Economics and the Environment, 8th Edition

CHAPTER 18Energy Policy and the Future

18.0 Introduction

Of all economic activities, energy production and use present the biggest challenge to the quality of the environment. This book began with an extended discussion of the challenge of global warming, due to the release of carbon dioxide from the combustion of fossil fuels. But, beyond global warming, energy consumption also yields as by-products acid rain and sulfate pollution, urban air pollution and traffic jams, oil spills, oil drilling and strip mining in sensitive habitats, acid mine drainage, hazardous mine tailings and oil drilling muds, occupational diseases such as black lung, and exposure to radioactivity in the mining, transport, and disposal of nuclear fuel and waste. Our three main energy sources—oil, coal, and nuclear—each have their own environmental drawbacks.

Yet, reliable access to reasonably priced energy is the lifeblood of any economic system, and the American economy relies more heavily on it than most. This chapter presents an overview of the current energy picture and then considers the prospects for a cleaner energy path, one based on a combination of renewable energy (solar, wind, and biomass electricity), energy efficiency, and electric, hybrid, and biofuel vehicles. The basic message is that the future is up for grabs. Depending on the interaction of technology, economics, and government policy, the energy system could follow the current fossil-fuel path or switch to either a renewable/efficiency ...