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Replacing fossil fuels-I: Sunk costs can make transition harder
Mar 22: Pushing fossil fuels out of our daily milieu and replacing it with renewable energy is a subject of much analysis today.
8But newer studies show that there are many hidden costs to the switch to a greener economy which are not taken into account at present but will eventually impact the transition.
8Research is beginning to acknowledge that the existing energy matrix has a lot of sunk cost value inherent in it but not taken into the calculations yet
8For example, the world currently has existing coal fired power plants, coal mines and general coal infrastructure, all of which has a sunk value that benefits society. The same goes for oil and gas infrastructure. The result is that giving up such infrastructure will mean losing the social benefits of that sunk value.
8If we outlaw the use of coal then all that sunk value of existing technologies and capital can no longer be used to help society, from creating jobs to increasing government programs for the poor to helping finance health care. Even if we put an emissions fee on the use of fossil fuels to reduce carbon emissions it would not necessarily overwhelm the inherent value of the continuing use of them.
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