Green Energy, Efficiency and Climate Change: An Economic Perspective - Green Energy and Efficiency: An Economic Perspective - page 13

5 Conclusions

The development and progress of the world depends on energy in its different
forms. Hence, in order to analyze the problems that the generation of energy, as
well as it use originates, it is imperative to have a long term perspective in which to
include conditions related to the role of the sector as a basis for economic and social
progress as well as conditions related to the security of provision. Countries and
their economies require, if they do not have property rights over energy resources,
reliable and durable energy sources to be ensured. This explains why energy
resources are not only a source of wealth but also a source of tension at world level.
The energy sector provides important services such as electricity, a fundamental
input, which if available at “ reasonable prices ” , ensures competitiveness for eco-

nomic activities and consumer s well-being. Yet the technology used and the

activities undertaken in this sector generates multiple externalities and local and
global environmental damages. Therefore, a well-implemented public regulation is
needed to guarantee that

'

“ environmental friendly ” technologies are being used

together with the ful llment of the security in provision.

culties for regulation of the energy sector stem from the fact that this
is a sector that needs a medium and long term perspective. And this is so because
technological changes exert their in

General dif

uence over the sector in the long run. Yet
knowledge about how technological changes in uence the energy sector in the long

run is not easy to anticipate. In fact, technology and its development is a complex
business full of uncertainty.
Furthermore, the energy sector needs, more urgently than other productive
sectors, large investments. A long term view is again needed as regulation cannot
miss the point of looking at the future before taking any decision. The short run
perspective leads to mistakes when planning how and what to do with energy, how
to regulate and the way in which energy is used. The necessary horizon for dealing
with energy problems is the long run and the future is, most of the time, full of
uncertainties.
On the other hand, the differences between the technological perspective and the
economic perspective have to be borne in mind as public policy in the energy sector
may sometimes pursue objectives, such as energy ef

ciency or economic ef ciency,

that need different measures and different instruments.
The difference between these two concepts implies that the policies adopted and
the instruments chosen have to ful

. Only
with this premise would it be possible to obtain the results that will maximize
collective welfare.
In general, when evaluating the costs that changes in the energy sector would
generate, economists tend to be more pessimistic than engineers. We are aware that
the changes needed in the energy sector are a dif

ll the conditions of being “ cost-effective ”

cult task given the cost-effec-
tiveness condition. However knowledge is improving and we should be con dent in

the future. It is a dif cult but not an impossible task.