Geothermal development policy for an isolated state : the case of Hawaii

Abstract

"Hawaii presents the case of an industrialized economy almost completely dependent on imported fossil fuel, but possessing potential indigenous energy sources. Publicly financed exploration for geothermal resources is under way, and the Hawaii state government is considering what actions should be taken to encourage and also regulate the resource should it be economically useful. In determining the level and kinds of support to give geothermal development, the state should consider benefits going beyond the substitution of geothermal power for imported oil. These benefits may include: 1. insurance against the interruption of petroleum imports or additional increases in their price; 2. stimulation of local employment; 3. population decongestion, with encouragement of population growth near geothermal areas, away of Honolulu; and 4. environmental enhancement, with the institution of power production less polluting than burning oil. Methods of approximating the value of these spillover effects are shown using Hawaii data as an example."