WORLD ENERGY SUBSIDIES RISING

Fossil Fuel and Renewable Energy Subsidies on the Rise

Alexander Ochs and Reese Rogers, August 21, 2012 (Worldwatch Institute)

“Total subsidies for renewable energy stood at $66 billion in 2010, but are still dwarfed by the total value of global fossil fuel subsidies estimated at between $775 billion and more than $1 trillion in 2012, according to new research…Although the total subsidies for renewable energy are significantly lower than those for fossil fuels, they are higher per kilowatt-hour [1.7¢ and 15¢ versus 0.1–0.7¢] if externalities are not included in the calculations…Unit subsidy costs for renewables are expected to decrease as technologies become more efficient and the prices of wholesale electricity and transport fuels rise.

“The production and consumption of fossil fuels add costs to society in the form of detrimental impacts on resource availability, the environment, and human health. The U.S. National Academy of Sciences estimates that fossil fuel subsidies cost the United States $120 billion in pollution and related health care costs every year…[T]hese costs are not reflected in fossil fuel prices…but [are paid] by all taxpayers…”

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“According to projections by the International Energy Agency (IEA), if fossil fuel subsidies were phased out by 2020, global energy consumption would be reduced by3.9 percent that year compared with having subsidy rates unchanged…[B]y 2035, oil demand would decrease by 4 percent, natural gas by 9.9 percent, and coal demand by 5.3 percent…At the same time, a phase-out of fossil fuel subsidies would level the playing field for renewables and allow us to reduce support for clean energy sources…Progress toward a complete phaseout, however, has been minimal…Fossil fuel subsidies continue to far outweigh support for renewable energy…

“Global production subsidies total an estimated $100 billion per year, and consumption subsidies add to roughly $675 billion…In 2010, developing countries spent roughly $193 billion, or 47 percent of all fossil fuel consumption subsidies, on oil while industrial countries spent roughly $28 billion…Since 2007, roughly 80 percent of spending on consumption subsidies occurred in countries that are net exporters of fossil fuels.”

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