Energy policy is determined by national issues and interests, including decarbonization, system reliability, resource diversification, technology export potential, economic costs and access.
As well, energy policy must ensure all consumers can take advantage of energy efficiency and renewables; and support job creation while protecting iconic public lands from energy development impacts.
Cost-effective energy efficiency programs
State energy policies provide utilities in the US with an important impetus to implement cost-effective energy efficiency programs that can offer significant economic and energy benefits for their customers, the economy and society. They may even help avoid or mitigate some environmental effects associated with new power generation.
State-level policies can ensure energy efficiency investments produce maximum return by setting minimum requirements for energy savings or allocating a set percentage of utilities’ sales to efficiency resources. Many states already employ this approach.
This analysis employs the levelized cost approach to estimate the net present value of energy efficiency measures, including their net present value and all related costs and benefits, such as capital, labor and markup costs, finance costs, operating costs, quantifiable non-power system effects effects and program administration costs. Our findings reveal that energy efficiency can be an extremely cost-effective resource.
Fossil fuel phase-out
A phase-out of fossil fuels should be conducted quickly and fairly, supporting developing countries in alleviating poverty by creating jobs in energy efficiency and renewables, which will also promote biodiversity while providing inclusive forms of prosperity based on renewables rather than raw materials extraction. An equitable transfer of implicit and explicit subsidies towards clean energy should accompany this change, along with transparent formulas for market-linked carbon prices with tight time frames for reformation.
COP28 climate talks in Dubai represent an unprecedented opportunity to forge stronger language around phasing out fossil fuels. At present, some leaders are pushing for an agreement which restricts only “unabated” coal, oil and gas; but this won’t meet Paris targets of keeping global warming below 1.5degC.
Report authors contend that including a clear reference to a fossil fuel phase out in the COP28 text could have real impacts, with nations adopting policies aligned with international definitions of abatement and thus reaching emissions reduction goals consistent with Paris-align targets (including net zero energy systems by 2050).
Refinancing for clean energy
Most energy policy incentives are financial, such as tax breaks, rebates and loans. They can also assist with new technologies’ development while helping lower consumer costs. Many state, local and tribal governments are using cost-effective clean energy policies to lower greenhouse gas emissions while saving energy consumption costs, improving air quality and spurring economic development.
Rush Island project refinancing utilizes the EIR loan program as leverage against other resources, including utility customer capital contributions, for an overall leverage ratio of 5:1. This approach offers greater flexibility while diversifying risk management.
Refinancing renewable projects can help increase their cash flow. This is because as construction continues, demand for debt decreases allowing more money for other projects that will move quicker into commercial operation. Furthermore, refinancing can also help lower energy rates as companies are able to borrow at reduced interest rates through refinancing.
Public-private partnerships
The global economy must transition quickly towards clean energy sources. Carbon emissions must be reduced quickly while still allowing economies to function and prosper. In order to do so, governments must take measures aligning policy and regulatory frameworks with financing mechanisms; including public-private partnerships.
However, these partnerships can present unique difficulties and be challenging to manage when the parties involved have different risk cultures. Finding ways to strike a balance between risk allocation and meeting public demands for transparency and accountability remains the ultimate objective.
To overcome these difficulties, the Department of Energy has established rules governing public-private partnerships. These regulations require partners to assess and price risks in a fair and reasonable way – an important requirement to ensure projects meet cost and schedule expectations as well as taking full advantage of private sector companies’ expertise and avoiding moral hazard issues that would reduce incentives.