The support andfinancing of renewableenergy 307attached to energy – worldwide they amount on average to the equivalent
of about $US 40 per tonne of carbon.^61 A start with incentives would
therefore be made if subsidies were removed from energy generated from
fossil fuel sources.
A third way of introducing an environmental cost to fossil fuel energy
is through tradeable permits in carbon dioxide emissions, as are being in-
troduced under arrangements for the management of the Kyoto Protocol
(Chapter 10, page 248). These control the total amount of carbon dioxide
that a country or region may emit while providing the means for industries
to trade permits for their allowable emissions within the overall total.
These fiscal measures are relatively easy to apply in the electricity
sector. Electricity, however, only accounts for about one-third of the
world’s primary energy use. They also need to be applied to solid, liquid
or gaseous fuels that are used for heating, industry and transport. It
has already been mentioned that, currently, liquid fuels such as ethanol
derived from biomass are about twice as expensive as those derived
from oil. Although there is an expectation that the processing of biomass
will become more efficient^62 – the rapid development of technologies
in bioengineering will help – it is unlikely that in the short term the
substitution of biomass-derived fuels will occur on a significant scale
without the application of appropriate financial incentives.
There is a further crucial area where incentives are also required
if renewable energy sources are going to come on stream sufficiently
rapidly to meet the need. That is the area of research and development
(R & D) – the latter is especially vital. Government R & D, averaged
worldwide, currently runs at about ten billion US dollars per year or about
one per cent of worldwide capital investment in the energy industry of
about one trillion (million million) dollars per year (about three per cent
of GWP). On average, in developed countries it has fallen by about a
factor of two since the mid 1980s. In some countries the fall has been
much greater. This is particularly true in the UK where government-
sponsored energy R & D fell by about a factor of ten from the mid 1980s
to 1998 when, in proportion to GDP, it was only one-fifth of that in
the USA and one-seventeenth of that in Japan.^63 It is surprising – and
concerning – that such falls in R & D have occurred at a time when the
need to bring new renewable energy sources on line is greater than it has
ever been. Energy R & D should be substantially increased to well over
one per cent of the energy’s total investment so as to enable promising
renewable technologies to be introduced more quickly.
More appreciation of the value of renewable energy sources and
their potential together with signals such as increasedR&Dinrenew-
able technologies will provide necessary encouragement for the rapid
increase in investment in these sources that is required. We have already