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Policies shape decisions about energy production and use. Institutions ranging from local governments to international trade organizations use different types of policy instruments, such as building energy codes, tax credits, and air quality standards, to influence energy-related behaviors.
More than 7,000 energy policies have been reported by countries to the International Energy Agency. Those are just the tip of a cascade of energy policies enacted by provincial and municipal governments as well. In the US, states have enacted energy policies in several categories that are tracked in every state, and both existing state laws and newly introduced bills shed light on frontiers of policy innovation. In addition, more than 60 major cities around the world have shared their policies and plans for a rapid transition to clean energy.
Energy policies are forged by pressure from stakeholders with a host of interests including economic development, geopolitical security, climate action, and rapid deployment of new technology. The capacity of each group of stakeholders to influence decision-makers and hold them to account is different, and political science is a field that helps explain how differences in influence affect policy. For example, incumbent energy interests in the US have historically spent 10 times more every year to influence policy through lobbying than clean energy interests. More recently, spending by champions for clean energy on political influence in US federal policy surged in the election cycle that then led to landmark US policies accelerating deployment of electric vehicles and renewable energy.
Some policies use financial incentives to affect the relative price of energy products or end uses. Subsidies to fossil fuels, for example, have reached a record-breaking high of $7 trillion according to the International Monetary Fund, and it is a top international policy issue among world leaders who are also grappling with catastrophic effects of a changing climate. Tax credits, direct spending, and support for research are among other types of financial incentives that affect how energy systems develop. The US estimated these explicit subsidies across all energy types cost $30 billion in 2022. In at least 40 countries, some energy markets are affected by a different type of financial instrument, a price on carbon dioxide pollution. This policy shifts to producers and consumers of fossil fuels a fraction of the estimated costs paid by societies for damages from climate change.
Regulation is another large category of policies that affect the decisions of producers or consumers of energy. For example, regulations on air pollution from cars and power plants are powerful drivers for transitions to electric mobility and renewable energy. Building energy codes and appliance standards are other types of regulations that, along with other policies, have helped make energy efficiency the “first fuel” in clean energy transitions. Regulations in areas seemingly unrelated to energy, such as wildlife protection or waste management, also can affect decisions about energy, such as siting of renewable energy or treatment of coal ash.
The United Nations Framework Convention on Climate Change (UNFCCC) is a vital structure for negotiating agreements between nations, and the Convention is neither a set of regulations nor pricing policies. Under the Paris Agreement among participating countries, each country pledges to adopt and enforce their own policies as nationally determined contributions to action on climate change. The differences between nations in responsibility for climate changing pollution and respective capacities to take action justifies a critical policy category for global energy transition known as international climate finance. Pledges to pay $100 billion per year for climate finance were offered by wealthier countries to countries with less capacity; however, they have not yet been fulfilled, and that makes finance one of the most significant policy issues for climate justice.
Set of ideas or plans used for making decisions, especially in politics, economics, or business
Process of determining who gets what, when, and how
Ability to change (or prevent change) to conditions and processes shaping policy
Typical Policy Attributes
Defined scope of a policy
Record of Decision
Formal record of decisions that govern oversight and implementation of a policy
Identification of the ramifications that may occur in cases of policy non-compliance
Identification of who has the ability to oversee the policy
Identification of who is subject to the policy and who may be exempt
Specifications regarding how the policy is to be enforced
Examples of Policy Mechanisms
A sum of money granted by the government or a public body to assist an industry or business
Partial refund to someone after paying for goods or services in order to make the sale more attractive; does not require filing of taxes
When the government guarantees loans issued by banks or makes loans from its own loan office
An amount of money that certain taxpayers can subtract from the taxes they owe
A sum of money granted by the government or a public body for a defined purpose
Puts a price on emissions to encourage consumers, businesses, and governments to produce less of them
Levels of Governmental Policies
Effects of Policies
A kind of compromise that involves giving up something in return for getting something else
Reduced conversion of forests has a tradeoff with reducing hunger and expanding food production
Coordination in the design of multiple policies to improve efficiency in their implementations and achieve optimal outcomes
Reducing methane and nitrogen use in agriculture for the goal of reducing GHG emissions also helps marine life
An unexpected side effect of a policy that has a negative effect on the problem the policy was created to solve
California’s 2006 clean fuel standards led to unnecessary imports and exports of corn and sugarcane ethanol, which unintentionally increased emissions due to fuel transportation
Select Key Global Energy Policies
Treaty on the Non-Proliferation of Nuclear Weapons (NPT)
MARPOL (International Convention for the Prevention of Pollution from Ships)
Intergovernmental Panel on Climate Change (IPCC)
Sustainable Development Goals
Select Key US Energy Policies
Price–Anderson Nuclear Industries Indemnity Act
Corporate Average Fuel Economy (CAFE) Standards
National Energy Act (includes PURPA)
Energy Policy and Conservation Act
Energy Policy Act
Energy Independence and Security Act
American Recovery and Reinvestment Act
Energy Policy and Modernization Act
Infrastructure Investment and Jobs Act
Inflation Reduction Act (IRA)
(Part of IRA)
*Visit our Energy, Environment, and Justice page for more information about energy justice.
