Energy Investments and Prices – What is in store?

In an article last year, Asian countries, particularly China, were appraised with regard to energy efficiency and investments thereof. It was observed that China, with wise investment in energy efficiency, has managed to reduce its energy intensity per unit of GDP by 70 percent, from 1980 to 2010. It will be interesting to note that several economies have taken up this agenda since the last several years. The US, for example, starting from 1992, has been active in improving efficiencies of various electrical and mechanical equipment to both suit needs of the economy as well as save on energy[1]. So much so, that it was recently estimated that from 2010 to 2015, there were savings of an estimated USD 2.4 billion in energy costs; and this number was for the large manufacturers alone.  Europe has also taken impressive steps towards energy efficiency. It can be said that some steady progress has been because energy use has reportedly reduced less than that was in 1990.

China is not a recent entrant, but with its achievements, it has proved that even with such massive population and imminent pollution levels, it is possible to reduce energy intensity. It is definitely a model for other Asian economies, especially its counterpart, India.

While most economies try to reallocate resources and make adjustments for what has not been done till date about energy efficiency and reducing energy intensity, one wonders about the relationship between renewable fuel price and energy efficiency. Already, in 2014, it has been observed that fossil fuel price and renewable energy prices are competing with each other in some countries. This may actually be a good sign, showing that renewable energy is being consumed almost as equally as fossil fuel. Another good thought to take home is that renewable energy being a technology, will have its costs reducing in the long term and reach economies of scale. This only means more renewable energy to the consumer.

[1] Details on US energy policy: https://www.ase.org/sites/ase.org/files/resources/Media%20browser/ee_commission_history_report_2-1-13.pdf

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