Environmental Economics Issues and Policies

Introduction

For a long time, environmental issues have been a major challenge to policy makers and there has been need to identify measures that will help overcome the problems that arise which affect the day to day operations in the society. Environmental economics concepts help policy makers come up with the relevant ideas that are useful in the formulation of the relevant policies (Elliott 2007). By taking into consideration environmental economics helps policy makers recognize the need to come up with practical action policies regarding climate change. Research and technology is also useful in identifying those strategies that will help the evaluators know the technology to implement in order to facilitate enhanced environmental development.

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Theoretical And Practical Considerations Facing Policy Makers Over Energy Issues

The world has made use of fossil fuels and other sources of energy to provide products that are an essential part of our lives. However, there keeps arising challenges related with providing the products that require energy and the major factors that result into these challenges include the rising demand for energy, a desire to fulfil that demand, the need to ensure continued supply and an ability to sustain both the demand and supply.

The International Energy Association points out that, the demand for energy can only be fulfilled if up to 50% extra energy is supplied by the year 2030, or if at least one third of the set policies are implemented (Silvestre & Dalcol 2009). This is because the world population has been rising significantly and this has continued to make the demand for energy products go way above the existing supply. Another reason is due to the fact that many people all over the world are moving from the rural way of life to urbanized life with increased urbanization.

Different countries in the world have been experiencing high rates of industrialization and this has resulted into many people moving form the rural areas to the urban areas even when there were not available energy sources to cater for these industries (Ison, Peake & Wall 2002). However, despite the high levels of demand, production of hydrocarbons has continued to be sustainable and this has enabled industries to keep growing. The International Energy Association estimates shows that there is likely to be commercial viability of the oil resources for approximately 40 years at the current consumption rates (Schork 2009).

The viability for gas is estimated to last approximately 60 years while coal is expected to last 120 years, taking into consideration the current consumption levels. With advancement in technology and the prevailing search for other hydrocarbon resources, it is likely that the viability may even extend to the next century.

The greatest challenge in implementing the appropriate policies to make energy resources commercially viable is the prevailing financial and economic crisis that is affecting the entire world. Policy-makers are making great efforts to ensure that the world does not experience a downward trend that will result in economic protectionism. They are also trying to ensure that the world’s financial system is consolidated to enable the implementation of the policy measures. This is, however, proving difficult and there are challenges that the 1930 protectionism in the US economy on commercial goods may affect the provision of energy resources (Twidell & Weir 1986).

The policy-makers need therefore to come up with a steady ground that will guide them during the difficult periods and also a clear vision of where they are headed with their set objectives. There has arisen the need also to support the coordinated international policies that are aimed at enhancing the global fiscal boost. However, the different governments in the world are not showing much co-operation and achievement of policy objectives is tending to be difficult as a result. The 1930 global depression greatly affected the policy-makers’ objectives and with the prevailing financial crisis, the situation is tending to be worse (Silvestre & Dalcol 2009).

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The issue of global debt deflation is proving to affect the policy implementation strategy.

Energy occupies a fundamental role in as far as the global environmental problems are concerned. These include the issue of climate change that has today taken a global context, in addition to the acid rain that has case massive damage to some regions of the global ecosystems, not to mention a disruption of the quality of air, at local environment.

Energy markets the world over have witnessed a rapid rate of evolving, thanks in part to competition, privatisation, regulation of the sectors in the market. These issues have thus gained prominence in the UK in particular, along with the rest of Europe (Elliott 2007).

Furthermore, the issues of energy are also tied to global politics, along with the issue of international security. Cases in point are the daily developments that we witness in the Middle East, as well as in Russia, with its neighbours.

In as far as the issue of energy and the environment is concerned, what appears to have caught the attention of the policymakers, educators and businessmen alike, is the desire to ensure that additional energy is created which at the same time paying close attention to the sustainability of the environment. Regardless of the environmental economic concerns that often accompanies this issue, there is a need to appreciate the fact that energy efficient homes, buildings, consumer products and cars is no the rise.

