IDEAS home Printed from
   My bibliography  Save this paper

The Economics of Renewable Energy


  • Geoffrey Heal


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

  • Geoffrey Heal, 2009. "The Economics of Renewable Energy," NBER Working Papers 15081, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15081
    Note: EEE

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Ian Parry, 2001. "Are Gasoline Taxes in Britain Too High?," Challenge, Taylor & Francis Journals, vol. 44(4), pages 67-81.
    2. Robert Hahn & Caroline Cecot, 2009. "The benefits and costs of ethanol: an evaluation of the government’s analysis," Journal of Regulatory Economics, Springer, vol. 35(3), pages 275-295, June.
    3. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
    4. R. C. D'Arge & K. C. Kogiku, 1973. "Economic Growth and the Environment," Review of Economic Studies, Oxford University Press, vol. 40(1), pages 61-77.
    5. Michael Hoel, 2009. "Bush Meets Hotelling: Effects of Improved Renewable Energy Technology on Greenhouse Gas Emissions," Working Papers 2009.1, Fondazione Eni Enrico Mattei.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Andrade de Sá, Saraly & Daubanes, Julien, 2016. "Limit pricing and the (in)effectiveness of the carbon tax," Journal of Public Economics, Elsevier, vol. 139(C), pages 28-39.
    2. Nick Johnstone & Ivan Ha__i_, 2013. "Increasing the penetration of intermittent renewable energy: innovation in energy storage and grid management," Chapters, in: Roger Fouquet (ed.), Handbook on Energy and Climate Change, chapter 6, pages 140-156, Edward Elgar Publishing.
    3. Zipp, Alexander, 2017. "The marketability of variable renewable energy in liberalized electricity markets – An empirical analysis," Renewable Energy, Elsevier, vol. 113(C), pages 1111-1121.
    4. Grüne, Lars & Semmler, Willi & Stieler, Marleen, 2015. "Using nonlinear model predictive control for dynamic decision problems in economics," Journal of Economic Dynamics and Control, Elsevier, vol. 60(C), pages 112-133.
    5. Sangiuliano, Stephen Joseph, 2017. "Turning of the tides: Assessing the international implementation of tidal current turbines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 971-989.
    6. Fikru, Mahelet G. & Gelles, Gregory & Ichim, Ana-Maria & Kimball, Jonathan W. & Smith, Joseph D. & Zawodniok, Maciej Jan, 2018. "An economic model for residential energy consumption, generation, storage and reliance on cleaner energy," Renewable Energy, Elsevier, vol. 119(C), pages 429-438.
    7. Benjamin Jones, 2011. "Driving A Green Economy Through Public Finance And Fiscal Policy Reform," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 325-349.
    8. Apergis, Nicholas & Payne, James E. & Menyah, Kojo & Wolde-Rufael, Yemane, 2010. "On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth," Ecological Economics, Elsevier, vol. 69(11), pages 2255-2260, September.
    9. Saraly Andrade de Sa & Julien Daubanes, 2014. "Limit-Pricing and the (Un)Effectiveness of the Carbon Tax," Working Papers 2014.07, FAERE - French Association of Environmental and Resource Economists.
    10. Burkart, Christopher S. & Arguea, Nestor M., 2012. "Efficient scale for photovoltaic systems and Florida's solar rebate program," Energy Policy, Elsevier, vol. 48(C), pages 470-478.
    11. Gorkemli Kazar & Arthur Kazar, 2014. "The Renewable Energy Production-Economic Development Nexus," International Journal of Energy Economics and Policy, Econjournals, vol. 4(2), pages 312-319.
    12. Kristina M. Lybecker, 2014. "Innovation and Technology Dissemination in Clean Technology Markets and The Developing World: The Role of Trade, Intellectual Property Rights, and Uncertainty," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 10(2), pages 7-38.
    13. Marianne Haug, 2011. "Clean energy and international oil," Oxford Review of Economic Policy, Oxford University Press, vol. 27(1), pages 92-116, Spring.
    14. Boliko, Charles M. & Ialnazov, Dimiter S., 2019. "An assessment of rural electrification projects in Kenya using a sustainability framework," Energy Policy, Elsevier, vol. 133(C).
    15. Thiam Hee Ng, . "Bond Financing for Renewable Energy in Asia," Chapters, in: Shigeru Kimura & Youngho Chang & Yanfei Li (ed.), Financing Renewable Energy Development in East Asia Summit Countries A Primer of Effective Policy Instruments, chapter 11, pages 321-342, Economic Research Institute for ASEAN and East Asia (ERIA).

    More about this item

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:15081. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.