Fossil Fuels Subsidized Much More Than Renewables

Subsidies for renewable forms of energy, including solar and wind power, have been on the uptick but are still eclipsed by subsidies provided for fossil fuels, new research shows.

The total subsidies for renewables was at $65 billion in 2010, while fossil fuels received between $775 billion and $1 trillion in 2012, according to the Worldwatch Institute, a global environmental research organization based in Washington, D.C.

The discrepancy can be explained in part by the fact that renewables still make up a much smaller share of the energy mix. On a per unit basis, subsidies for renewable energy are actually higher. 

Looking at 2009 figures, renewable energy production received subsidies worth 1.7 cents to 15 cents per kilowatt-hour, compared to 0.1 to 0.7cents per kilowatt-hour for fossil fuels.

It said, however, that subsidies for renewables will likely drop as the technologies become more efficient among other factors.

Worldwatch argues that what states are not factoring in when they subsidize fossil fuel burning are the hidden costs to taxpayers in terms of damage to human and environment health.

“Fossil fuel subsidies cost the United States $120 billion in pollution and related health care costs every year. But these costs are not reflected in fossil fuel prices,” it said, citing U.S. government data.

“These so-called hidden costs, or externalities, are in fact very real costs to our societies that are not picked up by the polluter and beneficiary of production but by all taxpayers,” Worldwatch said. 

The research group says that making fossil fuels cheaper encourages continuing down the path of harming ourselves.

By contrast, if fossil fuel subsidies were removed and renewables were given more support, governments would enjoy a range of benefits. 

“Such a shift could help create a triple win for national economies by reducing global greenhouse gas emissions, generating long-term economic growth, and reducing dependence on energy imports,” says Worldwatch.

For example, without fossil fuel subsidies, by 2020, global energy consumption would be reduced by nearly 4 percent while oil demand would be reduced by 3.7 million barrels per day, and coal demand would fall by 230 tons, and natural gas demand would also significantly drop, reports Worldwatch, citing the International Energy Agency figures. 

Moreover, carbon dioxide emissions could be expected to drop by 4.7 percent in 2020 and by 5.8 percent in 2035.

“A phaseout of fossil fuel subsidies would level the playing field for renewables and allow us to reduce support for clean energy sources as well. After all, fossil fuels have benefited from massive governmental backing worldwide for hundreds of years,” Worldwatch said.

But, the group noted, progress toward a total phaseout of fossil fuel subsidies has been negligible.

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