The Economics of Renewable Energy

31 Pages Posted: 16 Jun 2009 Last revised: 17 Sep 2010

See all articles by Geoffrey M. Heal

Geoffrey M. Heal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: June 2009

Abstract

Greater use of renewable energy is seen as a key component of any move to combat climate change, and is being aggressively promoted as such by the new U.S. administration and by other governments. Yet there is little economic analysis of renewable energy. This paper surveys what is written and adds to it. The conclusion is that the main renewables face a major problem because of their intermittency (the wind doesn't always blow nor the sun always shine) and that this has not been adequately factored into discussions of their potential. Without new storage technologies that can overcome this intermittency, much of the decarbonization of the economy will have to come from nuclear, carbon capture and storage (CCS) and energy efficiency (geothermal and biofuels can make small contributions). Nuclear and CCS are not without their problems. New energy storage technologies could greatly increase the role of renewables, but none are currently in sight.

Suggested Citation

Heal, Geoffrey M., The Economics of Renewable Energy (June 2009). NBER Working Paper No. w15081. Available at SSRN: https://ssrn.com/abstract=1418939

Geoffrey M. Heal (Contact Author)

Columbia Business School - Finance and Economics ( email )

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