8.1 Introduction

During the last 200 years, developed countries have shifted their energy consump­tion toward fossil fuels. Renewable energies have been the primary energy source in the history of the human race. Wood was used for cooking and water and space heating. The first renewable energy technologies were primarily simple mechanical applications and did not reach high energetic efficiencies. Industrialization changed the primary energy use from renewable resources to sources with a much higher energetic value such as coal and oil. The promise of unlimited fossil fuels was much more attractive, and rapid technical progress made the industrial use of oil and coal economical.

Developing renewable sources of energy has become necessary due to the lim­ited supply of fossil fuels. Global environmental concerns and decreasing resources of crude oil have prompted demand for alternative fuels. Global climate change is also the major environmental issue of current times. Global warming, the Kyoto Protocol, the emission of greenhouse gases, and the depletion of fossil fuels are the topics of environmental pleadings worldwide. Due to rapidly increasing energy re­quirements along with technological development around the world, research and development activities have perforce focused on new and renewable energy.

Competition of renewable liquid fuels into petroleum liquid fuels will be impor­tant in the near future. This can be achieved by research and development (R&D), technological development, and industrial mobilization by implementing a proper energy tax system that takes into account the environmental and social costs of con­ventional energies, by making calculations based on the entire energy system and not only the cost of one technology but of the entire energy chain, by calculating the burdens for the national economy of every country from importing fossil energies, etc. This requires a comprehensive view on energy.

The calculation of energy prices should be designed to maintain into the fu­ture the equilibrium between demand and supply, taking into account the costs of planned investments. They should also take into account the rest of the economy and

A. Demirbas, M. Fatih Demirbas, Algae Energy DOI 10.1007/978-1-84996-050-2, © Springer 2010

the environment. Two very important characteristics of energy prices are equity and affordability. Energy prices must reflect the cost imposed by the specific consumer category on the economy. Since energy prices based on apparent long-run marginal costs may not be sufficient to finance the development of the energy sector, prices should be adjusted so that the energy sector can be financed without subsidies to enhance its autonomy. In competitive markets this form of adjustment may not be possible. Energy pricing policy should not be employed as an anti-inflationary in­strument. It should be applied in such a way that it does not create cross-subsidies between classes of consumers.