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2019 | Book

Energy Economics

Concepts, Issues, Markets and Governance

Author: Dr. Subhes C. Bhattacharyya

Publisher: Springer London

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About this book

This book provides an updated and expanded overview of basic concepts of energy economics and explains how simple economic tools can be used to analyse contemporary energy issues in the light of recent developments, such as the Paris Agreement, the UN Sustainable Development Goals and new technological developments in the production and use of energy.

The new edition is divided into four parts covering concepts, issues, markets, and governance. Although the content has been thoroughly revised and rationalised to reflect the current state of knowledge, it retains the main features of the first edition, namely accessibility, research-informed presentation, and extensive use of charts, tables and worked examples.

This easily accessible reference book allows readers to gain the skills required to understand and analyse complex energy issues from an economic perspective. It is a valuable resource for students and researchers in the field of energy economics, as well as interested readers with an interdisciplinary background.

Table of Contents

Frontmatter
Chapter 1. Introduction to Energy Economics
Abstract
This chapter introduces the field of energy economics and offers a brief overview of the coverage of the book.
Subhes C. Bhattacharyya

Economic Concepts Applied to the Energy Sector

Frontmatter
Chapter 2. Energy Data and Energy Balance
Abstract
This chapter introduces the industries of the energy sector and presents the basic concepts related to energy. It also introduces the energy accounting framework that provides a consistent basis for energy-related information for statistical analysis. The chapter discusses the data-related issues and indicates how the information presented in the energy balances can be used to understand the energy situation of a country/region. The chapter will enable the reader to understand alternative forms of energies, the energy accounting framework for economic and policy analyses, and various ratios that are used to describe the energy situation of a country/region.
Subhes C. Bhattacharyya
Chapter 3. Energy Demand Analysis
Abstract
This chapter introduces the concept of energy demand using basic micro-economics and presents the three-stage decision-making process of energy demand. It then provides a set of simple indicators (such as price and income elasticities and energy intensity) and discusses the decomposition method and econometric method that can be used to analyse energy demand.
Subhes C. Bhattacharyya
Chapter 4. Sectoral Energy Demand Analysis
Abstract
The purpose of this chapter is to consider energy demand at the sector level. Major energy using sectors such as industry, transport, and households have their specific features that an aggregated analysis cannot capture. A sector level analysis provides a better understanding of the demand by identifying relevant drivers. This chapter first presents the disaggregation of energy demand, discusses the information issues and introduces frameworks/tools for a disaggregated analysis.
Subhes C. Bhattacharyya
Chapter 5. Energy Demand Forecasting
Abstract
This chapter presents alternative approaches used in forecasting energy demand and discusses their pros and cons. It covers both simple approaches based on indicators and more sophisticated approaches using econometric methods, end-use method and other techniques. The chapter builds on the materials presented in Chaps. 3 and 4 and explains how demand analysis tools are extended to make forecasts for the future.
Subhes C. Bhattacharyya
Chapter 6. Economic Analysis of Energy Investments
Abstract
This chapter introduces the traditional economic analysis of investment in energy projects and highlights the differences between the economic and financial analyses of projects. The chapter ends with a discussion on risk analysis for investment projects.
Subhes C. Bhattacharyya
Chapter 7. Economics of Non-renewable Energy Supply
Abstract
This chapter provides an introduction to the economic concepts related to fossil fuel supply. The chapter presents a typical chain of activities in the fossil fuel supply, namely exploration, development and production and discusses the relevant economic decision-making issues for each activity. It also considers the influence of government intervention on the investment decisions through fiscal instruments.
Subhes C. Bhattacharyya
Chapter 8. The Economics of Renewable Energy Supply
Abstract
This chapter introduces the economics of renewable energy supply. It covers the economics of renewable electricity supply and that of bio-fuels and presents the commonly used support mechanisms. The concerns for level-playing field for renewable energies and the cost barriers are also discussed.
Subhes C. Bhattacharyya
Chapter 9. Energy Pricing and Taxation
Abstract
This chapter introduces the economic concepts related to pricing of energy in different market conditions. The chapter starts with the basic competitive market model and discusses the extensions required to analyse specific features (such as indivisibility of capital, specificity of assets, capital intensiveness, etc.) of the energy sector. The chapter also covers the issue of market failure and presents the commonly used market interventions in such situations. The concept of cost-benefit analysis is used as the framework for most of the analysis. The principles of energy pricing are then introduced and the economic rationale behind energy taxation is considered.
Subhes C. Bhattacharyya
Chapter 10. The Economics of Environment Protection
Abstract
The objective of this chapter is to highlight the energy-environment interactions and present the economic principles used in dealing with the environmental issues arising from energy use. The chapter introduces the concept of externalities and discusses the methods available for internalizing them. It also discusses issues related to estimation of external costs.
Subhes C. Bhattacharyya
Chapter 11. The Economics of Climate Change
Abstract
The purpose of this chapter is to introduce the issues related to climate change and discuss the economic perspective of the problem. It then presents the options available for mitigating the problem, and the challenges encountered in their implementation. The chapter discusses the energy sector’s role in the entire debate and highlights the policy debates in both developing and developed countries.
Subhes C. Bhattacharyya

