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Subsidy for the sustainable energy policy - Jen-kuan Ting

Subsidy for the sustainable energy policy - Jen-kuan Ting -...

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Subsidy for the Sustainable Energy Policy Econ 489/689 Energy Economics and Policy Jen-kuan Ting Why When we drive to the gas station, the price of gas stills keep at high level. The Economics tell us: the price would be decrease when the competition happened. But when we review the price of oil history, the price of oil didn’t have too much change except for period of hurricane attacking or oil crisis. Indeed the industry of petroleum is a huge business in the past decades. They also have enormous influence on policy making, it makes the competition unfairly. For most North Americans, the system works just fine. We have grown so used to it. We no longer think about where the energy comes from. California's energy crisis was just a contrived event. If there's an energy shortage, all we need to do is burn more coal, drill more oil, and pump more gas.
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By green or environmental awareness, most countries in the world would make more encouraging policies for new energy companies which like solar, wind, ethanol or biodiesel or set limited rule of law on old energy. In the traditional way, most governments use the subsidy to encourage new energy industries to grow up and change consumers’ habit. But is it working for energy competition? When we drive to the gas station, the price of bio-fuel is always higher than oil. So there have some questions: first, is the price of oil too cheap for consumers? Second, is the subsidy not enough to generating effective competition? Background US government hope new energy policies can stimulate the economy. Include Energy Policy Act (EPACT2005) of 2005, Energy Independence and Security Act (EISA2007) of 2007, Emergency Economic Stabilization Act of 2008 and American Recovery and Reinvestment Act of 2009 (Recovery Act). The government subsidy policies like Tax credit, tax reductions, exemptions and special financing. U.S. government budget funding tilts the new energy. In this year, the Government's Department of Energy 2010 fiscal budget which 264 million for the Department of Energy's Energy Efficiency and Renewable Energy Authority. This budget seeks to expand the renewable energy using, while improving energy transmission infrastructure. Budget is also used for hybrid and plug-in hybrid vehicles, smart grid technologies and other research projects.
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