Risk spreading and US energy development

Journal Article · Fri Jan 01 04:00:00 EST 1982 · Energy Syst. Policy; (United States)

OSTI ID:7092841

Navarro, P

Who should bear the risks and financial burdens of future energy development. Is government regulation an appropriate mechanism to spread and allocate financial, regulatory, and engineering risks of future large-scale and high-risk energy projects. These two critical questions are examined within the context of the court battles over the Federal Energy Regulatory Administration's precedent-setting attempt to force gas consumers of five major pipelines to finance the Great Plains Coal Gasification Project. Private financing is the most-efficient method of funding investment when the assumptions of perfect competition are reasonably approximated. In the absence of market failures, consumer financing via construction-project surcharges on energy bills has equal efficiency properties, although consumer financing may reduce the project-builders incentives to minimize cost. However, government financing is clearly preferred in the presence of market failures that characterize large-scale, high-risk energy projects. In the case of Great Plains, its high risk and large scale coupled with the security benefits of a successful synfuels demonstration project suggested that government financing was both the most efficient and equitable means of financing Great Plains. That ideal solution ran afoul of the reality of selfinterested corporate behavior, Congressional politics, and bureaucratic expediency. 18 references.

• Research Organization: Harvard Univ., Cambridge, MA
• OSTI ID: 7092841
• Journal Information: Energy Syst. Policy; (United States), Journal Name: Energy Syst. Policy; (United States) Vol. 6:3; ISSN ESYPB
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
292000 -- Energy Planning & Policy-- Supply
Demand & Forecasting
COMPARATIVE EVALUATIONS
ECONOMIC POLICY
ENERGY SOURCE DEVELOPMENT
FINANCING
GOVERNMENT POLICIES
LEGAL ASPECTS
RISK ASSESSMENT