Clean Power clean energy subsidies

Published on April 29th, 2012 | by Zachary Shahan


Solar & Wind Energy Subsidies Should Continue “Forever”

April 29th, 2012 by  

clean energy subsidies

It seems that every day I’m reading (or even writing) about solar and wind energy’s prices and potential without government subsidies — but it is really ridiculous that dropping government subsidies should even be on the table.

Amongst the political right (especially politicians and media), there’s a common argument that renewable energy shouldn’t be subsidized, even though the majority of the public supports such subsidies, and even though fossil fuels have been getting subsidies for about a century (and continue to get them).

Even on the left, many people talk about the days when solar and wind won’t need any subsidies. Aside from the issue of fair dues (renewable subsidies continuing until historical subsidies of the various energy sources are more or less balanced), there’s one basic reason why solar and wind energy should receive subsidies “forever.”

Basically, a “free market” is an ideal that doesn’t exist in real life. Even if you take away all direct government subsidies, a free market doesn’t exist. Why? Well, there are a few reasons, but one of the most important is that some goods create societal costs that are not represented in their price (thus, distorting the market and making the market not work “as it should”).

Coal, according to a Harvard Medical School study last year, costs the U.S. at least $500 billion a year in health and environmental costs. This is $500,000,000,000 not accounted for in the price of coal-powered electricity. If it were, coal would be priced out of the market.

Oil, similarly, has tremendous health costs, as well as tremendous military costs — a good deal of our military resources are very clearly spent on protecting our foreign oil supplies.

Even by extremely low estimates, the public health costs of coal, natural gas, and oil come to $120 billion a year.

Now, since that isn’t accounted for in the price of our energy goods, someone should step up and correct this market failure by either putting a tax on these dirty energy options, or by subsidizing their alternatives to an adequate degree. Truthfully, I think it would be better if we just adequately taxed coal, natural gas, and oil. However, if that is never going to happen, solar and wind energy (as well as geothermal, hydro, biogas, EVs, and so on) should perpetually get government subsidies to address this inherent market failure.

Unfortunately, renewable energy subsidies are unfairly demonized by some people (i.e. FOX News and Tea Party politicians), and they are at more risk of being cut than fossil fuel subsidies… year after year. As such, I understand the strong desire many people have for clean energy options to beat dirty energy even with the referees bought and the scales heavily unbalanced in dirty energy’s favor. However, I don’t think we should condone the idea that renewable energy subsidies should one day end — we should make it dead clear that renewable energy subsidies serve the specific purpose of correcting a huge market failure.

With me?

Image: money & pollution via shutterstock

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • ruskykiss

    Oil is demonized purely because of jealousy and hate.  Too many people got wealthy and influential in the private sector.  The politicians are jealous and the environmentalists rads simply hate anyone rich. Scientist came up with the great hoax to give alternative energy wheels; Global Warming.  I see posts from so many arrogant fukkkks who hate what they call “right wingers”.  It’s all hate and bigotry.  Whining, whimpering, sniffling leftists!  LOL!!

  • The big problem with subsidies, in my opinion, is that it can encourage those getting them, like the renewables you so love, Zach, to become special interest groups that care more about getting money from the government than provide affordable, viable energy or, for that matter, viable business plans. It helps certain politicians hold on to power at the expense of the taxpayers who are forced to fork over their dollars to something they may not want. Add that to higher electricity costs in and low job returns for billions of dollars thrown at your favored industry in countries like Spain and Germany, and the result is a lower amount of trust and belief in making your vaunted switch at all.

    If a company needs constant handouts from the government to survive, then it should call it quits and go home. This goes for oil, gas, nuclear, renewable, or any other industry.

    • This is a very limited view of subsidies and what they are for. And a ton of false statements in one short paragraph.

  • RichWilson

    As technology develops, subsidies are necessary because we’re not smart all at once. We learn over time to get smarter. As long as the technology appears to have promise, the subsidies will help us get to that promise. But that means at some point we should be smart enough to go without subsidies. I believe that will be the case with solar and wind as new supportive technologies develop. A cost effective way to store energy will be one of these supporting technologies.

    Why do we have subsidies for fossil fuels? It’s because the other energy sources are not to the level of satisfying our energy needs any time soon and we need to keep them going while we develop these other energy sources.

    Considering our national debt, I would argue for at least some cutback to fossil fuel subsidies and a transfer to the “green” energies.

    Frankly, I am rooting for current developments in fusion energy, that is, low energy nuclear reactions. We are closer to fruition than most people realize. With LENR, solar and wind will no longer be necessary and neither will fossil fuels. All these arguments and counterarguments will become moot.

    • Love this line: ” As technology develops, subsidies are necessary because we’re not smart all at once.”

      As far as why fossil fuel industries get them, it’s not because they need them (they are making insane profits) but because they invest a bit of money into politicians and lobbyists in order to get more money back in subsidies.

  • This is a GREAT post. First of all, we love your blog and spread the word about it on our Facebook and Twitter pages ALL the time. Our Editorial Director Frank Andorka has been making this argument for a long time. We really appreciate all that you do, and we just wanted to say thank you.

    If you want to see what Frank has to say, send him a private note at and he’ll send you a couple of links.

    Thanks again for all you do — we’re in this fight together.

