The political economy of green energy

That is the topic of my latest Bloomberg column, here is one excerpt:

Japan seems to be approaching its energy infrastructure with politics at the forefront. It is making a big bet on hydrogen power, which is technologically iffy and expensive, currently about eight times more so than natural gas. Yet Japanese leaders are aware that Japan does not have its own solar power industry at scale, making the country dependent on China for solar panels. Hydrogen can also be used by existing (though modified) power plants, which both reduces cost and eliminates the need for new infrastructure. And if this all works, Japan could become known as the world leader in hydrogen power.

Greenpeace has criticized the Japanese approach, saying that its ammonia-reliant formula for hydrogen power is costly and will itself create greenhouse-gas emissions. That critique may well be right, but it’s also possible that Japan is thinking through the political questions at a deeper level.

The most relevant question about green energy isn’t necessarily about technology or cost. It may be about politics: “How many special-interest groups support this idea?” If there isn’t a decent answer, then maybe the idea doesn’t stand a decent chance.

There is much more at the link, including a consideration of other alternative energy sources.

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The political economy of green energy

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Author Of this post: Tyler Cowen
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