Successful instrument design requires a sound understanding of the relevant economic theory, but also an appreciation of the links to the physical system and in-depth knowledge of how market actors can respond. It is important that the instruments target identified barriers and market failures, and that they are designed so that market players and consumers will respond in a way that supports the desired social objectives. Effective policy instruments also need to work in conjunction with the price signals and incentives provided by the market.
The transformation of the energy market is central to the shift to a low-carbon economy. Energy and climate targets have been set in many areas. To achieve the desired result, policy instruments need to support delivery against these targets and work in a coordinated fashion. In addition to our market expertise, we have a good overview of the energy and climate policy measures currently in use.
Our services include:
- The identification of relevant barriers and market failures.
- Design recommendations to support the creation of effective policy measures that are suitably adapted to the policy objective.
- Analysing how proposed policy measures will work in the short and long term and the interaction with both markets and other policy measures, including network tariffs.
- Analysing the effects of policy measures on different actors and their distributional impacts.
We provide analyses of how different policy instruments work and advise on the design of effective instruments for the energy and transport sector. Reports are based on long experience analysing the market, familiarity with the relevant actors and an understanding of the relevant characteristics of alternative technologies.
Current issues include:
- Support schemes for renewable power generation, including market-based schemes such as certificate schemes and auctions.
- The interaction between support schemes and market prices and its impact on short-term resource utilisation and long-term investments
- Measures to support the electrification of the transport sector.
- Evaluating the impact of Norwegian state support schemes (via Enova) on greenhouse gas emissions.
- Outage penalties for networks that fail to supply household demand.
- The design and consequences of resource taxation and other special taxes in the energy sector.
- Indicators of policy impacts.
- Frameworks to support energy efficiency and electrification in the transport sector.