Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group
Like other sectors of an economy, a subsidy scheme for renewable energy technology development will inevitably increase the economy’s deficit, but economy’s debt only measures one side of the balance sheet, what it owes. Assets are important too. If a subsidy scheme (not necessary cash handout) helps to boost asset investments that increase the country’s long-run productivity, the country will be in better shape in the long run and even short-run output and employment may increase.
If so, why do not countries seriously support a subsidy scheme for clean energy investment? Are the clean energy plants not regarded as assets? Or perhaps their capacities are far low and then won’t be able to improve the productivity of economy? Or do the financial markets expect a high short-term profit rather than strategic investments?
As far as the air quality is concerned, employing the clean energy technologies obviously benefit societies and mitigate the energy security concerns in counties. Countries (example: the US) prefer to stimulate their economies through debt-financed consumption. A general notion says, the debt-financed consumption scheme is essential for high standard of living now and in the future. In other hand, the general consensus concedes that the existing pattern of consumption will degrade the environmental system and reduce standard of living for sure in the future. The debt-financed consumption will lower the standard of living when the time comes to pay back the debt or even just to pay interest on it.
If a country stimulates its economy through investment, future output will be higher with good investments by more than enough to pay the interest. Such investments not only improve standards of living today but also improve those of next generation.
High fossil fuel demand, decaying energy infrastructure, inefficient conventional energy supply chain and generation system and global warming all cloud our societies’ long-term outlook An effective subsidy scheme, for clean energy technology development, would target them or at least not make them worse. The nature of the energy sector requires exogenous help if it is supposed to get structural change and we believe the clean energy technologies will improve economy’s productivity and can replace the fossil fuel technologies and its profit!
Energy and Environment for Development – Policy Analysis Research Group
Like other sectors of an economy, a subsidy scheme for renewable energy technology development will inevitably increase the economy’s deficit, but economy’s debt only measures one side of the balance sheet, what it owes. Assets are important too. If a subsidy scheme (not necessary cash handout) helps to boost asset investments that increase the country’s long-run productivity, the country will be in better shape in the long run and even short-run output and employment may increase.
If so, why do not countries seriously support a subsidy scheme for clean energy investment? Are the clean energy plants not regarded as assets? Or perhaps their capacities are far low and then won’t be able to improve the productivity of economy? Or do the financial markets expect a high short-term profit rather than strategic investments?
As far as the air quality is concerned, employing the clean energy technologies obviously benefit societies and mitigate the energy security concerns in counties. Countries (example: the US) prefer to stimulate their economies through debt-financed consumption. A general notion says, the debt-financed consumption scheme is essential for high standard of living now and in the future. In other hand, the general consensus concedes that the existing pattern of consumption will degrade the environmental system and reduce standard of living for sure in the future. The debt-financed consumption will lower the standard of living when the time comes to pay back the debt or even just to pay interest on it.
If a country stimulates its economy through investment, future output will be higher with good investments by more than enough to pay the interest. Such investments not only improve standards of living today but also improve those of next generation.
High fossil fuel demand, decaying energy infrastructure, inefficient conventional energy supply chain and generation system and global warming all cloud our societies’ long-term outlook An effective subsidy scheme, for clean energy technology development, would target them or at least not make them worse. The nature of the energy sector requires exogenous help if it is supposed to get structural change and we believe the clean energy technologies will improve economy’s productivity and can replace the fossil fuel technologies and its profit!
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