As the demand for sustainable and renewable energy increases, there is also a corresponding rise in new careers that have emerged in the area of the green industry (Elliott 2007). These include for example, turbine technicians, and installers of solar panels, to name but a few. According to a report that the Solar Energy Society in the United States commissioned, close to 8.5 million jobs that were realized in 2006 were attributed to industries that concerns themselves with the issue of renewable energy.

The signing in august 2005 of the Energy Policy Act means that both long-term and short terms impacts may be expected on the issues of energy and its conservation. The energy law seeks to ensure that both new and existing facilities are able to make efficient improvements in terms of energy. In addition, the law is also concerned with the issue of enhancing the utilization of renewable sources of energy, so as to conserves the natural sources, such as the fossil fuels. Three is also the issue of ensuring that equipments that are energy efficient are purchased, alongside the buying of bio-based products or those with recycled content (English 2007).

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The law also seeks to ensure that the activities of the federal government in as far as environmental impacts are concerned, are drastically reduced. The 2005 energy policy act calls for a concerted effort from all the aforementioned areas. Furthermore, the laws shall also have a major impact on environmental management systems, with the result that the various managers at for example, federal facilities, shall be called upon to ensure that the considerations of the law are implemented fully.

In 2007, the White Paper on energy title, “Meeting the Energy Challenge” was formulated. This paper gives an insight into the domestic and international government strategy as regards the issue of energy, with a view to containing the challenges that the UK government has been faced with for a long time now. In addition, this White Paper also seeks to deliver four fundamental policy objectives. First, there is a need to ensure that a structure is established, so that the UK is in a position to reduce the emissions of carbon dioxide by a factor of 60 percent, come 2050.

Moreover, real progress of this goal is poised to be assessed by the year 2020, a time when the country is expected to have made remarkable headways. The second goal is that of ensuring that reliable energy supplies are maintained, in order that the government may cushion against energy shortages n the future (Silvestre & Dalcol 2009). In addition, there is a also the goal that seeks to enhance within the UK, and into the rest of the world, competitive markets whose aim is to assist in an elevation of growth rate of a sustainable economy, in addition to ensuring that the productive of the country is made better. Finally, the White Paper has an objective of seeing to it that each and every home received affordable and adequate heating.

It is important to state the scope of this energy policy here, and in this case, it encompasses the generation, and dissemination of electricity, the utilization of transport fuel, as ell as heating means (in this case, a lot of emphasis is placed in the natural gas).

The policy is also awake to the realisation that energy affects virtually every facet of the lives of individuals (Makhijani, Freeman & Caldicott 2007), and as such, it is a necessity that cannot just be wished away. Nevertheless, there are two forms of challenges that we may be faced with, as far as the issue of energy is concerned. To start with, we have a handle the climate change, by ways of decreasing the emissions of carbon dioxide not just within the United Kingdom, but also in the rest of the world.

The second challenge is that of ensuring that we are able to realise clean, affordable and secure energy, give the fact that the UK, along with the rest of the nations of the worlds that are not endowed with oil resources, have come to be reliant on the oil products, mainly in the Middle East, for this vital commodity. According to this policy, it has been estimated that the UK shall require between 30 and 35 GW, in terms of the generated electricity for the coming twenty years ((Makhijani et al 2007).

This rise in the demand for extra energy often in n the form of electricity has especially been the case because a majority of nuclear and coal power stations, and which dates back to the 1960s, are destined to be closed, as some of them shall have outlived their usefulness.

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Socio-economic impact

Ever since the end of the 19th century, the world has witnessed advances in technology, with the result that profound improvements have been realized in as far as the issue of efficient utilisation of energy is concerned. In addition, there has also been a corresponding increase in terms of the number of energy consumption patterns, and this bears a direct connection with the development of the socio-economic activities of the people. Still, practical technology and efficiency gains of the utilisation of energy by homes as well as towns may very well impact greatly, in as far as the activity of ensuring that the emissions of the greenhouses gases are concerned (The Guardian 2007).

