The document discusses market regulation for green heat and identifies criteria for successful regulation. It provides examples of regulations in the UK, France and Germany that promoted greener heat. Successful regulation needs to ensure market readiness, consistency, openness to innovation, simplicity and tackle fundamentals.
Delta-ee - Market Regulation - Help or Hindrance for Green Heat
1. MARKET REGULATION
A HELP OR HINDRANCE TO THE GROWTH OF GREEN HEAT?
SIRACH NETWORKING MEETING | LONDON | 16.10.2018
CONTACT:
Lukas Bergmann | lukas.bergmann@delta-ee.com | +44 (0)131 625 3332
Pleasure to be here
Topic today very important but also very contentious
Regulation = intervention of the state in markets & the behaviour of their actors
Often seen as a barrier to innovation and business – the famous red tape
Seen by others as safe guard against a free for all society
When preparing the presentation lots of questions were going through my mind:
Why do we need regulation?
What types of regulation are there?
What makes some market interventions more successful than others?
Why do we need intervention by the Government in the heating market?
Most people in the UK are adequately warm, the main fuel – natural gas – is cheap and reliable
So why intervene?
Proverbial elephant in the room is Climate Change
But the real issue, the real driver for regulation is an underlying market failure.
Climate Change is in most modern societies a generally acknowledged fact
The risks of inducing more significant climate change by continuing to burn fossil fuels in the same way as before are getting clearer by the day
And yet, we as individuals, as businesses, widely fail to adapt our behaviour.
We choose to fly rather than take the train, we choose to waste energy by living in uninsulated homes and we do not choose a lower carbon alternative for our heating even when one is available.
And there’s a reason for this: We can afford it, because the hidden costs of fossil fuels are not apparent to us in our day to day spending or on our balance sheets.
Financial support measures on their own are insufficient
For support to be successful in the long term the market needs to be ready
Market readiness of Workforce, Technology and Finance
This is in particular related to regulations regarding the construction standards
Potentially too much of an effort has been
This is in particular related to regulations regarding the construction standards
Potentially too much of an effort has been
Valid for all types of regulation, except probably minimum quality standards
This is in particular related to regulations regarding the construction standards
Potentially too much of an effort has been
The closer you get to the fundamental issue you are trying to solve, the cheaper and more successful you are going to be. In order to heal the patient we need to be treating the disease, not its symptoms.
And the fundamental issue hindering greater energy efficiency and any type of green heat is the current low cost of fossil fuels that is not reflective of their true cost to society.
The basic economic truth is that in order to overcome the market failure, these externalised costs will have to be paid by someone, whether through subsidies, higher costs of alternative fuels or a combination of the two.
By allocating the cost to the fuels that are the problem, e.g. based on their carbon content, we could use the forces of the market to optimise reaching our goals.
Creating a market against an adverse economic environment will feel like rolling a rock up a hill at best
But at current energy price levels we’re not working ourselves up a hill, we’re pushing the rock up an escalator – going down, whereas we really need it to be going up.
Creating a market against an adverse economic environment will feel like rolling a rock up a hill at best
But at current energy price levels we’re not working ourselves up a hill, we’re pushing the rock up an escalator – going down, whereas we really need it to be going up.
Creating a market against an adverse economic environment will feel like rolling a rock up a hill at best
But at current energy price levels we’re not working ourselves up a hill, we’re pushing the rock up an escalator – going down, whereas we really need it to be going up.
