consumers to give up control of their storage resource in order to use it more efficiently for the benefit of the wider electricity system.

In the context of energy sector reforms pursued by Romanian government since 1990s, we compare and contrast the market outcomes of European utilities’ investment with the host government policy objectives. We begin with energy market reform in Romania and review governments’ efforts to attract foreign direct investment (FDI) and to gradually withdraw from the distribution and supply segments of electricity market. Subsequently, we illustrate the scope European utilities have had, market policy and design notwithstanding, for consolidating market power through regional dominance. We examine the extent to which these utilities have sought to enhance their positions through horizontal and vertical integration, counter to the EU plans for a competitive market structure. We find that the investments of European incumbents have not been resoundingly successful: although market entrance may have been justified on long-term strategic grounds, in the immediate term, segments acquired through competitive auctions have yielded modest regulated returns. Finally, we discuss the extent to which policy makers have achieved their goals. Although the short-term benefits of a competitive market structure have reached some consumers, a renewed interest in promoting ‘national champions’ reflect frustration with market mechanisms as a means of ensuring long-term strategic investments in the sector.

Abstract This note attempts to provide a simplified insight into the mechanisms of petroleum futures trading. The exact nature of the ‘social gain’ resulting from futures trading is specified, and particular attention is paid to the importance of speculation for increasing the amount of hedging (ie insurance against price risk) that can be accommodated.

Abstract The simulated effects of anthropogenic global warming have become important in many fields and most models agree that significant impacts are becoming unavoidable in the face of slow action. Improvements to model accuracy rely primarily on the refinement of parameter sensitivities and on plausible future carbon emissions trajectories. Carbon emissions are the leading cause of global warming, yet current considerations of future emissions do not consider structural limits to fossil fuel supply, invoking a wide range of uncertainty. Moreover, outdated assumptions regarding the future abundance of fossil energy could contribute to misleading projections of both economic growth and climate change vulnerability. Here we present an easily replicable mathematical model that considers fundamental supply-side constraints and demonstrate its use in a stochastic analysis to produce a theoretical upper limit to future emissions. The results show a significant reduction in prior uncertainty around projected long term emissions, and even assuming high estimates of all fossil fuel resources and high growth of unconventional production, cumulative emissions tend to align to the current medium emissions scenarios in the second half of this century. This significant finding provides much-needed guidance on developing relevant emissions scenarios for long term climate change impact studies.

Abstract This paper presents the experience curves of low-carbon domestic heating technologies in the United Kingdom between 2010 and 2019. The deployment of these technologies has been acknowledged as one of the main actions toward decarbonising the heating sector. In the UK, several deployment oriented policies have been implemented, such as the Renewable Heat Incentive (RHI). In this study, we focus on the following domestic heating technologies: air-source heat pumps, ground-source heat pumps, solar thermal collectors, and biomass boilers. Condensing combination gas boilers are also included to act as the baseline/incumbent technology. Using UK installation cost data for 2010 to 2019, we found that low-carbon heating technologies had experience rates of; air-source heat pumps −2.3 ± 5%, ground-source heat pumps −0.8 ± 4%, biomass boilers 0.1 ± 2%, and solar thermal 13 ± 5%, all significantly lower than the reported rates of similar technologies in the literature. Furthermore, we found that gas boilers have potentially reached the floor price at approximately £30/kW. The resulting experience rates can be used in energy economics models and to inform policymakers in developing further deployment programs.

Abstract A study of the relationship between electricity use and economic development in over one hundred countries, constituting over 99% of the global economy has been undertaken. Correlations between electricity consumption/capita and GDP/capita have been analysed and compared with those between total primary energy supply/capita and GDP/capita. A supporting analysis has correlated the proportion of energy used in the form electricity, the `e/E ratio', with GDP/capita. The general conclusions of this research are that wealthy countries have a stronger correlation between electricity use and wealth creation than do poor countries and that, for the global economy as a whole, there is a stronger correlation between electricity use and wealth creation than there is between total energy use and wealth. The study also shows that, in wealthy countries, the increase in wealth over time correlates with an increase in the e/E ratio. The results imply that the energy ratio ($/toe) should be replaced by the electricity ratio ($/kWh) as a development indicator and, more precisely, by the e/E ratio (kWh/toe).

This article sets out to analyse the Saudi gas initiative in the context of the decision-making process in Saudi Arabia between 1998 and 2002. It describes the overall context in which the initiative was made. It focuses on the personalities and institutions that were important in its birth and its evolution. The article argues that a mixture of personalities (especially that of Crown Prince Abdullah and foreign minister Saud al-Faisal) and institutions (especially a clutch of new bodies formed in 1999 and 2000) were pivotal in the emergence of the initiative. It also looks at the obstacles that were placed in the way of the initiative, arguing that Saudi Aramco and the minister of oil, Ali Naimi, were key blocking players. Over time, the Saudi gas initiative has come to be seen as a benchmark of the wider cause of economic liberalization in the Kingdom. The lack of progress in the initiative since the initial indicative contract awards in June 2001 has reflected the lack of movement in the general reformist strategy.