The result of this is that we may have societies with marked improvements on their health statuses. This may come in the form of them being protected from say, mortalities and morbidities that bears a correlation with fluctuations in temperature, as a result of global warming.

Furthermore, the issue of having sustainable energy also means that the poverty that often accompanies a depletion of the natural resources may also be eradicated, once and for all. Moreover, by having the societies shift towards the utilisation of energy that has been produced through renewable resources. (Nielsen 2006).

What this means is that we may have cleaner carriers of energy. The reason for this is that the air quality of especially the urban environment would be cleaner, thereby reducing the environment-related illnesses. However, those countries whose members ranks amongst the low-income earners still has to grapple with the issue of having affordable technology disseminated to them. This is for purposes of ensuring that the burdens that usually accompany indoor air pollution are seen to be alleviated (Nielsen 2006).

This is in addition to an extra impact on the health of individuals. Where this technology has been implemented, the individuals have been able to reliably utilise biomass fuel for the functions of heating as well as coking. This is in addition to an enhanced access to electricity for a majority of the remote areas.

Political issues of energy policy

At the energy review conference in 2006, the prospect of establishing new power stations for nuclear power within the UK came up. This was catapulted by a judicial review that Greenpeace had requested for on the 15th of February, 2007. Due to this, it was deemed fit to rule out the possibility that a new power plant for the generation of nuclear power would be built.

However, the energy bill that was issued in January 2008 sought to bring up to speed the UK’s legislative framework, with a view to shedding light on the prevailing policy that addressees the issue of energy market, along with the problems that accompanies economic change, as well as securing the supply of energy (The Guardian 2007). The principle elements of this bill have highlighted on the areas of the capture and storage of carbon, nuclear energy, offshore oil and gas, and renewable energy.

The issue of energy has also taken a political perspective, even in the UK. For example, between the 1980s and the 1990s, when the conservative party was in power, the government had then adopted a market liberalization policy. Further, this liberalisation had a connection with the practice of having energy companies in which the state had a stake, being privatized (Ottinger & Nicholas 2005). At the same time, the period also witnessed the energy department being dismantled.

Due to these developments, the UK government was not in a position anymore to have a direct control on the energy market. Currently, the Electricity, Market and Gas Office (OFGEM) have been mandated with the task of ensuring that regulation into this sector is achieved. On the other hand, the energy policy, to a large extent, only has the mandate to impact on the market operations. This form of influence usually gets exerted via subsidies on taxation, planning controls, incentives liabilities underwriting, research funding, and grants.

The liberalisation and the eventual privatisation of the energy sector has managed to accomplish a lot, as evidenced in a significant reduction in terms of energy intensity, this is an index of the amount of energy that gets used up for every single unit of GDP output (Ottinger & Nicholas 2005). Moreover, there has also been a remarkable decrease in the number of individuals in energy poverty. In addition, there has been sustainability with regard to reliable energy supply. This reliability is often gauged on the basis of dissemination and delivery of energy to the natural gas and electric grids. In this case, the United Kingdom has been rankled as number two amongst the rest of the countries in Europe, in terms of features of reliability, after the Netherlands.

Ethical issues of energy

Virtually each and every facet of the humankind bears connection to the supply and cost of energy. For this reason therefore, when we attempt to take into account the ethical aspects that may impact on the issue of sustainable energy, it may be expected that energy sustainability shall elicit mixed reactions. At the moment, the world appears to be faced with an energy threat that is two-sided. On the one hand, there is the threat of the world lacking enough as well as secure energy supplies at prices that are affordable to the consumers (Ottinger & Nicholas 2005). On the other hand, we are faced with the issue the environmental harm that comes about when we resort to over-consumption of energy. The three energy pillars that have been recognised as having a bearing on energy sustainability include efficiency, security, and social justice.

