tential for higher efficiency and potential cost reductions if investment and de-
velopment continue. The radical technologies are, by definition not widespread,
but open to radical improvements in performance and costs (e.g., geothermal
power plants, solar thermal power plants and PV-solar).9
This is important, since environmental targets change relative prices, and then
also create incentives to make existing technologies more (energy) efficient. As
seen from figure 4, since the conventional energy-producing sector can be
placed into the mature sector, costs of production will probably not change sig-
nificantly as competition increases.
The conclusion so far is that within the range of estimates presented in this pa-
per, whether or not the implementation of the Kyoto-protocol makes wind en-
ergy competitive depends on which instruments are used to achieve the Kyoto-
targets. If the Kyoto targets are met without the use of flexible mechanisms,
then wind energy will be competitive compared to coal-based energy produc-
tion. On the other hand, if the full use of flexible mechanisms is allowed, then
whether or not wind energy will be competitive is ambiguous. Figure 4 also re-
veals that new and radical technologies also have the potential to be more com-
petitive, if the price of conventional energy production increases. In light of
this, the EU proposal in Johannesburg the EU has been pushing for a target of
15% of energy to come from sources such as windmills, solar panels and waves
by 2015 might have result from interests other than purely environmental ones.
9 See Grübler et al (1999) for a very detailed discussion of the dynamics of energy technologies
and a more thorough description of the different phases in the development of new technolo-
gies.
21
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