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March 26, 2008

If it's possible, will it always sell?

With today's big push to find energy alternatives to oil and gas, we're hearing all kinds of suggestions to use different fuels and sources for energy. But even if it becomes technically possible to produce energy from some source, will we automatically see it marketed? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"No, because there's a difference between what we will call technical feasibility and economic feasibility. Technical feasibility simply says, 'Can you make the product?' For example, can you convert corn to gasohol? Can you make electricity from solar cells? If it's technically feasible, then the answer is, 'yes, you can do those things.' Economic feasibility says, 'Can you market those things that you've made at a cost and a price that will be able to be successful in the marketplace?' And this is where you are going to have to take that new product and stack it up against existing products and see if consumers bite, if they will bite and take that new product. And this is going to depend on your costs and whether those costs allow you to put that product on the market for a price that is competitive. And this is the problem right now with a lot of energy alternatives. They're technically feasible, but they're not yet economically feasible. For example, solar power is still much more expensive than getting our electricity from other sources. So you can speed this along, of course, by subsidizing the new technology or taxing the dominant fuel, but of course, this also raises issues. This is a basic principle to keep in mind, that, yes, you can possibly do something, but it still may not be marketable."

Posted by Dave at March 26, 2008 08:00 AM