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Can Renewable Energy Compete

Severin Borenstein, U.C. Energy Institute, 2547 Channing Way, Berkeley, CA 94720-5180

Besides technology breakthroughs, the future of non-fossil energy depends on the cost of fossil energy and on the cost of polluting. Without pollution constraints, fossil fuels will likely dominate energy markets for many decades if not centuries. Oil production may or may not be peaking, but there is sufficient coal and near-coal (oil sands) to last into the next century. Furthermore, technologies for recovering and using those resources are constantly improving. So, the future of renewable energy depends on government-determined costs of pollution. While local governments in the U.S. and some other countries have been successful in controlling local pollutants, and have used economic incentives effectively in the process, greenhouse gasses create a much bigger challenge than have been presented by NOx, SOx or other pollutants. The adoptions of tradable markets in greenhouse gas emissions are a small step in the necessary direction. Only if those markets extend to all major GHG emitters and caps on total GHGs are made much tighter will most renewable energy be able to compete in the market.