Class 1: introduction Flashcards
triangle of energy econ.
sustainability, efficiency, security of supply
3 main types of fossil fuels
coal, gas, oil
5 main types of renewables
hydro, solar, wind, geothermal, bio fuels (e.g. wood)
DESERTEC: idea and problems
use lots of RES where they’re most available (e.g. solar in sahara, wind in northern europe) and transport energy around world
problems: transmission expensive/inefficient, dependency on huge grid
nuclear fusion vs fission
fission already in use, splitting big atoms, creates radioactive waste, dangerous if leaks
fusion only theoretical for now, combining small atoms (hydro), harmless “waste,” very difficult to control chemical reactions
2 aspects of security of supply
technical: stability of system (like quality of electrical grid or oil pipelines), resource availability
political/economic: contracts, trade of energy, regulation, natural monopolies
fossil fuel reserves/production ratio
still at least 100 years of fossil fuels left with expected future consumption levels
example of energy as a political weapon
Russia cut off natural gas to Europe after invading Ukraine, also cut off energy to Ukraine a lot over last 20 years
Nord Stream 2 crisis
newly built natural gas pipeline from Russia to Germany was bombed in September 2022, even though it wasn’t in service yet the fear/uncertainty caused increase in gas prices
natural monopolies in energy: why?
building energy infrastructure (e.g. electrical grid, pipelines) can be so expensive that it’s most efficient to only have one system, must be regulated somehow, or a monopoly will own all the resources/ transportation/ distribution
2 aspects of economic efficiency
markets: how well do they work, information availability, company strategies
regulation and policy: competition policy, market regulation
price patterns of oil, gas, coal, and electricity
oil big ups and downs, coal and natural gas usually stable (but Russia/Ukraine war caused big spikes), electricity very volatile (sometimes negative prices)
why does electricity have negative prices sometimes?
supply and demand are often misaligned, solar and hydro from glaciers melting are produced in summer when heating and lighting demand is low
electricity can’t be easily stored, the grid can only handle certain amounts, sometimes priority is getting rid of it so prices become negative
how are the different stages of energy regulated?
generation: encouraging sustainable energies, safe extraction
transport and distribution: anti-monopoly regulations
supply: taxation to make consumption more expensive and discourage wasteful usage
Problem with regulating externalities like pollution
What do you regulate? Consumption of resource? Extraction of resource? Distribution? Directly the damage to the environment (like taxing more polluting types of extraction)?
