Part2-Energy and Natural Resources


Drawbacks and Incentives

While the advantages to renewable sources of energy are numerous, so are the disadvantages. Currently, such sources of energy are expensive, and without government investments, are economically unfeasible for many businesses (and most SMEs). At present, it costs approximately four times more to obtain energy from solar energy than fossil fuels, and twice as much to obtain energy from wind energy than from fossil fuels. Governments around the world offer a variety of incentives to households and enterprises to adopt instruments that would harness renewable energy, such as offering these instruments at subsidized costs, or offering low interest loans for their installation.

China Leading Solar Race

China has leapfrogged the West to emerge as the world’s largest manufacturer of solar panels. China’s efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.

The Chinese government charges a renewable energy fee to all electricity users. The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy is increasingly priced competitively.

But China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, solar power is still at least twice as expensive as coal.