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Published on June 26th, 2012 | by Zachary Shahan

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Fossil Fuel Subsidies Are 5 Times Larger than Wind Energy Subsidies (12 Times Larger than Renewable Energy Subsidies)

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June 26th, 2012 by Zachary Shahan
 
 

Ah, FOX News and GOP politicians at the federal level will harp on clean energy subsidies all day… but won’t drop fossil fuel subsidies for anything (note: many local- and state-level Republicans are actually supporting clean energy industries). But the fact remains: fossil fuel subsidies are much larger than clean energy subsidies.

International Energy Agency figures show that government subsidies for fossil fuels are 12 times greater than those for renewable energy,” the Guardian notes.

Julian Scola of the European Wind Energy Association (EWEA) writes: “It makes me wonder — how do politicians and media can get away with talking  about removing subisidies from renewables without even mentioning the existence — let alone withdrawal — of much larger subsidies for much more established energy technologies? It is hard to understand.” [sic]

It is a wonder. Julian goes on to point out the difference between fossil fuel and wind power subsidies:

… public subsidies for wind power are dwarfed by those channelled to fossil fuels and nuclear. OECD figures show that coal, oil and gas in the UK were subsidised to the tune of £3.63 billion in 2010, while onshore and offshore wind received only £700 million in the year to April 2011 — that’s more than five times less than fossil fuels.

Moreover, International Energy Agency figures show that coal, oil and gas subsidies in 37 countries received a total of $409 billion in 2010, compared to $66 billion for renewables.

Shockingly different, eh?

 

 

And, another critical point is that fossil fuel industries are largely mature industries, which shouldn’t be receiving subsidies, while clean energy industries are largely nascent industries that should be receiving subsidies!

Government support has already played an important role in expanding Europe’s use of wind power. And while the industry aims to be competitive in a fully liberalised market, wind power needs subsidies to get it on a level playing field with dominant fossil fuels which have received subsidies for decades.

The industry is working hard to become fully cost-competitive with fossil fuels. And that is setting aside the fact that much of the environmental and human health cost of extracting, transporting and burning fossil fuels to make electricity is not included in the cost of fossil fuels. Costs have already fallen over recent years — largely due to improved turbine design and the increased efficiency of blades and other components. A recent report by the Grantham Research Institute found that onshore wind power will be cost competitive with fossil fuels by 2016 in the UK. Meanwhile, the biggest and best-sited wind farms in the world are already cost competitive, and onshore wind is already considerably cheaper than nuclear power.

In some places, wind power is actually now cost competitive with or significantly cheaper than fossil fuels.

Source: Renewable Energy World
Image Credit: oil refinery storage tanks with wind turbines in the background via Shutterstock

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009. Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.



  • Bob_Wallace

    Here’s an interesting little tidbit…

    Remember back in November when US forces accidentally killed 24 Pakistan troops and Pakistan closed down all US shipping through their country?

    “”with the supply lines closed, the U.S. has been forced to use more costly transportation routes through Russia and Central Asia. [Defense Secretary Leon] Panetta has estimated the cost at an extra $100 million a month.” ”

    Seven months.  $700 million dollars, just in “extra” shipping costs.

    And, remember why we are in Afghanistan?  (Here’s a hint: oil. Trace it back to us supporting dictators in the Middle East, stationing our troops there, and invading Kuwait).

    If we had to pay for the oil wars at the pump….

    • http://cleantechnica.com/ Zachary Shahan

      Good work, Bob. Connecting the dots. Something we don’t seem to teach our kids well enough in the US.

  • DengieBoy

    This article makes the classic mistake of quoting the UK as having fossil fuel and nuclear subsidies.
    In fact, what the OECD refers to is the reduction in Value Added Tax that is allowed to domestic electricity consumers and low energy use business’s. This low useage tax rate reduction also applies to heating oil, coal and gas and is intended to encourage conservation and make supplies more affordable for low income consumers. With the astronomical costs of energy here in the UK, THIS IS NOT A SUBSIDY.
    However, just to make the point, this tax rate reduction from 17.5% to 5% applies to all electricity supplies, including renewables!
    This is just another myth perpetuated by our wind lobbyists to justify the massive 100% to 200% subsidy their industry receives here in the UK. 

  • irandom

    If memory serves the exaggerated petroleum subsidies come from including bridges and military spending. Although, Europe is the main beneficiary of our excursions into the middle ages east. I have no problem with depreciating a hole in the ground quickly or slowly, the same way I have no problem with depreciating a windmill. An investment is an investment. Until a buffering system is viable like compressed air or liquefied air, the intermittent renewables will be hard to integrate with baseload power requirements.

    • Bob_Wallace

      I’m pretty sure you are wrong.

      The cost of our three Middle East oil wars are not included in the oil subsidy total.

      It’s looking more and more like the main storage technology will be batteries.  Not CAES.

    • Bill_Woods

      No, they come from oil-exporting countries choosing to sell oil products domestically at prices far less than they could have gotten if they’d sold the oil on the world market.

      Since the IEA was addressing primarily “consumption” subsidies, government supports that make the price of gasoline and other fuels artificially cheap for citizens, the calculations were relatively straightforward and consistent from country to country. IEA just subtracted the difference, or “gap,” between the price consumers paid in each high-subsidy country and the actual price on the world market. That gap expands or contracts depending on global oil prices, the size of the discount citizens enjoy, and the size of a nation’s population.

      http://theenergycollective.com/mariannelavelle/87511/fossil-fuel-subsidies-why-we-crunched-numbers

  • rkt9

    Looking at it from another perspective, the larger subsidies for fossil fuels could be justified in that the sale of fossil fuels is taxed and brings in a lot of revenue for Federal, State and County governments. 

    The Department of Energy anticipates that “Crossover” will occur sometime between 2015 and 2016, that is when Solar will be cheaper than fossil fuel.  We are on the cusp of a new energy revolution, our focus should be on these new energies!  I don’t see the use in beating a dead horse.

    Chances are we will have to subsidize fossil fuels to an even larger degree in the future as we undo the damage they have perpetrated on the earth, and dismantle their infrastructure, making the “Superfund” look like small potatoes. 

  • Seth Goodman

    I appreciate attention being given to the existing fossil fuel subsidies in the U.S., but this article is a little misleading.  No, quite misleading.  Everything quoted and referenced is referring to either UK figures or international multi-country studies.  I don’t see how this ties in at all with arguments that FOX news or the GOP are making regarding U.S. spending or subsidies on renewable energy.  I agree with the authors premise that government subsidies are being largely misallocated, but at least use relevant U.S.-based quotes and statistics!

    • Matt

      Yes, have to agree the mismatch in title and content kept me from sharing.

    • mk1313

      Googling US subsidies you get rates from 3-7 times more for fossil fuels as compared to renewables in the US depending on the source and how they calculate it.  That agrees pretty well with the UK.  I’m disappointed you make a comment like that without doing 5 minutes of checking for yourself.  By the way, the USA isn’t the only place in the world, nor by any stretch of the imagination the most important.  The internet is global so you might just want to broaden your viewpoint.

    • Bill_Woods

       US subsidies for the years 2007 and ’10 (for electricity, so not including oil) are listed here (see Table ES2): http://www.eia.gov/analysis/requests/subsidy/

      National Geographic has a nice map of fossil fuel subsidies for 2010 here: http://environment.nationalgeographic.com/environment/energy/great-energy-challenge/global-energy-subsidies-map/

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