who governs energy the challenges facing global energy governance this article conceptualizes the energy problems facing society from a global governance perspective it argues that a notion of global energy governance taken to mean international collective action efforts undertaken to manage and distribute energy resources and provide energy services offers a meaningful and useful framework for assessing energy related challenges the article begins by exploring the concepts of governance global governance and global energy governance it then examines some of the existing institutions in place to establish and carry out rules and norms governing global energy problems and describes the range of institutional design options available to policymakers it briefly traces the role of a selection of these institutions from inter governmental organizations to summit processes to multilateral development banks to global action networks in responding to energy issues and points out their strengths and weaknesses the article concludes by analyzing how the various approaches to global governance differ in their applicability to addressing the conundrums of global energy problems

the effects of regulatory policies on the cost of debt for electric utilities an empirical investigation this article develops a model of debt cost determination for regulated electric utilities based on an application of finance theory estimation of the model allows the hypothesis that regulatory policy directly influences the cost of debt to be tested and also enables the specific effects attributable to individual regulatory policy variables to be examined regulatory decisions are found to have statistically and economically significant effects on the cost of debt for electric utilities and the most important effects are associated with the treatment of construction work in progress for ratemaking purposes the extent of regulatory delay and whether or not interim rate relief is provided copyright 1989 by the university of chicago

individual option prices for climate change mitigation abstract willingness to pay for climate change mitigation depends on people s perceptions about just how bad things will get if nothing is done individual subjective distributions for future climate conditions are combined with stated choices over alternative climate policies to estimate individual option prices the appropriate ex ante welfare measure in the face of uncertainty for climate change mitigation we find statistically significant sensitivity of estimated option prices to both expected future conditions and uncertainty about future conditions

energy justice and the contested petroleum politics of stranded assets policy insights from the yasuni itt initiative in ecuador abstract ecuador s progressive yasuni itt initiative operational 2007 to 2013 would have left almost one billion barrels of crude oil locked in perpetuity beneath one of the most intact and diverse nature reserves on the planet the project attempted to strand these oil assets in order to protect biodiversity respect the territory of indigenous peoples combat climate change and encourage more sustainable economic development the yasuni itt proposal would have had the international community pay ecuador 3 6 billion roughly half the value of the oil found there in exchange for not developing the ishpingo tambococha tiputini itt oilfields funds would have been placed into social and environmental development programs and the promotion of domestic renewable energy instead the project collected only 13 million and succumbed to a series of challenges including limited financing intense political pressure a national commitment to oil and carbon leakage this article summarizes the history benefits and insurmountable obstacles facing the yasuni itt initiative and presents six broader lessons and implications for climate and energy analysts practitioners and policymakers it questions the political viability of and serves as a stark warning against those promoting and advocating policies centered on carbon budgets stranded assets negative emissions and carbon revenue streams

new frontiers and conceptual frameworks for energy justice this article explores how concepts from justice and ethics can inform energy decision making and highlight the moral and equity dimensions of energy production and use it defines energy justice as a global energy system that fairly distributes both the benefits and burdens of energy services and one that contributes to more representative and inclusive energy decision making the primary contribution of the article is its focus on six new frontiers of future energy justice research first is making the case for the involvement of non western justice theorists second is expanding beyond humans to look at the rights of nature or non anthropocentric notions of justice third is focusing on cross scalar issues of justice such as embodied emissions fourth is identifying business models and the co benefits of justice fifth is better understanding the tradeoffs within energy justice principles sixth is exposing unjust discourses in doing so the article presents an agenda constituted by 30 research questions as well as an amended conceptual framework consisting of ten principles the article argues in favor of justice aware energy planning and policymaking and it hopes that its reconsidered energy justice conceptual framework offers a critical tool to inform decision making

