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Renewable energy could pay the price for fuel crisis

Tyler Cowen
Tyler Cowen10/17/2021 10:30 PM GMT+08  • 5 min read
Renewable energy could pay the price for fuel crisis
"Maybe the pandemic is teaching us how things really were all along."
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The Covid-19 pandemic has led to many unforeseen consequences, and right now we may be approaching one of the biggest: the possible neutering of the green energy movement. Prices of fossil fuels are rising sharply, and most of the world is responding by trying to get those prices back down again. Voters might end up bitterly opposed to ever seeing more expensive energy again. That poses a problem for the adoption of renewable energy, because during the transition away from fossil fuels, many forms of energy are likely to cost more.

To rewind just a bit, three events have come along at the same time. As part of a long-term structural trend due to political pressures and investment risks, the West has been cutting back its investments in fossil-fuel energy before truly significant quantities of renewables have come online. Next, the earlier stages of the pandemic blunted energy demand, leading to much lower prices and discouraging further spending on energy capacity, including in the natural gas sector. Finally, due to vaccines and activist fiscal policy, the economic recovery came more rapidly than had been expected, pushing up energy costs. In the UK, for instance, natural gas prices have shot up 700% as of late.

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