Environmental Engineering Reference
In-Depth Information
10.4.2 Economic Factor 2: Subsidies to Energy Technologies
Conventional electricity technologies in any given nation become entrenched
partly through government support. Consider coal-ired power is a case in
point. In most nations, governments have provided infrastructure for trans-
porting coal to the plants (i.e., rail links), subsidized coal procurement, and
provided T&D infrastructure to get the electricity from the plant to the elec-
tricity grid. Nowadays, it is not unusual to see government research funds allo-
cated to clean coal or CCS research. Consequently the actual cost of adopting
coal-ired power technology is underreported, creating a false economy. he
nuclear power industry is even worse than the coal-ired power industry in
terms of hidden government subsidies. If the government wasn't responsible
for nuclear power R&D, nuclear storage and underwriting the threat of nuclear
disaster, it is likely that nuclear power plants would not be built in any nation
because the costs would render the technology to be commercially unviable.
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Comparatively, wind power has not received the same level of support
as fossil fuel power and nuclear power technologies. his suggests that
while many of the conventional technologies have now matured (where
cost declines associated with technological innovation slow down consider-
ably), wind power is entering the early stages of commercialization; as such,
wind power should experience comparatively greater cost reductions (on a
percentage basis). However, wind power manufacturers are still playing a
costly game of catch-up to try and match the cost proiles of some of these
conventional technologies that have enjoyed decades of government sub-
sidization. In order to accelerate the transition from early commercializa-
tion to technological maturity, government support for wind power should
be at least as robust as government support for conventional technolo-
gies. Remarkably, at this juncture in time, this is still not the case in many
nations. As this topic documented, in Japan, Canada, the United States, and
China conventional technology irms still receive far more government sup-
port than wind power technology irms receive.
he lesson for policymakers is clear: in order to expedite a transition away
from carbon-intensive energy technologies and nuclear power, policymak-
ers must eliminate conventional fuel subsidies and ramp up inancial sup-
port for wind power and other renewable energy technologies in order to
even the competitive playing ield.
10.4.3 Economic Factor 3: Entrenched Investments
Conventional electricity generation plants are expensive capital assets that
represent sunken costs once they are built. herefore, once a plant is built,
