Various countries at COP26 in 2021 reached a resolution of phasing down coal from their economies. This resolution of ‘phasing down’ was initiated by India. India is a developing economy and as compared to other developed economies, it cannot afford to phase out coal and go through an immediate transition to greener fuels.
Green energy is also known as renewable energy and is produced from nature using resources like water and sunlight. Some of the common forms of green energy includes- solar power and biomass fuels.
Green energy is seen as the new energy source in today’s world. One of the primary reasons behind this is that it replaces the negative impact of fossil fuels on the environment. Green energy is clean and renewable source of energy and produces very little or no greenhouse gases, a major driving force of pollution. Some of the economic benefits of use of green energy includes the amount of employment it generates in the economy. Globally, the renewable energy market has employed 12 million as of 2021.
Another benefit of using greener fuels for the economy of a country can be that it reduces the dependency of a country on other economies for its energy needs. The country can diversify its supply chains and reduce its dependency on imported fuels. As the green energy is locally produced in the country, it is not affected by any geopolitical crisis and thus is likely to lead to lesser energy disruptions in the economy.
This will make the country more self-reliant on terms of its energy sector and can help keep the country’s economy stable. Greener fuels are also likely to lead to stable prices for energy in the longer term.
However, there are also limitations to the use of green energy in an economy. Green energy such as solar power and wind energy incur a very high installation cost. The storage of the energy produced, the installation costs of the battery and the maintenance cost require a huge investment, thus raising the economic cost of green energy. Often, storage costs of renewable energy are overlooked, if the energy is produced you need to store it using batteries otherwise you will lose the energy. This involves installation of batteries that can store energy for a long. Therefore, renewable energy involves the installation costs of batteries and also the maintenance costs of the batteries so that they do not wear out easily and need replacement on a regular basis.
Therefore, we can conclude that even if green energy requires high installation costs, it gives us profit in the long-run and can prove to be beneficial for the economy. Many economics around the world are using green energy as an alternative to fossil fuels as they are eco-friendly and also helping in reducing dependency on foreign countries for meeting the country’s energy needs. Shifting to green energy can involve high installation costs as stated but can also prove to be remunerative in the long run.