Publisher: International Institute for Industrial Environmental Economics, Lund University
The move towards the liberalisation of the energy markets in the whole world and the general shift from command-and-control to market mechanisms bring forward new ways of stimulating initiatives to increase the efficiency in the final uses of energy and demand-side management. In the past, energy policies were implemented in most countries by direct action of the governments through state monopolies, prescriptive legislation and in some cases incentives. With the progressive advent of liberalisation of the energy market and privatisation of state companies, the emphasis has shifted toward a regulation of the market that introduces economic corrections to take into account collective interests (such as externalities) and long-term objectives, which generally are not taken into due account by market forces in the absence of corrective measures. Policies based on incentives have also shown their limits. As they rarely use market forces effectively, the results obtained tend to have a higher cost than necessary and they may bring to a non-optimal development of new technology. Recently, the emergence of other problems - as shown by the power crisis in Sweden, the insufficient assurance given by the system to security of supply, some concerns about the quality of the service - have prompted a reconsideration of the regulation of the energy market. In this context, it is important to consider the ways in which the increase of the share of energy supplied by renewable sources and the increase in the efficiency of energy utilisation can be promoted. These two measures are considered the mainframe of any sustainable energy strategy and necessary steps to contrast the threats of climate change.