Energy policy influences decisions related to production and consumption of energy resources. Governments use tax credits, building energy codes, and air quality standards as levers of influence on these behaviors.
Nations establish energy policies tailored to their national interests, such as decarbonization, system reliability, resource diversification, technology export potential and electricity access. International agreements serve to align countries toward achieving common goals.
Energy Security
Energy security or independence became a high-profile topic following the 1973-4 oil shock, when widespread gasoline shortages and long lines at gas stations highlighted how fragile domestic energy supplies were. Governments soon implemented energy policies aimed at safeguarding energy supplies while simultaneously driving economic development and reaching net zero carbon emissions levels.
Energy security has multiple dimensions, as evidenced by its vast literature on this subject. Modern authors often define energy security in different ways but all agree on one fact: energy is a public good that cannot easily be provided through markets. Thus, more comprehensive problem-solving approaches should address both technical and social components of energy security as well as consider dynamic technological progress, environmental constraints, political climate conditions and social and civilizational transformations necessary to overcome today’s energy crisis.
Energy Efficiency
Energy efficiency can be an effective strategy for cutting emissions and costs, while simultaneously expanding manufacturing capacities of companies, expanding water supplies in cities, improving attendance at schools and heating low-income households. Recognizing and accounting for these benefits of energy efficiency should be part of economic assessments.
Economists have long asserted that markets provide public goods inadequately by failing to account for non-excludable environmental externalities, thus necessitating government intervention through regulations, subsidies or carbon pricing policies.
However, many regulatory efforts fall short in taking full advantage of energy efficiency’s potential benefits and may even diminish them. To overcome information and behavioral barriers to energy efficiency, policymakers can utilize insights from behavioral economics to influence individual choices towards more energy-efficient ones – this might include providing real-time feedback on energy usage or framing savings as avoided losses – plus offering financial incentives like rebates or tax credits as financial inducements for individuals to adopt energy efficient behaviors.
Fossil Fuels
Fossil fuels are carbon compound mixtures formed naturally within Earth’s crust from prehistoric plant and animal remains through processes like anaerobic decomposition and ancient photosynthesis. Today, fossil fuels such as coal, petroleum, natural gas and methane form the cornerstones of modern energy systems by providing heat for cooking, heating homes, propelling vehicles and producing electricity; additionally they are refined into useful products like kerosene gasoline diesel etc. as well as being converted to plastics and synthetic resins through conversion processes.
Burning fossil fuels releases dangerous pollutants into the atmosphere that threaten public health and ecosystems, with cancer Alley residents in Louisiana being exposed to more than twice the national average air pollution due to nearby oil refineries and chemical plants releasing air pollution that contains particulate matter, mercury poisoning and nitrogen oxide pollution. Fossil fuel pollution also leads to premature deaths and diseases caused by exposure to particulate matter, toxic mercury or nitrogen oxide emissions.
Renewable Energy
Renewable energy uses sunlight’s abundant supply of light, heat and electricity for our benefit without harming the environment. Renewables take advantage of solar’s rays to eliminate fossil fuel extraction and burning while decreasing carbon emissions; furthermore it promotes sustainable practices while contributing to economic stability – an example that government buildings can set by switching over to cleaner, renewable power sources.
As part of our fight against climate change, a global transition to renewable energy must occur at scale. While it will require significant investments, its importance cannot be overstated. To make renewables more cost-effective and affordable, we should implement a carbon tax or cap-and-trade system that forces major CO2 emitters to internalize their pollution costs more fully – ultimately creating a cleaner and more sustainable world; estimates indicate this effort can save the planet $4.2 trillion each year through decreased pollution and climate impacts by 2030.