Depletion of Fossil Energy Resources and the Provision of Renewable Energy
The exploitation of the stocks of fossil based resources is at dangerously high levels now. As far as crude oil is concerned, the maximum point of extraction i.e. the so-called peak oil has already been exceeded (Energie Watch Group 2008) and the security of supply appears to be a serious worry (IEA 2009). At the same time the capacity of the earth’s atmosphere to absorb greenhouse gases is limited, and any excess will stretch the impacts of climate change beyond manageable limits (IPCC 2007). In the recent past, renewable energy has emerged as an important option to mitigate supply problems and also simultaneously aid economic development.
In the academic and policy debates, issues related to the demand for energy, renewable re-sources, changing lifestyles, consumption patterns and the interactions among these, have only now gained popularity, thereby also bringing to light the conflicting dimensions contained within these. Such complex issues range from the conflicting patterns of competitiveness between the factors of production for solar, wind, earth, geothermal and bio-energy use up to their displacement and risk effects. For example, biomass cultivation für energy production shares the same production factors as agricultural food production (e.g. land and water) leading to land use tradeoffs. Biomass production also requires intensive agricultural practic-es, thus increasing the use of pesticides and fertilizers. Moreover, by distorting agricultural price incentives, they can potentially lead to income inequalities. These interdependencies arise due to the particular nature of transactions and need to be regularized through appro-priate sets of rules, i.e. institutions.
Although energy efficiency and increased share of renewable energy are considered im-portant so as to restrict climate change, there is still no concrete evidence that a shift to bio-mass production indeed has a positive mitigating impact. There are opportunity costs in terms of reduced food supply due to the diversion of common factors of production. On the contrary, the demand gap due to reduced food production may lead to further aggressive use of other greenhouse gas intensive production techniques, leading to a net increase in the quantum of such gases. Therefore, considering the current world food situation, a further question arises whether the production of bio-energy needs to be subjected to certain norms so that it not only serves the purpose of checking climate change but also does not prove detrimental to global food supply?
The work of the Department of Resource Economics focuses its research on such dilemmas as well the subsequent development of formal and informal rules needed to resolve or govern them on a sustained basis.
This problem dimension has been addressed in the following research projects:
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MEGACITY 2
Climate and Energy in a Complex Transition Process Towards Sustainable Hyderabad. Mitigation and adaptation strategies by changing institutions, governance structures, life styles and consumption patterns