Issues

Frontmatter
Chapter 12. Overview of Challenges Facing the Energy Sector
Abstract
This chapter provides a brief introduction to important issues facing the energy sector. It introduces the concepts of energy transition and energy trilemma and discusses how the energy sector is evolving to address the global challenges.
Subhes C. Bhattacharyya
Chapter 13. Energy and Sustainable Development
Abstract
This chapter introduces the basic tenets of sustainable development and presents the global initiatives towards creating a better world for all. It then discusses how energy contributes to unsustainable practices by focusing on energy trilemma and highlights the options available to create a sustainable energy sector that is aligned with the sustainable development agenda.
Subhes C. Bhattacharyya
Chapter 14. Energy Security Issues
Abstract
This chapter focuses on the economic issues related to energy security concerns. Security of supply issues have traditionally focused on oil price volatility and the disruption of supply due to fossil fuel depletion. The attention then shifted to threats to infrastructure and the possibilities of disruption due to inadequate investments in infrastructure or market manipulation by market players. The outlook for energy security has changed significantly post-economic crisis of 2008 due to oversupply situation and the rapid penetration of renewable energies. The contemporary thinking on energy security has moved away from the traditional focus and accordingly, this chapter explains the concept, introduces the economic dimension of the problem and discusses the policies that can mitigate the issue.
Subhes C. Bhattacharyya
Chapter 15. Impact of Price Volatility
Abstract
This chapter focuses on the issue of fluctuating energy prices and their impacts on the economy. The impact varies depending on price rise and fall. The effect varies for the importing and exporting countries as well. The purpose of this chapter is to explain the economic dimension of the problem and discuss the policies that can be taken to improve the situation.
Subhes C. Bhattacharyya
Chapter 16. Energy Investment Issues
Abstract
This chapter introduces the issues related to energy-related investments and presents the economic arguments to analyse such issues. The presentation focuses on the global, cross-cutting issues on investment without specific focus on a particular country. It presents an overview of the investment needs and present main issues affecting investment and financing of investments. The chapter also touches on the effects of energy sector reform and global financial crises on investments in the sector.
Subhes C. Bhattacharyya
Chapter 17. Energy Access
Abstract
This chapter introduces the problem of lack of access to energy services. It provides an overview of the problem dimension and presents the common approaches used to address this issue. Finally, it calls for a change in the provision of access to ensure better results.
Subhes C. Bhattacharyya
Chapter 18. Pollution Control from Stationary Sources
Abstract
This chapter presents the issue of pollution from stationary sources and introduces available mitigation options. It focuses on both direct and indirect control mechanisms and indicates the benefits and shortcomings of each option. The chapter elaborates on the cap-and-trade programme used in the US for mitigation of acid rains and also introduces the problems related to indoor air pollution.
Subhes C. Bhattacharyya
Chapter 19. Pollution Control from Mobile Sources
Abstract
This chapter aims to discuss the options and policies for mitigating pollution from mobile sources. The nature of the externality involved here is first presented and economic as well other instruments for reducing pollution from this sector are considered. It also discusses the economic rationale behind some of the policies generally used.
Subhes C. Bhattacharyya
Chapter 20. Energy Demand Management and Demand Response
Abstract
This chapter introduces the concepts related to management of energy demand and their economic analysis. It focuses on the demand management options and the economic decision making involved in demand management. It also introduces the concept of demand response and energy efficiency and presents the debate related to energy saving. The chapter also introduces a set of evaluation tests that are used to evaluate demand management programmes. Finally, the concept of rebound effect and the link between energy and other factors of production are presented.
Subhes C. Bhattacharyya

