Renewable energy use and the renewable energy sector’s development: public finance, environmental externalities and sustainability

Abstract

This article presents an economic case for governments providing financial support for the solar and the wind-powered electricity sector. To do this, it takes into account both the environmental consequences of relying on alternative natural resources for electricity production as well as the sustainability of the supply of these resources. It critically examines the relevant literature (it identifies shortcomings and gaps in it) and applies economic principles to demonstrate how government financial support for the development of the green energy electricity sector can add to social economic welfare. It provides a significant contribution to the existing literature. This is because (when compared with the present literature) it provides an improved classification of energy resources, and a more comprehensive account of the nature of social economic choices involved in relying on solar and wind power rather than on fossil fuels to supply electricity.

Keywords

• electricity economics
• environmental externalities
• renewable energy
• solar power
• sustainability
• wind power