regulation and preemptive technology adoption two rival firms must decide if and when to adopt a new technology knowing how adoption costs decline over time and how profit flows vary with adoption patterns in many cases price and entry regulations beneficially slow technology adoption by making preemption strategies less attractive in some cases these regulations can so discourage a firm from preemption as to change the order in which firms adopt new technologies speeding one firm s adoption date and slowing the other s in the context of a particular scenario for cable and telephone companies adoption of new fiber optic technologies the case for lifting the cross ownership ban depends on the extent to which telephone companies are able to implement a superior technology reregulation of cable companies strengthens this case

valuing amenity resources under uncertainty does the existence of fair contingent claims markets matter abstract alternative welfare measures are evaluated as measures of the value of change in access conditions for environmental resources and it is shown that traditional hicksian surplus estimates systematically underestimate benefits it is further argued that the existence of fair contingent claims markets is a peripheral consideration in benefit estimation that state dependent payments present no significant collection obstacles not already encountered in state independent payment schemes and that risk neutral social decision making requires state dependent benefit measures for situations involving individual risk these findings imply that future research should focus on developing theoretical bounds between the expected value of state dependent benefit measures and conventional measures and that contingent valuations techniques need to be extended to measure contingent payment possibilities for changes in uncertain access conditions to environmental resources

regulatory delay and the timing of product innovation abstract this paper examines how regulatory delay affects innovation by a regulated firm when product introduction costs fall over time an extra day of regulatory delay increases time to introduction by more than a day when the uncertainty of regulatory delay increases a risk neutral firm responds by moving up the product introduction the model places testable restrictions on the empirical relationship between introduction delay and regulatory delay and is consistent with data gathered from a large u s telecommunications provider

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

capital structure with countervailing incentives the regulatedjirm s choice of capital structure is affected by countervailing incentives the jirm wishes to signal high value to capital markets to boost its market value while also signalling high cost to regulators to induce rate increases when the jim s investment is large countervailing incentives lead both high and low cost jims to choose the same capital structure in equilibrium thus decoupling capital structure from private information when investment is small or medium sized the model may admit separating equilibria in which high cost jirrns issue greater equity and low cost jims rely more on debt jinancing

innovation and imitation in an asymmetrically regulated industry abstract we model a game of innovation and imitation between a regulated firm and an unregulated firm although regulation may slow the industry wide pace of innovation it does not necessarily do so in fact by weakening the regulated firm s incentive to imitate a rival s successful new technology regulation may make the rival s innovation profitable thereby accelerating innovation by extension giving the regulated firm stronger incentives may backfire by producing either excessive or insufficient innovation these negative outcomes are more likely the greater is the cost reducing potential offered by the new technology

regulation innovation and the introduction of new telecommunications services i examine the effects of fcc regulation on the innovation and introduction of advanced telecommunications services in the united states an interim of lighter regulation provides an experiment to test the regulatory regime s impact the econometric model comprises an arrival process for service innovation followed by a duration process for regulatory delay the number of services the firms created during the interim is 60 99 higher than the model predicts they would have created if the stricter regulation had still been in place overall firms would have introduced 62 more services to consumers during the study period if the regulation had not been in place

the uniqueness of the energy security justice and governance problem this article argues that among all policy fields exhibiting externalities of a global scale energy stands out on four dimensions vertical complexity horizontal complexity higher entailed costs and stronger path dependency these structural attributes are at odds with contemporary key challenges of energy security energy justice and low carbon energy transition with regard to the latter energy governance challenges occur related to unclear levels of authority and weak resilience this has implications for energy scholarship specifically relating to the political economy of energy transitions discussions about common pool resources systems analysis and other neighboring disciplines

escaping carbon lock in this article explores the climate policy implications of the arguments made in understanding carbon lock in unruh 2000 which posited that industrial countries have become locked into fossil fuel based energy systems through path dependent processes driven by increasing returns to scale carbon lock in arises through technological organizational social and institutional co evolution culminating in what was termed as techno institutional complex tic in order to resolve the climate problem an escape from the lock in condition is required however due to the self referential nature of tic escape conditions are unlikely to be generated internally and it is argued here that exogenous forces are probably required

