Divergent Paths to a Common Goal? An Overview of Challenges to Electricity Sector Reform in Developing versus Developed Countries

Recent experiences in electricity market reform have reignited an enduring debate in economics and public policy, namely, the benefits of liberalized markets versus central planning in the provision of goods and services. This debate as it relates to energy is not new – there has been previous criticism of whether liberalized markets in the energy sector have delivered optimal outcomes on objectives related to pricing, investment, storage, and overall ‘security of supply’ (Wright, 2006; Rutledge and Wright, 2010). However, the debate has arguably taken on new and greater relevance for two reasons. The first relates to the role of the electricity sector in decarbonization, and the argument that the sector provides the most direct and substantial way of reducing greenhouse gas emissions given the growing urgency of the environmental impacts of non-action (Keay, 2009; 2010). The second has wider ranging, global implications, given that many developing countries – which stand to lose the most from the environmental impacts of climate change – have been progressively moving towards electricity market liberalization, since the 1990s, after having adopted variations of this model following its relatively successful reception in the developed world at the time. What then are the implications of the fact that developed and developing countries could end up moving in opposite policy directions – the former towards central planning and the latter towards markets – in the pursuit of a shared eventual goal, that is, climate change mitigation through the proliferation of renewable energy in the electricity sector? This paper summarizes this debate and sketches out areas of policy relevance as they pertain to developing countries.

By: Anupama Sen

Latest Tweets from @OxfordEnergy

  • A cleaver comment by US President Donald Trump on Russia-Germany Nord Stream 2. Read @thierry_bros interview in Fre… https://t.co/ipMQftQ42b

    July 13th

  • J Stern on Germany’s imports of Russian gas: Europe particularly northwestern Europe has turned into a gas-trading… https://t.co/nR3mBymiLz

    July 12th

  • OIES @thierry_bros quoted on Gazprom EU market share and Nord Stream 2 in French https://t.co/OMgEg9QgXs

    July 12th

Sign up for our Newsletter

Register your email address here and we will send you notification of new publications, comment, articles etc. automatically.