Abstract
In order to increase energy security, production of renewable energies has been highly promoted by governments around the world in recent years. The typical base of various policy instruments used for this purpose is gross energy output of renewable energy. However, we show that basing policy instruments on gross energy output will result in problems associated with energy waste, economic inefficiency, and negative environmental effects. We recommend using net energy output as the base to apply price or quantity measures because it is net energy output, not gross energy output, which contributes to energy security. The promotion of gross energy output does not guarantee a positive amount of net energy output. By basing policy instruments on net energy output, energy security can be enhanced and the above mentioned problems can be avoided.
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