Note: This seminar will be available over Zoom. If you would like to join via Zoom, please contact Ben Hobbs for the information.

Title: The Energy Transition, Electricity markets and the European Energy Crisis

Abstract: Europe had already embarked on a substantial energy transition, particularly in the electricity sector, when gas prices started to escalate in 2021 and then unfolded into a full-blown energy crisis when Russia invaded Ukraine.  The immediate policy response focused on a combination of supply-side efforts to replace Russian gas, and alleviating the impact on consumer bills – policies which, amongst other things, resulted in the UK’s shortest-lived prime minister, as financial markets rebelled at the fiscal gap implied after c. £150bn emergency subsidies.

The crisis has also however highlighted growing tensions within the electricity sector arising from the transition – in economic terms, a growing wedge between the known (and declining) cost of renewables, and the volatile cost of fossil fuels which sets the price in the European electricity market.  After a brief overview of the crisis, this talk will bring together a series of studies on the intersection of the electricity transition and the energy crisis, focused mainly on the UK, which is in the midst of a major review of electricity market reform.  The talk will clarify key concepts and debates, summarise concerns about limitations to the traditional theory underpinning European electricity markets, and discuss proposed reforms including proposals for split or dual markets.

Finally the talk will conclude briefly with observations on links between electricity market structures and international trade in carbon-intensive goods, notably the European carbon border adjustment mechanism (CBAM).

Bio: Michael Grubb is Professor of Energy and Climate Change at University College London, following positions at Imperial College London and then Cambridge University. His career has combined academic with half-time implementation roles. Following eight years as Chief Economist at the UK Carbon Trust, the UK’s lead organisation for business implementation, he was Senior Advisor to the UK Office of Gas and Electricity Markets (the energy regulator, Ofgem), and then Chaired the UK government’s Panel of Technical Experts on Electricity Market Reform.

His book Planetary Economics: Energy, Climate Change and the Three Domains of Sustainable Development, won the 2021 Marcel Boiteux prize for “outstanding book contributing to energy economics and its literature” by International Association for Energy Economics.  Prof Grubb was one of the original members of the UK’s statutory Climate Change Committee, which advises the government on future carbon budgets and reports to Parliament on their implementation. He has contributed to several reports of the Intergovernmental Panel on Climate Change, and in 2018 was appointed as Convening Lead Author for Chapter 1 of the Sixth Assessment Report – Mitigation.

Further info and publications available at www.profmichaelgrubb.com.