Drivers and Barriers to Clean Energy Policy
- Demands for affordable energy
- Calls for action on climate change to protect life support systems
- Need for clean air and water and the effects of the currently polluted resources for humans and wildlife
- Depletion of natural resources from nonrenewable energy sources
- Attention to jobs created by energy transitions
- Money in politics: reported oil & gas lobbying in the US exceeds $100 million every year since the Energy Independence Act of 2007
- Resistance to losing high-paying jobs in the coal, oil, and gas industries
- While policies are being passed, actual implementation and permitting processes are much slower
- Fossil fuel subsidies tend to be long term and entrenched in tax codes
Updated October 2023
Before You Watch Our Lecture on
We assign videos and readings to our Stanford students as pre-work for each lecture to help contextualize the lecture content. We strongly encourage you to review the Essential tools and readings below before watching our lecture on Energy Policy. Include selections from the Optional and Useful list based on your interests and available time.
- Climate & Economic Justice Screening Tool. US Council on Environmental Quality. November 22, 2022.
Uses US census tracts to highlight disadvantages communities that experience burdens.
- What the War in Ukraine Means for Energy, Climate and Food. Nature. April 5, 2022. (5 pages)
How Russia's invasion could prompt a long-term shift towards sustainability.
- Executive Order on Tackling the Climate Crisis at Home and Abroad. The White House. January 27, 2021. (18 pages)
Read the text of the Executive Order.
- North Carolina Clean Energy Plan - Executive Summary (pp 10-17). North Carolina Department of Environmental Quality. October 2019. (8 pages)
Clean energy policy and action recommendations for North Carolina.
Optional and Useful
- Policies That Work: How to Build a Low-Emissions Economy. ClimateWorks Foundation. 2011. (40 pages)
Analyzes energy, transportation, and climate policies from around the world.
- Center for the New Energy Economy (CNEE). Colorado State University.
Helps energy policy leaders create policies that facilitate a just and equitable transition to a clean energy economy.
- Advanced Energy Legislation Tracker.
Tracks the status of legislative bills related to energy.
- Advanced Energy Legislation Tracker.
- State Policy Opportunity Tracker (SPOT) for Clean Energy. Center for the New Energy Economy (CNEE) & The Nature Conservancy (TNC).
Information on existing US state clean energy policies and future policy opportunities.
Our Lecture on
This is our Stanford University Understand Energy course lecture on energy policy. We strongly encourage you to watch the full lecture to understand the critical role policy plays in managing and sustaining energy systems and to be able to put this complex topic into context. For a complete learning experience, we also encourage you to review the Essential tools and readings we assign to our students before watching the lecture.
Presented by: Holmes Hummel, PhD; Energy Equity & Just Transitions, Managing Director, Precourt Institute for Energy, Stanford University
Recorded on: October 30, 2023 Duration: 43 minutes
Additional Resources About
Government and International Organizations
- International Energy Agency (IEA). Policies Database.
- United Nations Framework Convention on Climate Change (UNFCCC).
- US Environmental Protection Agency (EPA). Clean Energy Programs.
- US Environmental Protection Agency (EPA). Laws & Regulations.
- US Environmental Protection Agency (EPA). White House Environmental Justice Advisory Council Recommendations.
- US Federal Energy Regulatory Commission (FERC).
- US Bureau of Indian Affairs (BIA). Energy & Mineral Development Regulations.
- US Department of Energy (DOE). Office of Policy.
- US Department of State. Bureau of Energy Resources.
- The White House. Fact Sheet: The American Jobs Plan.
- Interagency Working Group on Coal & Power Plant Communities & Economic Revitalization.