the evolution of markets under entry and standards regulation the case of global mobile telecommunications abstract we analyze the effects of government policies on the evolution of an industry the global mobile telecommunications market i we find a relatively slow diffusion convergence between countries this follows partly from regulatory delay in issuing first licenses yet persisting initial cross country differences also contribute to a lack of convergence ii introducing competition has a strong immediate impact on diffusion but a weak impact afterwards sequential entry is preceded by pre emptive behavior by incumbents this is consistent with the presence of consumer switching costs iii setting a single technological standard accelerates the diffusion of analogue technologies considerably for digital technologies it is too early to draw reliable conclusions yet the available evidence suggests that setting single standards has similar beneficial effects

resolving society s energy trilemma through the energy justice metric carbon dioxide emissions continue to increase to the detriment of society in many forms one of the difficulties faced is the imbalance between the competing aims of economics politics and the environment which form the trilemma of energy policy this article advances that this energy trilemma can be resolved through energy justice energy justice develops the debate on energy policy to one that highlights cosmopolitanism progresses thinking beyond economics and incorporates a new futuristic perspective to capture these dynamics of energy justice this research developed an energy justice metric ejm that involves the calculation of several metrics 1 a country national ejm 2 an ejm for different energy infrastructure and 3 an ejm which is incorporated into economic models that derive costs for energy infrastructure projects an ejm is modeled for china the european union and the united states and for different energy infrastructure in the united kingdom the ejm is plotted on a ternary phase diagram which is used in the sciences for analyzing the relationship trilemma of three forms of matter the development of an ejm can provide a tool for decision making on energy policy and one that solves the energy trilemma with a just and equitable approach

cost benefit analysis under uncertainty reply robert mendelsohn and william strang raise a number of issues which require clarification their misrepresentations of my results in several cases are easily corrected the analytical flaws in their own arguments are more difficult turning first to the issue of misrepresentations they incorrectly assert that i recommended the use of the maximum expected value of alternative contingent payment schemes as the measure of project benefits even a cursory reading of my introduction reveals that option price which does not maximize the expected value of revenue is the appropriate measure of benefit in situations involving similar individuals collective risk and certain costs despite their claims to the contrary i have not suggested that option price is an underestimate of the true value of project benefits option price is precisely the true value of project benefits in this case contradicting themselves in their first footnote they assert that i recommend the use of option price for cases involving certain costs and collective risks thus ignoring the crucial role of similar preferences other examples could be mentioned but it is perhaps sufficient to suggest that any reader wishing to know what i actually said would do well to review my paper the appropriate measure of benefits is the subject of the third section of my paper no mention is made in this general argument of expected value calculations similar preferences certain costs or any of the other special cases that are considered in the fourth section of my paper these special cases are exactly that situations in which the general answer because of the special circumstances takes a relatively simple form it is of course crucial not to forget the special circumstances when considering these results although mendelsohn and strang do not mention the distinction between collective and individual risks save for a passing reference in their first footnote this issue is central to the consideration of the appropriate measure of project benefits while the general procedure developed in my third section is compatible with any joint distribution of individual states option price measures the benefit to similar individuals of a project involving a collective risk when cost is certain expected value calculations on the other hand are only appropriate in situations involving individual risks these issues were examined in detail in my fourth section in dealing with the special case involving individual risks i argued that the magnitude of aggregate payments would be equal to the sum of the expected values of the individual payments with virtual certainty this was hardly a profound observation but it led to the result that if contingent payments are to be collected in such circumstances one should consider those payments that have the largest expected value since all contingent payment schemes including that associated with expected surplus involve the same difficulties of adverse selection moral hazard and so forth mendelsohn and strang in expressing the view that for the government to collect more revenue than the sum generated by the expected value of surplus the government must provide an additional service p 1098 fail to recognize that collecting the wrong contingent payments those associated with the surplus point involve the same difficulties as collecting the right contingent payments those associated with the fair bet point this mistake is not eliminated by their argument that when fair insurance is available the individual s willingness to pay locus becomes linear the presence of such a market makes it possible for an individual to trade a given payment liability in the market for contingent claims for another professor of economics duke university durham nc 27706

