Energy Economics
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Energy Economics
Energy economics was derived from the resource depletion theory. Since then this branch of economics has significantly developed fueled by climate and environmental issues. One major focus of these developments was the externality of energy consumption and energy resources; which form the basis of energy economics. Some of these growth trends in energy economics include;
- The balance between market regulation and free competition. The energy sector has been known for its monopolistic characteristic. This is the basis of the issues of market competition introduction and regulation of these markets. Moreover, the use of visible and invisible tools to boost resource allocation efficiency is still a long term and persistent problem in the sector.
- Innovation. Energy economics has integrated innovation trends and tools in its policy making; behavior simulation applied in emission trading schemes and market research. These include; big data, behavioral economics, and large systems.
- Energy consumption and external costs involved. This involves financing of sustainable development and environmental management as well as considering externality cost when conducting an energy consumption cost-benefit analysis. Due to the issue of accuracy of these externality related to the global factor, a new trend has been devised to solve the problem. This trend involves the introduction of variables to substitute the cost estimates of these externalities in the energy system. This trend has had a great impact on climate negotiation and emissions trading.
- The interaction between energy economy and developments in energy technology. With the dynamism of the technology sector, its interaction with the energy sector is inevitable and has become a continuing trend in the energy economy.
- Energy security has been expanded to include renewable energy and nuclear energy, in addition to fossil energy.