In this chapter, we first explain what energy economics is and what energy and climate policy mean. We then describe the advantages of energy for society, and the current energy systems and their environmental and economic problems. At the end of the chapter, we discuss the energy transition and the characteristics of the energy systems once the transition has taken place. In the discussions in this chapter, we make note of developing countries.

The development of blue and green hydrogen has been identified as national priorities in a number of Middle East and North Africa (MENA) countries, most notably Gulf Cooperation Council (GCC) states such as Saudi Arabia, United Arab Emirates (UAE), Oman, and Qatar. For example, Qatar announced plans for a US$1 billion plant to make blue ammonia, while Saudi Arabia already commenced work on the NEOM Green Ammonia project, a $US5 billion green hydrogen plant and one of the world’s largest hydrogen projects. With increasing investment and capital outlay on hydrogen projects, the MENA region is projected to become one of the world’s largest exporters of green hydrogen by the year 2050 with an approximate export value of US$200 billion. Despite the rise in hydrogen investments, corresponding law, governance, and institutional frameworks to support hydrogen production are yet to be formulated and communicated, and key vectors for implementation remain, at best, loosely articulated, including mission-critical public–private partnerships (P3), which have been so successful in similar contexts. There is a rather limited legal and/or policy framework that specifically relates to hydrogen across the MENA region. The injection of significant amounts of hydrogen into the national energy networks and grids comes with a wide range of questions across the entire hydrogen production and supply chain. A comprehensive legal framework is required to clarify licensing and permitting processes for hydrogen production, storage, commercialization, and export; while health, safety and design standards for hydrogen infrastructure will need to be elaborated upon to limit environmental, social and governance risks. The chapter explores the guiding principles of an optimal hydrogen regulation framework for MENA countries. It analyses current regulatory uncertainties and gaps in the design and implementation of hydrogen projects across the MENA region and draws upon experiences from other regions with legal pathways for addressing those challenges.

This chapter analyzes the interconnections between energy policy and security and defense policies in Estonia with respect to energy transition. After explaining the key characteristics of energy and security regimes, it examines administrative interaction and policy coherence. The interconnections pertaining to energy transitions and security are visible via three cases: the oil shale phaseout and stability of Ida-Viru County, wind power expansion and the defense radar operation, and the desynchronization of the electricity network from Russia. Russia has formed the prevalent landscape pressure on the energy regime, although other landscape pressures have been noted, for example, climate change. Administrative coordination between energy and security has often relied on informal means, which are employed for agility but lack transparency. The security implications of the expanding energy “niches,” such as solar and wind power, have been little covered, although this has clearly increased via newly emerging attention on critical materials.

This chapter analyzes the interconnections between energy policy and security and defense policies in the UK, zooming in on Scotland. It explains the energy and security regimes and analyzes policy interplay. The links between hydrocarbon energy, energy transition, and security are complex, with relatively fragmented governance in place. While some instances of policy integration were found, broader policy coherence regarding security and the zero-carbon energy transition was lacking. Before 2022, coordination efforts were focused on external, global energy questions instead of domestic energy. Domestic energy security was driven by market-based values. Post-2022, security and energy transition links pertaining to domestic energy production and use became more important in political and policy agendas. Scotland has had a differing worldview on security in relation to energy transition than the rest of the UK, with more focus on the environmental and health security effects of energy policy choices and just transitions, evident, for instance, in its opposition to nuclear power.

This chapter analyzes the interconnections between energy policy and security and defense policies in Norway. It explains the background of energy and security regimes and analyzes policy interplay. Prior to 2022, Norway had barely considered the energy–security nexus due to substantial domestic energy supplies. Some interconnections were, however, visible via three cases: the economic security provided by oil and gas exports, security of hydropower infrastructure, and internal tensions around wind power. Repoliticization of the Norwegian energy policy took place in 2022, and questions of energy sovereignty and energy security also became a part of Norway’s energy policy vocabulary. In 2022, strong degree of securitization was not evident, but, lightly framed, there have been breaks from previous energy political practices – evidenced by new support for offshore wind power and visible military protection of critical energy infrastructure.

This chapter analyzes the interconnections between energy, security, and defense policies from a transition perspective in Finland. It explains the key characteristics of Finland’s energy and security regimes, and then examines administrative interaction and policy interplay. The interconnections are visible via three cases: expansion of wind power and the operation of air surveillance radars, framing of peat as a security question, and how the Finnish government addressed the Nord Stream 2 pipeline. Policy coherence between energy and security was limited before 2022, mainly focusing on stockpiling fuels and mitigating direct risks to the electricity network, for example, collaboration via the “Power Pool.” Geopolitical discussion pertaining to Russia was avoided in energy policy discussions. Energy policy integration into security and defense policy has occurred on a general level, for example, energy is now seen as a critical infrastructure and the energy efficiency of defense premises has been improved. Recent events show the need for improved coherence and collaboration.

After 1945, the United States took unprecedented levels of responsibility for leadership of the capitalist world economy, offering the dollar as the anchor for world currencies, championing free trade, and setting the standard for the consumer society, to which most other countries aspired. Related to that, it also acted as pacesetter in the adoption of petroleum-based fuels. For three decades, the system championed by America seemed to work well, not least for the West Germans and the Japanese. Suddenly, however, everything changed. US President Richard Nixon ended the Bretton Woods system in 1971, ushering in floating currency exchange rates. Two years later came the first of two oil crises that buffeted global trade and economies. The Germans and Japanese must have felt that, instead of entering a US-style Garden of Eden of earthly delights, they had instead been led down the garden path. The impact of these crises involved unaccustomed negative current account deficits for both countries through the early 1980s. However, reduced use of energy, changes in the energy mix, and highly successful export drives soon led to a pronounced recovery. These surpluses have generally remained positive ever since, although at far more modest levels in Japan than in Germany.

This chapter outlines a situation where a country with heavy reliance on carbon-intensive energy resources has faced substantial greenhouse gas dilemmas; where those dilemmas manifest themselves in strong ideological and partisan differences; and where both the central government (the Commonwealth) and the States have broad licence in climate change policymaking. It finds that the need for coordination can be exaggerated and that federalism has been a facilitating rather than a hindering factor in Australia, with constituent unit action compensating for central government inaction.

Reducing greenhouse gas emissions is an economy-wide challenge so policy to reduce emissions has to accommodate varying scope and scale to reach all sectoral processes. This chapter focuses on the complexity and challenges inherent in developing climate policy for electricity supply and for energy use in all industry and transport sectors. Policy frameworks need to take account of the context, competing social and economic objectives, global competitiveness and the expectations of industry participants and consumers. Energy policy to accommodate climate imperatives will always involve integrating policy into existing frameworks, which adds to the layers of complexity. The advantages and disadvantages of the variety of tools required to create incentives for investment, consumer behaviour change and institutional adaptation are also considered. Inevitably, policy formulation will involve hard political choices, so the chapter concludes with thoughts on managing the politics.

Chapter 6 investigates the contradiction between expanded coal use and the climate policy regimes that emerged after the adoption of the UN Framework Convention on Climate Change (UNFCCC) in 1992, and the subsequent Kyoto Protocol. During this period coal mines and coal-fired power remained ‘locked in’ as the key foundation for energy security, and for economic growth. Struggles over climate policy in support of renewable energy did secure some changes, especially in Germany, but overall there was a steep increase in aggregate emissions from the coal sector. During this period, ‘business as usual’ entrenched the primacy of coal: international agencies such as the IEA predicted that climate policy would fail and coal would remain dominant. Yet coal was now in direct collision with climate stability, and this was profoundly disruptive of coal’s hegemony.