cost benefit analysis under uncertainty comment decision makers performing cost benefit analysis must often deal with the problem of how to aggregate the benefits across states of nature accruing from an uncertain public investment project option price and the expected value of consumer s surplus are two potential measures of these aggregate benefits 2 the expected value of surplus has been proposed because it is readily measured and because risk pooling paul samuelson william vickrey 1964 and risk spreading kenneth arrow and robert lind 1970 tend to encourage risk neutral behavior option price has been favored on the vague notion that people would be willing to pay something extra above expected surplus to preserve the opportunity to purchase a good burton weisbrod 1964 as daniel graham cogently argues in this review 1981 however option price is but one of an infinite number of contingent payment schemes the literature has provided no justification for focusing upon it as an ideal measure of benefits under individual risk graham further argues that policymakers ought to adopt the compensating contingent payment plan which maximizes expected revenue this maximum payment plan by definition is never less and will often exceed any other contingent payment scheme consequently graham argues that both the expected value of surplus and option price are underestimates of the true value of project benefits our purpose in this comment is twofold first we show the role of project and nonproject insurance in a model of individual risk and second we argue that option price not the maximum payment plan is the optimal rule when no fair insurance is available in section ii we show that if fair insurance is available against all risks all contingent payment plans yield identical revenue a similar result holds if insurance is available for nonproject risks and the effect of the project to an individual is small the arrow lind model in section iii we explore the case where either the project has a large uninsurable effect on the individual or there is no insurance against even nonproject risks we argue that the very phenomena moral hazard adverse selection and complexity that eliminate the market for private insurance also prevent the government from making otherwise desirable contingent payments if contingent payments are too costly the government s only remaining choice is to collect payments that are constant across states which makes option price the relevant measure of benefits

uncertainty benefit cost analysis and the treatment of option value abstract this paper proposes a new conceptual framework for defining welfare measures under uncertainty the planned expenditure function this function describes the locus of expenditures on contingent claims that are required to realize a given level of expected utility to illustrate the convenience of the framework it is used to consider the definition of the option price the appropriate treatment of option value the valuation of risk changes and the definition of non use benefits under uncertainty

politicizing energy justice and energy system transitions fossil fuel divestment and a just transition the burgeoning energy justice scholarship highlights the importance of justice and equity concerns in the context of global decarbonization and the transition to a green economy this paper seeks to extend current conceptualizations of energy justice across entire energy lifecycles from extraction to final use to offer an analytically richer and more accurate picture of the in justice impacts of energy policy decisions we identify two key areas that require greater attention and scrutiny in order to enact energy justice within a more democratized energy system first we call for greater recognition of the politics power dynamics and political economy of socio technical energy transitions we use the example of the fossil fuel divestment movement as a way to shift energy justice policy attention upstream to focus on the under researched injustices relating to supply side climate policy analysis and decisions second the idea of a just transition and the distributional impacts on and the role of labor in low carbon transitions must be addressed more systematically this focus produces a more directly political and politicizing framing of energy in justice and a just energy transition

requiem for option value as freeman 1984 accurately notes a lot of ink has been spilled over the concept of option value during the last two decades graham in his seminal 1981 article outlined the specific conditions under which option price is and more significantly is not an appropriate and relevant measure of value under demand uncertainty while graham s article demonstrates that option value is relevant only under restrictive assumptions regarding preferences and the nature of the uncertainty both the tone and contents of recent articles on the

