306 Energy andtransport for thefuture
turn this into electrical energy.^58 The waters around the British Isles con-
tain some of the best opportunities to exploit all forms of tidal and wave
energy. Because of the hostile ocean environment, early exploitation of
some of these may be comparatively costly, but the size of the potential
resource is large. What is urgently needed is the necessary research and
development.The support and financing of renewable energy
Renewable energy on the scale required to meet any stabilisation scen-
ario for carbon dioxide (for instance WEC scenario C – see Table 11.5)
will only be realised if it is competitive in cost with energy from other
sources. Table 11.6 provides a summary of the status and costs, present
and future, of the main sources of renewable energy. Under some cir-
cumstances renewable energy sources are already competitive in cost,
for instance in providing local sources of energy where the cost of trans-
porting electricity or other fuel would be significant; some examples of
this (such as Fair Isle in Scotland – see box above) have been given.
However, when there is direct competition with fossil fuel energy from
oil and gas, as Table 11.6 shows, many renewable energies at the present
compete only marginally. In due course, as easily recoverable oil and gas
reserves begin to run out, those fuels will become more expensive en-
abling renewable sources to compete more easily.^59 That is some decades
away and, since estimates of recoverable fossil fuel reserves have always
tended to be low, it may be well into the second half of the twenty-first
century before any substantial limitation in oil and gas resources occurs.
Before then in order that renewables begin to displace fossil fuels to the
extent required, appropriate financial incentives must be introduced to
bring about the change.
As we saw in Chapter 9, the basis of such incentives would be the
principle that the polluter should pay by the allocation of an environ-
mental cost to carbon dioxide emissions. There are three main ways in
which this can be done. Firstly, through a direct subsidy being provided
by governments to renewable energy. Secondly, through the imposition
of a carbon tax. Suppose, for instance, that through taxes or levies an
additional cost of between $US 50 and 100 per tonne of carbon (figures
mentioned in the context of environmental costs towards the end of Chap-
ter 9) were to be associated with carbon dioxide emissions, between 0.5
and 2.5 cents per kWh would be added to the price of electricity from
fossil fuel sources (Table 11.6) – which could bring some renewables
(for instance, biomass and wind energy) into competition with them.^60
It is interesting to note that in many countries substantial subsidies are