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Environmental Externalities, Market Distortions and the Economics of Renewable Energy Technologies

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  • Anthony D. Owen

Abstract

This paper reviews life cycle analyses of alternative energy technologies in terms of both their private and societal costs (that is, inclusive of externalities and net of taxes and subsidies). The economic viability of renewable energy technologies is shown to be heavily dependent upon the removal of market distortions. In other words, the removal of subsidies to fossil fuel-based technologies and the appropriate pricing of these fuels to reflect the environmental damage (local, regional, and global) created by their combustion are essential policy strategies for stimulating the development of renewable energy technologies in the stationary power sector. Policy options designed to internalize these externalities are briefly addressed.

Suggested Citation

  • Anthony D. Owen, 2004. "Environmental Externalities, Market Distortions and the Economics of Renewable Energy Technologies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 127-158.
  • Handle: RePEc:aen:journl:2004v25-03-a07
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    Cited by:

    1. Timilsina, Govinda R. & Cornelis van Kooten, G. & Narbel, Patrick A., 2013. "Global wind power development: Economics and policies," Energy Policy, Elsevier, vol. 61(C), pages 642-652.
    2. Caroline Ignell & Peter Davies & Cecilia Lundholm, 2013. "Swedish Upper Secondary School Students’ Conceptions of Negative Environmental Impact and Pricing," Sustainability, MDPI, Open Access Journal, vol. 5(3), pages 1-15, March.
    3. Woo, Chungwon & Chung, Yanghon & Chun, Dongphil & Seo, Hangyeol & Hong, Sungjun, 2015. "The static and dynamic environmental efficiency of renewable energy: A Malmquist index analysis of OECD countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 367-376.
    4. repec:gam:jsusta:v:9:y:2017:i:9:p:1665-:d:112476 is not listed on IDEAS
    5. van Kooten, G. Cornelis & Timilsina, Govinda R., 2009. "Wind power development : economics and policies," Policy Research Working Paper Series 4868, The World Bank.
    6. McHenry, Mark, 2009. "Policy options when giving negative externalities market value: Clean energy policymaking and restructuring the Western Australian energy sector," Energy Policy, Elsevier, vol. 37(4), pages 1423-1431, April.
    7. Carole Donada & Yannick Perez, 2015. "Editorial of the 2015 special issue about Electromobility," Post-Print hal-01424757, HAL.
    8. Tahamina Khanam & Jukka Matero & Blas Mola-Yudego & Lauri Sikanen & Abul Rahman, 2016. "Assessing external factors on substitution of fossil fuel by biofuels: model perspective from the Nordic region," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 21(3), pages 445-460, March.
    9. Carole Donada & Yannick Perez, 2015. "Editorial," Post-Print hal-01660231, HAL.
    10. Wolfgang Buchholz & Jonas Frank & Hans-Dieter Karl & Johannes Pfeiffer & Karen Pittel & Ursula Triebswetter & Jochen Habermann & Wolfgang Mauch & Thomas Staudacher, 2012. "Die Zukunft der Energiemärkte: Ökonomische Analyse und Bewertung von Potenzialen und Handlungsmöglichkeiten," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 57, October.
    11. Alves, Laura Araujo & Uturbey, Wadaed, 2010. "Environmental degradation costs in electricity generation: The case of the Brazilian electrical matrix," Energy Policy, Elsevier, vol. 38(10), pages 6204-6214, October.
    12. G. Cornelis van Kooten, 2015. "All you want to know about the Economics of Wind Power," Working Papers 2015-07, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    13. repec:eee:rensus:v:80:y:2017:i:c:p:971-989 is not listed on IDEAS
    14. repec:eee:appene:v:210:y:2018:i:c:p:518-528 is not listed on IDEAS
    15. Liu, Qian & Zheng, Lucy, 2016. "Assessing the economic performance of an environmental sustainable supply chain in reducing environmental externalitiesAuthor-Name: Ding, Huiping," European Journal of Operational Research, Elsevier, vol. 255(2), pages 463-480.
    16. Farrell, Niall & Devine, Mel, 2015. "How do External Costs affect Pay-as-bid Renewable Energy Connection Auctions?," Papers WP517, Economic and Social Research Institute (ESRI).
    17. McCubbin, Donald & Sovacool, Benjamin K., 2013. "Quantifying the health and environmental benefits of wind power to natural gas," Energy Policy, Elsevier, vol. 53(C), pages 429-441.
    18. Heinzel, Christoph, 2008. "Implications of diverging social and private discount rates for investments in the German power industry: a new case for nuclear energy?," Dresden Discussion Paper Series in Economics 03/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    19. repec:aen:journl:ej38-si1-argentiero is not listed on IDEAS
    20. Gerboni, R. & Salvador, E., 2009. "Hydrogen transportation systems: Elements of risk analysis," Energy, Elsevier, vol. 34(12), pages 2223-2229.
    21. Chien, Taichen & Hu, Jin-Li, 2007. "Renewable energy and macroeconomic efficiency of OECD and non-OECD economies," Energy Policy, Elsevier, vol. 35(7), pages 3606-3615, July.
    22. Verduzco, Laura E. & Duffey, Michael R. & Deason, Jonathan P., 2007. "H2POWER: Development of a methodology to calculate life cycle cost of small and medium-scale hydrogen systems," Energy Policy, Elsevier, vol. 35(3), pages 1808-1818, March.
    23. Verbruggen, Aviel, 2009. "Performance evaluation of renewable energy support policies, applied on Flanders' tradable certificates system," Energy Policy, Elsevier, vol. 37(4), pages 1385-1394, April.
    24. Moslem Mousavi, Sayed & Bagheri Ghanbarabadi, Morteza & Bagheri Moghadam, Naser, 2012. "The competitiveness of wind power compared to existing methods of electricity generation in Iran," Energy Policy, Elsevier, vol. 42(C), pages 651-656.
    25. Mahapatra, Diptiranjan & Shukla, Priyadarshi & Dhar, Subash, 2012. "External cost of coal based electricity generation: A tale of Ahmedabad city," Energy Policy, Elsevier, vol. 49(C), pages 253-265.

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    JEL classification:

    • F0 - International Economics - - General

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