In this chapter, we present the most important market forms that are relevant for understanding the functioning of energy markets and energy-related markets. This presentation is introduced by a deep discussion on the concepts of economies of scale and density, that are relevant to understand these market forms. We then discuss the following market forms: monopoly, perfect competition, monopolistic competition, and oligopoly. The presentation of these market forms is also integrated with some applications in the energy sector. For example, after presenting monopolies in a general way, we describe the natural monopoly and role regulation in the electricity and gas distribution sectors. At the end of the chapter, we discuss issues in developing countries related to the topics discussed in the chapter.

In this chapter, we illustrate how to perform an economic analysis of energy investments from a private as well as a social point of view. In the first part of the chapter, we present the most important investment criteria that can be applied in the evaluation of private investments, i.e., the net present value and the internal rate of return. Because of their importance in the energy sector, we also discuss the computation of the levelised cost of energy (LCoE) and the concept of the learning curve. In the last part of the chapter, we introduce social cost–benefit analysis, highlighting the differences between this approach oriented to choose projects which maximize society’s welfare, with respect to private cost–benefit analysis. At the end of the chapter, we discuss issues in developing countries related to the topics discussed in the chapter.

In this chapter, we describe the most important policy evaluation criteria that can be used to choose the appropriate mix of energy and climate policy instruments. We give space to economic efficiency, effectiveness, macroeconomic effects, equity, acceptability, enforceability, and administrative practicability. In the second part of the chapter, we present a simple overview of the most important economic models that can be used to estimate the impact of the introduction of energy and climate policy measures, such as applied general equilibrium models and integrated assessment models. Further, we provide a short introduction to some policy evaluation methods such as randomised controlled trials, difference-in-difference, and regression discontinuity designs that can be used to evaluate policy effectiveness.

In this chapter, we present and discuss the theory of energy demand for the residential sector and for the industrial sector. For the residential sector, we provide a discussion of household production theory, whereas for firms, we discuss duality and production theory. We also provide an extensive discussion on how researchers are estimating energy demand models using empirical methods to derive income and price elasticities, and we provide tables with information on price, income, and substitution elasticities derived in studies that have been recently published. At the end of the chapter, we discuss issues in developing countries related to the topics discussed in the chapter.

The role of judges in implementing climate policies has become a crucial component of the existing governance framework regulating climate change action. Litigation focusing on more ambitious climate action is trending globally. Individuals, local authorities and NGOs are bringing lawsuits against national governments, holding them accountable to their legal obligations and engendering policy change. Due to the constitutional doctrine of the separation of powers, the justiciability of climate policy is questioned. Disagreements exist between advocates of an activist judicial role and those in favour of legislative and executive discretion. The main question is to what extent the judiciary can oblige other government branches to take urgent preventative action, particularly to implement or adjust climate policies. Their role in implementing climate policies is analysed from a comparative perspective, considering theoretical debates on the doctrine of the separation of powers in different legal systems and relevant case-law. The chapter connects international and domestic issues and highlights recommendations to foster effective implementation of more ambitious climate policies.

This chapter maintains that the International Court of Justice (ICJ) may usefully intervene in the complex and multifaceted litigation that has developed before national and international tribunals, as well as human rights treaty bodies, concerning national climate policies adopted to implement international obligations. By considering the rationale and nature of climate litigation, the chapter seeks to point out what international law rules the ICJ should take into account (especially clarifying their existence and scope) in order to make a real contribution to national and international jurisprudence.

The lawfulness of carbon border adjustment measures (CBAMs) under general international economic law and particular economic agreements is explored; specifically, if their international lawfulness can be determined by thinking of them as countermeasures necessary to implement climate change obligations. As there are no non-discriminatory obligations under customary international law, it is argued that CBAMs are lawful under general international law, but under particular international economic agreements they can be seen as countermeasures lawfully taken in response to breaching the obligation to curb GHG emissions, allowing their justification as a breach of primary non-discriminatory economic obligations, particularly the national treatment principle under the GATT and GATS. This shifts the burden of proving necessity/proportionality to the State in breach of the obligation. CBAMs are fundamentally lawful measures and can only give rise to compensation if it they are unnecessary/disproportionate. This chapter also assesses whether they can be thought of as erga omnes contractantes obligations under international economic agreements, particularly the GATT and the GATS.

This chapter discusses the building blocks of the European Union’s strategy for climate neutrality. Carbon pricing in the EU is described, focusing on the EU ETS and on the forthcoming CBAM. Then the roles of electrification and clean molecules in the future European energy system are discussed. Finally, sustainable finance priorities, capacities, and regulatory instruments put forward by the EU are reviewed, before a brief conclusion.