Energy: Green sources

Renewable energy is gaining in popularity, but if businesses want to switch they will have to weigh up a host of difficult issues.

by Nick Loney, World Business
Last Updated: 23 Jul 2013

There are three main ways to reduce carbon emissions: energy efficiency, carbon sequestration and greater use of renewable energy. Energy efficiency and carbon sequestration are essentially concerned with reducing the level of carbon dioxide emissions generated by existing energy resources, primarily fossil fuels.

Renewable energy is defined as energy "derived from sources that are regenerative or for all practical purposes cannot be depleted". Mankind has made use of solar, wind and water energy for thousands of years and, unlike the burning of fossil fuels, renewable energy produces no carbon emissions at all. But renewable energy has been regarded as less reliable and plentiful than fossil fuels.

But increasing concern over the risks associated with fossil fuels is putting renewable energy back into the spotlight. Many governments and organisations are attempting to promote its use through taxes and subsidies. However, it isn't always an easy sell. Businesses interested in switching to renewable energy have to weigh up a complex range of issues.

First, there is the cost: renewable energy is currently more expensive to produce than fossil fuels, but further subsidies and taxes could easily tilt the scales the other way. However, if the price of oil falls significantly, and many believe it will, the situation could change again. Second, despite technological advances, renewable energy is still seen as a less reliable and predictable form of energy than fossil fuels. Sunshine, wind and water movement are all subject to frequent fluctuations, and storing the energy generated is more of a challenge than storing oil or coal. No business wants to face the prospect of shutting down for hours or even days because the sun hasn't shone enough or it's not windy.

Finally, there is the issue of availability. In some countries, such as Scotland, energy suppliers offer customers the opportunity to have some or all of their energy provided from renewable sources. But this option does not exist in developing economies with a high reliance on fossil fuels. Of course, companies have the option of building their own renewable energy plants on site, but such a move is expensive and high risk.

Existing technology makes it possible for renewable energy to meet a much higher proportion of the world's energy needs than it currently does. But realising this potential will depend as much on politics as on technology.

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