As can bee seen, there are quite a number of dimensions that the issue of ethics may take when we are talking about sustainable energy. One of these dimensions is that of ensuring that the various energy consuming countries attempts to embrace trade offs, as opposed to utopias. There is however another dilemma that emerges here; that of ensuring that we do not only establish priorities when we are handling the issue of sustainable energy, but also that we are able to counterbalance objectives that appears to be in competition (Macdonald 2009). Furthermore, we also need to take into account the role that both the market structure of energy, as well as the political atmosphere, will play in this issue.

Impact of energy policy on businesses

The idea of instituting certain policies ands laws to ensure that we attain sustainable energy shall be both an opportunity and at the same time a threat to business the world over. In terms of threats, it may be expected that as we continue experiencing an escalation in the prices of oil, this shall impact negatively of the cash flows of various businesses. In addition, there is the threat of stability ion terms of the supply of energy.

At a time when we have gas and oil failing to quench demand, then a real crisis in businesses may also be expected (Macdonald 2009). This could also occur as a result of political; tussles between those countries in which the oil pipelines passes through, as was recently the case between Russia and Ukraine. For the countries whose main source of energy is not gas, it may be expected that in the event that such a political tussle occurs, then an intermittent energy supply could occur.

Another potential threat comes whine a country lacks to have fully functional energy policy. This mesa that such s country could be caught unawares by there fluctuation of supply and prices of energy occurs. When energy is expensive, the cost of business operations in a given region also goes up, and far less businessmen are likely to invest here. In terms of opportunities, renewable energy policies are likely to bring forth innovative entrepreneurs, such as experts in solar panels. These would then establish new business opportunities in the process creating more job opportunities (Nielsen 2006).

At the moment, there is a lot of material that we often look at as being waste, but in the spirit of embracing renewable energy, this waste may find valuable use, again acting as a basis for the establishment of novel business opportunities. This is in addition to the prospects of this form of waste being utilised for purposes of generating electricity.

Conclusion

Environmental issues that touch on the policy structures of energy have been characterised by a controversy for a long time now (Elliot 2007). This is because energy, being a scarce resource, affects the economic, political and socials elements of a given country. In addition, there is also the issue of ethical considerations to take into account, such as a need to conserve the natural sources of energy, while at the same time also ensuring that demand and supply of this commodity is maintained. As such, the policy that may be put in place address this issue requires the input of the entire various player Sin the affected sector. Moreover, such policy may be seen as both an opportunity and at the same time, a threat to the existing as well as the upcoming businesses in the affected areas (Komor 2004).

Bibliography

Elliott, D, 2007, Sustainable Energy: Opportunities and Limitations (Energy, Climate and the Environment). London: Palgrave Macmillan.

English, A. (2007). “Fuel’s gold- the cost of carbon emissions”. The Daily Telegraph. Web.

Ison, S., Peake, S. and Wall S, 2002, Environmental Issues and Policies, FT/Prentice Hall.

Komor, P, 2004, Renewable Energy Policy. New York: i-Universe.

Macdonald, G. (2009). “Energy Policies May Lead to Carbon Crack-Up by 2012”. Web.

Makhijani, A. S, Freeman, D, and Caldicott, H, 2007, Carbon-free and nuclear-free: a roadmap for U. S. MD: IEER.

Nielsen, R, 2006, The little green handbook, Picador, New York.

Ottinger, R. L, and Nicholas, A, 2005, Compendium of sustainable energy laws. Cambridge: Cambridge University Press.

Silvestre, B. S and., Dalcol, P. R. T. (2009). Geographical proximity and innovation: Evidences from the Campos Basin oil & gas industrial agglomeration — Brazil.

Technovation (2009). Web.

Schork, S. (2009). “Look who’s buying natural gas now”. Web.

The Guardian (2007). “Minister confirms retreat of 20 percent renewable energy target”. The Guardian.

Twidell, J and Weir, A. D, 1986, Renewable energy resources. New York: Francis & Taylor.

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