Markets

Frontmatter
Chapter 21. International Oil Market
Abstract
This chapter provides a brief review of the evolution and developments of the international oil market. It sketches the historical evolution of the oil industry and indicates the major changes observed in this market. The chapter also presents a brief analysis of some relevant issues such as the changing role of international and national oil companies, changing demand-supply patterns and the OPEC behaviour.
Subhes C. Bhattacharyya
Chapter 22. Natural Gas Market
Abstract
This chapter introduces the specific features of the natural gas market and shows why the industry has developed in a different way than the oil industry. It then indicates the efforts being made to transform the regional markets into a global market. The economics of the gas market relevant to the developed and the developing countries is also presented.
Subhes C. Bhattacharyya
Chapter 23. Coal Market
Abstract
This chapter provides a brief overview of the coal industry and indicates how coal—the old lady of the energy industry–has made a come back. The chapter introduces the reserves, demand, and supply situations in coal and discusses the regional demand pattern. It also indicates the role of clean coal technologies for future development of the industry.
Subhes C. Bhattacharyya
Chapter 24. Markets for Electricity Supply
Abstract
This chapter introduces the key concepts related to the electricity supply industry (such as load duration curve, capacity factor, and load diversity) and provides simple decision-making tools such as merit order dispatch, levelised costs and screening curves used in the traditional electricity system. The chapter also presents the features of the competitive electric power markets and sketches the evolution of the electric power industry in a carbon constrained world.
Subhes C. Bhattacharyya
Chapter 25. Carbon Market
Abstract
This chapter presents the developments in the carbon market. The chapter considers the market development in two phases—Kyoto mechanisms and the market-based measures under the Paris agreement. The issues related to the carbon markets are also briefly presented.
Subhes C. Bhattacharyya

Governance

Frontmatter
Chapter 26. Institutions and the Energy Sector Governance
Abstract
This chapter considers evolving nature of the energy sector challenges and focuses on the governance of the energy sector at different levels—international, regional and national. It introduces the energy sector governance through an introduction of essential concepts of institutional economics. It then highlights the multi-disciplinary nature of governance and highlights how poor governance has affected the sector in many countries.
Subhes C. Bhattacharyya
Chapter 27. Reform of the Energy Sector
Abstract
This chapter discusses the reform and restructuring of energy industries and presents the issues related to these structural changes in the energy industry. The chapter starts with a discussion about the economic rationale for government intervention in the energy sector, and the changes that weakened these arguments. Alternative reform models are then presented along with their pros and cons. It also presents a set of factors that determine the substainability of any reform.
Subhes C. Bhattacharyya
Chapter 28. Regulation of Energy Industries
Abstract
This chapter introduces the concepts related to the regulation of energy industries. It first presents the traditional regulation, followed by the modern concepts of regulation (incentive regulation). The pros and cons of each alternative are discussed as well.
Subhes C. Bhattacharyya
Backmatter
Metadata
Title
Energy Economics
Author
Dr. Subhes C. Bhattacharyya
Copyright Year
2019
Publisher
Springer London
Electronic ISBN
978-1-4471-7468-4
Print ISBN
978-1-4471-7467-7
DOI
https://doi.org/10.1007/978-1-4471-7468-4

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