Leveling the playing field for renewables
August 22, 2012 | By
Barbara Vergetis Lundin
If fossil fuel subsidies were phased out by 2020, global energy consumption would be reduced by 3.9 percent that year compared with having subsidy rates unchanged, according to projections by the International Energy Agency (IEA). Further, total subsidies for renewable energy totaled $66 billion in 2010, but are still dwarfed by the total value of global fossil fuel subsidies, according to research from Worldwatch Institute. Fossil fuel subsidies are estimated at between $775 billion and more than $1 trillion in 2012, the research says. The U.S. National Academy of Sciences estimates that fossil fuel subsidies cost the U.S. $120 billion in pollution and related health care costs every year. But these costs are not reflected in fossil fuel prices. Estimates based on 2009 energy production numbers placed renewable energy subsidies between 1.7¢ and 15¢ per kWh, while subsidies for fossil fuels were estimated at around 0.1-0.7¢ per kWh. Unit subsidy costs for renewables are expected to decrease as technologies become more efficient and the prices of wholesale electricity and transport fuels rise. Fossil fuel subsidies continue to far outweigh support for renewable energy, the report contends. "…a phase-out of fossil fuel subsidies would level the playing field for renewables and allow us to reduce support for clean energy sources," said Alexander Ochs, Director of Worldwatch's Climate and Energy program. For more: © 2012 FierceMarkets. All rights reserved. http://www.fierceenergy.com |