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Resolving the Green Paradoxes: Thriving Under Energy Transition Uncertainties

Ricardo G. Barcelona

June 13, 2018

"Renewables are perceived as social goods that deliver social benefits (i.e. less pollution) while incurring private costs (i.e. higher life cycle costs). Hence, economics and policy are locked in blind alleys where subsidies become central to achieving their ends. However, the cure becomes worse than the disease when highly distorted systems emerge: expensive supplies are favored, investments are turned into rent extraction opportunities, and risks are increased when firms' continued viability is dictated by policy actions. In reality, renewables are among the myriad of technology choices that have economic costs and benefits. In this context, renewables are economic goods that aim to gain traction, or niches, within an evolving and transitioning energy market. This perspective leads to very different conceptions of optimality and a 'common good.'"

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