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Discussion Question For Economics
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When watching the news it seems like the answer to many problems like global warming, or pollution point to green energy. This would include wind, solar and hydroelectric power. While many people seem to believe these are renewable, and sustainable resources they are mistaken. These resources use around 3 to 6 times the amount of resources that natural gas uses. While the burning of the gas creates carbon dioxide, the creation or construction of the other energy sources creates more pollution than the natural gas usage. The way the government helps these "green" industries is through industrial policy, subsidizing and or regulating certain crops or goods to support the growth of the industry.
Wind seems like it is plentiful and free, but windmills cost money, time and resources.There is more to green energy than one can see at a quick glance.Wind turbines use 8 tons of Neodymium to operate correctly. The use of this material creates a tremendous amount of pollution. Another problem with windmills is visual pollution, most areas do not want an eyesore consisting of windmills spread over acres of land. In the ares the mills are created there will need to be a plentiful source of wind, witch is not always attainable. The reason for this is that wind can stop, this forces engineers to add a 375 megawatt conventional power-plant as a backup to the 500 megawatt wind turbine. This is unnecessary and a bit foolish. Finally, the only way the government can attract individuals to start a wind farm is through subsidies. When subsidies are necessary you can tell that the cost is not worth the benefit, in this case it uses about 3 times the power of a contemporary power-plant, and causes more pollution.
Solar power is also much more costly than expected. First, you need many acres of tiles to pick up the sunlight necessary to create electricity. The panels are also very costly, and create more pollution than natural gas. The government provided a solar company, Solyndra, with 1.6 billion dollars in subsidies to create a more cost effective and resource friendly solar panel. After research and attempts the company went bankrupt and no innovations were found. This case helps to prove that when subsidies are prevalent costs will exceed benefits. Further most government money is not used in a smart way, mainly because the officials have no skin in the game when using tax payers money. As of now solar panels are to costly, and create to much pollution through their production to be economically effective.
Similar problems are present in the electric car industry, most cars are around 40,000-45,000 dollars. Even with government subsides and manufacture discounts the cars still has trouble selling. On top of the hard sell, these machines cause no less pollution than a normal combustion engine car. All of these industries are out of reach momentarily because of a lack of innovation in the field. Unfortunately government intervention through industrial policy has not seemed to positively effect any industries, there will need to be pure competition for useful breakthroughs.