The fear of radioactivity, however, prompted Japan and Germany to abandon their nuclear power stations in favour of renewable energy. Both discovered green energy to be too expensive. In both countries, the decision led to rapidly rising electricity prices, and had the perverse effect of a surge in demand for coal—the dirtiest and deadliest form of energy on the planet. Japan, for one, has reversed its early knee-jerk decision.
By contrast, the shale gas boom has brought massive strides towards energy independence in the US. America’s electricity is world’s most affordable, according to a study by South African economist Mike Schüssler. Unlike in Europe and Japan, US electricity prices are lower today than they were before the 2008 financial crisis.
This is relevant to emerging economies because many face similar environmental trade-offs and rising energy prices. Kenya has suspended issuing new licences for renewable energy projects as it pursues less expensive fuel sources in a drive to raise generation capacity and lower electricity tariffs.
South Africa likewise faces a critical shortage of electricity, which has led to rationing for industrial users and steeply rising prices for consumers.
Many environmental activists may be able to afford more expensive but clean- er forms of energy, but the developing world cannot. The poor will not pay to put solar panels on their shacks to combat rising electricity. They will revert to unhealthy and dangerous sources of energy such as wood, paraffin and coal. Firms are less likely to hire new people or invest in expansion or pollution reduction when faced with rising input costs or excessive regulatory burdens.
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