U.S. Banking Chief Backs Renewable Energy

The chairman of the U.S. Federal Reserve Bank has endorsed the development of renewable energy, as well as research into other forms of energy such as nuclear fusion.

WASHINGTON, DC, US, 2001-11-26 [SolarAccess.com] Alan Greenspan says the best energy policy for the United States would rely on free markets to determine prices and to spur development of new energy sources. The U.S. should work to assure the availability of energy supplies that maintain long-term economic growth, but he says it is crucial that policy makers allow markets to operate freely with as few government constraints as possible. “The same price signals that are so critical for balancing energy supply and demand in the short run, also signal profit opportunities for long-term supply expansion,” he says. “Energy issues present policymakers and citizens with difficult decisions and tradeoffs to make outside the market process; as always, national security and environmental concerns need to be addressed in setting policy. But those concerns should be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets.” “Technology alone is unlikely to restore the United States to the position of price leader, which characterized our role in world oil markets for most of the industry’s first century,” he warns. “We presumably will never return as the overwhelmingly dominant world producer.” In his speech at Rice University, Greenspan said price signals “stimulate the research and development that will unlock new approaches to energy production and use that we can now only scarcely envision.” The U.S. economy needs “a variety of renewable energy sources, the most prominent of which are hydroelectric power from dams and the energy generated through the recycling of waste and byproducts from industry and agriculture. Solar and wind power have proved economical in some small-scale and specialized uses, but together they account for only a tiny fraction of renewable energy.” “Substantial experimentation and exploration is under way in the application of advanced technologies to alternative approaches to energy production and conservation,” and he noted the potential for fuel cells and fuel-efficient hybrid cars, “With rapid scientific advances, it is not inconceivable that technological breakthroughs will allow non-conventional energy sources to play a larger role in meeting our demand for energy than is currently the case.” The sharp jump last winter in fuel prices in California, have been dealt with effectively through the market, and Greenspan says price spikes prompted higher production and lower demand. Coal will remain a critical factor in U.S. energy, while the potential for of nuclear “could doubtless be much enlarged,” he predicts. “Given the steps that have been taken over the years to make nuclear energy safer and the obvious environmental advantages it has in terms of reducing emissions, the time may have come to consider whether we can overcome the impediments to tapping its potential more fully.” He noted the “concern of making nuclear plants safe from terrorist attacks” and finding acceptable ways to dispose of spent nuclear fuel.

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