Energy Policy: Keeping an Eye on the Big Picture!


Energy policy has to meet several targets such as security, environmental compatibility, and economic efficiency at the same time. The success of these efforts can be illustrated using only few indices. A transparent and comprehensible concept according to which the numbers are selected is, however, required. Moreover, data is often missing and new indicators have to be developed. This is the finding of a recent study the Centre for European Economic Research (ZEW) in Mannheim conducted on behalf of several associations under the umbrella of the Federation of German Industry (BDI).

“Energy policy has to keep an eye on security, environmental compatibility, and economic efficiency at the same time. This is the only way which guarantees its success and acceptance”, says Prof. Dr. Andreas Löschel, head of the Research Department “Environmental and Resource Economics, Environmental Management” at ZEW. “In this project we have thus tried to develop a transparent and comprehensible approach which enables us to select indicators applicable for the analysis of target achievements in the area of energy policy”.

The concept is based on the targets security, environmental compatibility, and economic efficiency. There are different aspects to each target. The security of energy supply is being assessed with reference to the supply chain. This includes the dependence on imports, price and power system security, and demand flexibility. Environmental compatibility is an intrinsically diverse target. Not less than ten relevant dimensions were developed, ranging from climate change, soil and ocean acidification, and fine particles to the consumption of resources. Measuring the economic efficiency demands an analysis of the extent to which the requirements of a profitable energy supply are being met. A goal of the concept is to map the competition on the energy market, to discuss if external effects are being internalised, if information is available, and to estimate the costs of political interventions into the energy market.

After the evaluation of more than one hundred potential indicators, it is evident that there is great demand for better data and further research. Thus, better indicators have to be developed to analysethe power quality and supply risks stemming from political developments. Numerous data gaps have to be closed, especially in the area of environmental compatibility, for instance concerning emissions into soil and water, as well as the consumption of resources and land use. Measuring the economic efficiency of the energy supply system is one of the greatest challenges: on the one hand, there is a lack of non-controversial numbers concerning external effects which have been developed methodologically sound. On the other hand, better indicators for regulatory costs are still necessary. This dimension comprises macroeconomic costs, ranging from regulating the costs of bureaucracy to the loss of international competitiveness.

“We are able to propose some indicators to draw an informative picture of the target achievements in the area of energy policy. But even more important, we have been able to show gaps and weaknesses. These problems have to be solved to put the indicator concept into practice”, explains Andreas Löschel. “In general, assessing energy policy with indicators alone is an idea that quickly reaches its limits. This is what makes a further evaluation of energy policy measures with in-depth studies so important.”

For further information please contact

Prof. Dr. Andreas Löschel

Tel:  +49 (0)621 1235-200