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New RFF Center Will Focus On Nexus Between Energy Economics and Public Policy

FOR RELEASE: April 7, 2010
CONTACT: RFF Office of Communications, 202-328-5026

WASHINGTON – Seeking to improve understanding of U.S. and global energy fundamentals, a new Center on Energy Economics and Policy (CEEP) at Resources for the Future will employ economic tools and other methodologies to monitor and evaluate developments in energy markets, as well as to draw out their implications for energy policy.

In announcing the initiative, RFF President Phil Sharp noted that research in energy economics and policy has not kept pace with marketplace developments and policymaking needs – nor has it been well disseminated to policy audiences.

“Increasing our capacity and impact in this crucial field has long been an important institutional ambition at RFF,” Sharp said. “There is a great need to improve basic knowledge of the economic pressures and incentives that will affect our energy future – and to thoughtfully reengage the public on these issues.”

Co-directors of the CEEP work will be Senior Fellow Alan Krupnick and Nonresident Fellow Stephen P.A. Brown, former director of energy economics and microeconomic policy analysis at the Federal Reserve Bank of Dallas.

“CEEP will utilize economic research to guide policymaking and the evaluation of energy policies and energy market forces,” said Krupnick. “Using strategic communications and by upholding RFF’s traditions of independence and quality academic research, CEEP will maintain a visible and forceful presence in the policy arena.”

Through its activities, CEEP aims to help key policymakers grasp the importance of energy issues and markets, strengthen U.S. and worldwide energy policy by developing analytical frameworks that combine rigorous economic analysis with implementable policy, and expand RFF’s already successful academic publication record in energy economics and policy.

Initial CEEP research objectives will emphasize three broad themes: 

Understanding the Present: Assessing Current Energy Policies and Market Realities

Myths and misunderstandings abound about how energy markets work and how current policies shape those markets. RFF has the independence, credibility, and expertise to dispel such myths and offer thoughtful, reasoned analyses to inform and focus energy policy debates. The center’s work will focus on the underlying issues that motivate energy policies, assess the energy-environment interface, examine policy cost-effectiveness and net benefits, and investigate to what extent existing policies are synergistic, redundant, or working at cross-purposes. Key areas of investigation may include:

  • The underlying issues that motivate energy policies;
  • How current policies, including policy interactions, affect U.S. energy markets;
  • The causes and implications of oil price volatility, including speculative behavior;
  • The implications of energy commodities having become financial instruments;
  • Fundamental relationships in energy markets, such as demand and supply;
  • The social costs of energy use; and
    The role of consumer behavior and market failures in energy choices.

Shaping the Future: Energy Market Evolution and Policy Directions

The pace of change in the energy arena is rapid. Technological advances have changed supply conditions for gas shale and tar sands, and political dynamics can change supply conditions even more rapidly. New technologies and approaches to energy use will likewise be game changers, and a barrage of new policy ideas are being advanced, even as legislative action slows. CEEP will keep pace with these changes, distinguish important developments from fads, and help guide policy to take advantage of new technologies and the best thinking. Key areas of investigation may include:

  • Future U.S. energy policy options including potential policy interactions;
  • Development of an approach to policy assessment that finds the first-best and second-best policies, and puts them ahead of other options;
  • Development of policies to foster better energy use choices given consumer behavior and market failures;
  • The policy implications of recent discoveries of greater natural gas resources;
  • Policy design to control the environmental and climate effects of energy use;
  • Policies for and implications of emerging energy technologies; and
  • How interrelated energy, water, land, and food issues may affect resource development and utilization.

The International Dimension: World Energy Markets, Energy Security, and Economic Development and Energy Use

Economic growth is creating significant challenges for world energy resources and greenhouse gas emissions. The Middle East remains the focal point for the world’s oil supply, even as countries in the region are using more of their own energy. RFF’s global affiliations and experience in developing international and country-specific policy prescriptions add significant value in policy design. Key areas of investigation may include:

  • International oil and natural gas markets;
  • Worldwide energy security and energy security policies;
  • Energy demand and energy efficiency in rapidly growing economies;
  • Issues in international policy coordination;
  • Approaches to technology transfer;
  • Economic development and energy use (e.g., the issue of energy poverty); and
  • Pricing distortions and reforms. 

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Founded in 1952, Resources for the Future is an independent and nonpartisan institution devoted to research and publishing about critical issues in environmental and natural resource policy.

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