**6. Renewables** *vs* **traditional sources**

By the end of the 21st century, it is accepted that we will no longer be using crude oil as a primary source of energy, as a consequence of its depletion. However, the coal situation is different. The reserves are large and will remain widely available for a long time, perhaps even for a century. Unfortunately, this source is both highly polluting and not so efficient. Similarly, natural gas will be available in larger quantities than the crude oil reserves, even considering that some of its reserves remain unknown. It will remain available as a primary source of energy even until the turn of the century. The conversion of natural resources into energy, mainly into electricity, is a matter of crucial importance within this context of changing the global energy paradigm.

With regard to the impact of different energy sources on economic growth, there seems to be a dichotomy between the effects that are caused by the use of renewable and traditional sources, which include fossil and nuclear sources. Both oil and natural gas stimulate economic growth in the period and countries considered, in line with what has been pointed out by the literature (e.g. Yoo, 2006) and with *the growth hypothesis*. The effect of coal on economic growth is statistically weaker than the other fossil fuels and, when statistically significant, this source of energy constrains economic growth.

Among the fossil fuels, oil is the source that has mostly contributed to economic growth. Given that the productive structures of the industrialised nations, such as those under review here, which are highly dependent on the intensive use of internal combustion engines, this effect was expected. Natural gas also has a positive effect on economic growth, although this source of energy has been particularly significant in recent years. This is due not only to the advances concerning the discovery of new reserves, but also to the considerable increase in the network of natural gas pipelines. At the same time, the combined cycle plants, which use mainly natural gas as fuel, have been used to guarantee electricity supply within the RE development strategy. This fact has contributed to stimulating the development of this energy source. It is a cleaner source, and is considered the transition source from fossil fuels to renewable sources.

Although the fact that RE limit economic growth is an unexpected result, it is one that deserves deep reflection in this chapter. Policy makers should be made aware of the global impacts of policies promoting the use of renewables. At first glance, the development of renewables should have everything to make it a resoundingly successful strategy. With this strategy, it would be possible to fight global warming, reduce energy dependency (not only economic but also geo-political), create sustainable jobs and develop a whole renewables cluster. What these results suggest is that the effects of renewables are more normative than real, i.e., the results are far from what they should be. Indeed, the development of renewables has been supported in public policies that substantially burden the final price of electricity available for final consumption to economic agents. At the same time, the productive structures of the countries are still heavily dependent on fossil-based technologies, such as internal combustion engines. Their conversion towards other technologies is a slow and expensive path.
