Additional thoughts on non renewable energy sources
In every pie chart we see of energy sources distribution within a country, renewable sources continue to occupy a defenseless place when compared to other energy sources, whether we look on today’s data or future forecast. When we weigh the factors that determine the role of each energy source in an economy, we are left with the following scenario:
Power potential isn’t the aspect holding back the ascension of renewable energy sources share on total energy demand, but rather the lack of investment on R&D to properly develop the market, decrease costs, gain scales economy and transform most products and machinery technology compatible.
As an economist, I understand that this lack of investment is due to misplaced incentives on public policy. Energy markets are usually highly regulated, and concentrated on a few players.
The regulation and the concentration provide environment for a more stable market. On one hand, this means it is less likely to suffer the consequences of economy cycles. On the other hand, the supplier’s interests are more likely to prevail, which isn’t necessarily the best for economic development.
If it is a matter of misplaced incentives generated by public policies, than it is time to rethink them. The following video, from a lecture at Stanford, approaches well this subject, especially the complexity of issues correlated with public policies and energy markets.