All countries today faces surprisingly similar and global challenges for their energy use. These are the challenges of: maintaining a secure energy supply (energy security), producing affordable energy, and consuming energy with a minimal environmental impact. In macroeconomic policy there exists an ‘impossible trinity’ whereby a fixed exchange rate, the free flow of capital, and monetary independence, cannot be achieved all at once. When you pursue any two of these options, it can close off the third. Likewise in energy policy the contemplation of energy security, affordability, and a minimal environmental impact, is called the ‘energy trilemma’. Much of the high-level discussions about energy focus on ‘balancing’ the trilemma, so that no one part of it is closed off.

Energy security

Energy security can be summarised as having reliable access to energy. In today’s discussions about energy security, Britain focuses on ‘keeping the lights on’ – making sure the system continues to function without disruption. In Eastern Europe this has recently been centred around Russian gas imports that keep homes heated during cold (and potentially unsafe) winter months which is called security of supply. When I lived in Russia, people talked about security of demand, as much of Russia’s income is based on exporting fuel. During the build up to the second world war, Churchill spoke at length to Parliament on the need for oil imports to be secured, so that our navy could achieve supremacy (which Senator John McCain wrote about in a recent book).

Affordability

Affordability can be summarised as being able to use energy within your means. Historically, energy use was limited to a select few applications that allowed people to subsist, travel infrequently over relatively short distances, and produce much less goods. People were much more incentivised to avoid living in climates with extreme heat or cold. Our industrial and agricultural output was mainly based on the use of raw human or animal power. Early windmills were built, and fuel was burnt, but not with today’s efficiency or flexibility. With the affordable use of coal power on a large scale, Britain underwent an industrial revolution that shaped the world into the shape it holds today. Energy has continued to become more affordable across society, to the point where it’s a common expectation to travel hundreds of miles a year, use portable electronic devices with long-lasting batteries, and so on. To maintain a strong economy, communities need affordable energy – especially if their businesses are to compete on a global scale.

Minimal environmental impacts

Energy with minimal environmental impacts can be summarised as energy without adverse effects. When people talk about this component of the trilemma it is often in reference to decarbonisation. This is undoubtedly the most pressing part of the environmental impacts of energy, but is not the only one that policymakers have to take into consideration. Long before climate change was studied and known about, communities were forced to deal with the more local problems of pollution, of the air and water. Extraction of fuels caused local issues, and the dangerous potency of nuclear material that swept across Europe following Chernobyl made the public rethink the atom. Even today, the language in Chinese politics for instance, shows that there are at least some who view local pollution as the main issue rather than global climate change.

Illustrating the trilemma

If I’m talking about a triangle this whole time, it’s best to just show the triangle, right? So I made a quick one below. It has some caricatures of what to expect between the different sides which are by no means tested against any economic models or anything similar – they’re purely illustrative. I’ve used an equilateral triangle, but it would be fun to illustrate the priorities of some countries (e.g. North Korea) with regards to the environment by using a scalene triangle.

Copy of Our Project (4)

Is 2017 the trilemma’s last year?

The electricity system has, at great speed, been undergoing a transition which policymakers are playing catch up to. The shifts that have happened are unprecedented, such as the rapid ramping down of coal in the UK. We are on track towards a post-subsidy world for renewables. We are already there in certain areas. The cost of intermittency is falling, and there is great potential in new balancing technologies and applications of smart digital communications technology. Could this mean we have technologies available that satisfy all parts of the trilemma?

One thought on “The core of energy policy in 2017

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