fuel poverty as injustice integrating distribution recognition and procedure in the struggle for affordable warmth bringing attention to fuel poverty as a distinct manifestation of social inequality has asserted the place of affordable warmth in the profile of contemporary rights and entitlements as such fuel poverty can be understood as an expression of injustice involving the compromised ability to access energy services and thereby to secure a healthful living environment in this paper we consider how fuel poverty may be aligned to various alternative concepts of social and environmental justice whilst recognising that fuel poverty is fundamentally a complex problem of distributive injustice we argue that other understandings of injustice are also implicated and play important roles in producing and sustaining inequalities in access to affordable warmth addressing fuel poverty has to involve seeking justice in terms of the cultural and political recognition of vulnerable and marginalised social groups and pursuing procedural justice through opening up involvement and influence in decision making processes we make this argument both in theoretical terms and through considering the experience of fuel poverty advocacy and policy development in the uk opportunities for future action may be illuminated through such interconnected justice framings as wider awareness of energy climate and poverty issues emerge

the choice of a welfare measure under uncertainty use of option price as a welfare measure when conducting a benefit cost analysis under uncertainty is appropriate only if the project under consideration will have no impact on the allocation of risk among individuals use of the willingness to pay locus as a benefit measure is appropriate only if the project will result in an efficient allocation of risk a more general welfare measure is proposed maximum agreeable payment that correctly measures the benefits and costs of any project

adoption of cost saving innovations by a regulated firm regulatory lag is generally credited with providing monetary incentives for the adoption of cost saving technological changes by regulated firms because regulators can not instantaneously adjust price ceilings in response to cost changes these incentives are inherent to the process of price regulation in a dynamic world a firm which decreases production costs through technological innovation will enjoy excess profits until the regulators lower price to a level consistent with the new conditions the longer the delay before regulatory response to a decrease in cost the greater are the profits which can be derived from a cost reduction and therefore the greater is the incentive for adoption of technological change 2 the passive nature of this incentive mechanism is an important characteristic although regulatory agencies typically have authority to force price decreases upon firms which do not take advantage of potential cost savings this power is limited by the difficulty of proving that a firm is laggard rather than the victim of unfortunate circumstances thus the regulated firm which foregoes potential profit from adopting a costsaving innovation today may generally reap that profit at some convenient time tomorrow indeed it is the main contention of this paper that in many circumstances a regulated monopolist can maximize the present value of profits only by delaying adoption of an innovation that is rather than completely adopting a cost saving innovation when it becomes available a profit maximizing regulated firm will choose to adopt the innovation only gradually through time the profitability of such delaying procedure may be illustrated by a simple example consider a situation in which the price of a firm s product is fixed by a regulatory authority but periodically adjusted according to the following cost plus markup scheme at each review price for the following period is set equal to average cost of the previous period plus an allowed markup that is price in period i 1 is set equal to m times average cost in period i m 1 this situation is illustrated in figure 1 a firm is initially producing output qo at cost co qo with price set by the regulators at mco qo qo suppose a cost saving innovation is discovered which if employed would decrease average production cost to c1 q q if the firm were to adopt this innovation immediately it would earn a profit equal to the area of the rectangle abcd in figure ia at the next regulatory review price would be lowered to the level m times the new average cost i e to p1 and profit would fall to that amount represented by the area aefg this amount of profit would be earned each period thereafter however suppose that the firm were to adopt this innovation in two steps rather than completely adopting the innovation when it first becomes available this option is sketched in figure lb in the initial period the firm adopts the innovation throughout approximately half its operations thereby lowering average cost only to oh in the next period the firm completes the adoption process lowering average cost to the final level oa although this procedure would yield profit equal only to hicd in the initial period it would result in a price in the next period equal to p1 i e equal to m times oh since average cost in that period would fall to oa profit would equal ajkl in the next period price would be at the new equilibrium level og and profit would equal aefg this amount of profit would be earned each period thereafter given the demand and cost functions illustrated in figure 1 the second alternative assistant professor of economics vanderbilt university see william baumol and alfred kahn ch 2 2see elizabeth bailey