    • Thanks! It’s a point I try to make quickly in a lot of posts, and write about in some way from time to time, but such an important one and so underacknowledged that I feel I should write about it every day. 😀

      Feel free to drop links to posts you think we could repost if you’ve got them. 😀

  • There are good technical economic reasons to put a price on CO2 of about $50 a tonne to avoid the worst effects of global warming. A subsidy of about 3+ cents a kilowatt-hour for low emission energy sources is a less efficient work around to achieve this goal, but a heck of a lot better than doing nothing. (Note that in grids with nuclear power, nuclear appears to already receive subsidies in excess of this.)

    Allowing for other externalities such as particulates and heavy metals would push the required subsidy to put renewables on an even footing higher.

    A related issue is how much the feed in tariff should be for point of use solar installations. As it only relies on local transmission and not substations or long distance transmission, I think the feed in tariff should be very close to the retail spot price. If the subsidy for providing low emission energy is included in feed in tariff then the feed in tariff should be above the retail spot price.

  • Eaglecry

    We are farmers and have a website that you should view.
    It is
    I disagree with most of what your website says.
    The wind project and developers that came into our community have hurt a lot of people. They have misrepresented themselves and their project at every turn in the road. It began in 2008. Many homes were left off of maps. It has been a downward spiral of lies ever since.
    Our area is a very rich eco-system within the Mississippi River flyway.
    This project will be devastating to the farmers, rural residents, and the American Bald eagles, the Northern long eared bat, rare Loggerhead Shrike, herons, owls, hawks, and other raptors.
    Renewables are a scam.
    Subsidies most certainly should be stopped.
    Lobbyists in the U.S. have scammed politicians into supporting the crony capitalists like GE. The GE CEO is President Obama’s job czar.
    The circle goes round and round.
    Follow the money, Zachary.
    You are not looking at reality. You are looking at a big swindle.
    You are damaging communities with your message.
    The renewables sector is an experiment on the rural communities, it does not work, and it is a land take-over.
    All you have to do is do the math.
    Wind is the worst. It is not dispatchable power.
    It is off peak in generation. It is variable, and causes instability to the grid.
    If it were sited correctly in combination with natural gas, it could be considered. But, no, the subsidies are so horrendous, that developers put projects everywhere, and gas plants (fossil fuel plants) are built as backup.
    Your website has a very disappointing and wrong message.

    • Sorry, I’ve been studying these matters for years, and yes, looking into the critiques i receive on here, and I don’t agree with you at all. It looks like you’ve had a bad experience — it can happen with any topic — but many of your generalizations don’t match the reality as a whole. And the others are not the problem you make them out to be. Sorry, but I respectfully disagree.

  • Captivation

    Two unexamined conservative mythologies get shaky the moment they are considered. The first is that conservatives are good at war. But if you examine the Bush approach to the Iraq war verses the Obama approach to the Libya war you see there is no comparison.
    The second is that conservatives are good at business. But if you compare economic progress in progressive regions/nations to the stagnation in conservative regions/nations you quickly see that pillar fall too.
    In the interest of sincerity, I’m not raising this issue to create some sort of ideological feud, but I get tired when I hear the same dishonest mythologies presented again and again.
    Green energy isn’t just ecologically superior, it is economically superior too, but it seems that only left leaning thinkers can understand this.

    • Kevon Martis

      You must be joking. “The second is that conservatives are good at business. But if you compare economic progress in progressive regions/nations to the stagnation in conservative regions/nations you quickly see that pillar fall too.” What I have seen fall is the Berlin Wall and the Soviet Union. Can North Korea be far behind? And you truly believe leftist central economic planning is superior?

      “Green energy is economically superior too.” How so? It relies completely upon underlying capitalist ventures from which to first seize wealth and then transfer it by governmental fiat to the economically absurd green energy shills pretending to provide valuable service in exchange. You are correct: only left leaning thinkers can understand this because it is based on faith and not economics.

      And you have yet to realize that the windmill craze in the US exists only because of Enron’s Ken Lay who sought out and found a way to strip mine the US tax code to his own benefit. Now the main beneficiaries of the US taxpayer largess are European, Indian and Chinese wind turbine manufacturers and developers who desperately need the US market for their dubious products to remain strong as their own nations pull the plug on renewables. Your leftist environmental sympathies are being exploited by multinational rent seekers to fatten their all too capitalist bottom lines. If you doubt this look at Iberdrola’s cut of the booty. Or GE’s or NextEra’s almost non-existent federal tax bill, all complements of the Al Gore/Ken Lay green energy plan. They are laughing all the way to the bank, also made whole by the US taxpayer.

      • Captivation

        Your own incredulity shows that mythologies die hard. But look up the growth statistics for Dem/Rep administrations and the same pattern emerges again and again. Or compare the economic performance of countries that give women the right to vote versus their more conservative brethren. Or examine the UN stats for the nations with the highest life quality. Or use a state by state evaluation of your own choice. The same pattern will consistently emerge: Conservatism is the prelude to decline.
        As I explained, I don’t want to create an ideological battle. I simply want to escape the disinformation campaign that is affecting people’s ability to understand history and therefore the future.

        • Kevon Martis

          Like North Korea vs. South Korea?

    • LOL. That gave me a chuckle — because it was so on point yet mind-opening, like a good Twain quote. I hadn’t given it much thought generally, just regarding specific cases, but wow, that really seems to be the case.

  • Dcard88

    Great point Zachary. Maybe we could get the pubs to agree to tax coal and only use the revenues to sub solar. CA did that with a tobacco tax.

    • yeah, if they’d tax it appropriately, we wouldn’t even need the subsidies, but i don’t see them doing that any time soon…

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