ABSTRACT
The energy crises of the 1970s gave rise to a flurry of state initiatives to stimulate renewable energy development and use. While the efforts were diverse, their justification and goals were generally similar across the nation. World oil and domestic natural gas supplies were in short supply and accelerated renewable energy development was considered essential to prevent future shortages and price increases. Additional justification was based on "market failures" which reduced the real cost of traditional energy supplies. As discussed by Feiveson and Rabl (1982), Bezdek and Kannan (1982), and others, these include:
- The use of average cost pricing of electricity which obscures the high marginal cost of new conventional supplies,
- The market entrenchment and low cost of traditional fuels caused by federal price controls, research subsidies, and other promotion efforts,
- The failure to include social costs (adverse environmental impacts, national defense expenditures, etc.) in the price of traditional energy supplies,
- The ability of businesses to claim fuel expenditures as tax deductible expenses,
- The extensive tax preferences enjoyed by the traditional energy industry.
