While I certainly support the IEA's calls to phase out fossil fuel subsidies -- excepting where those would expand the already deplorable share of the global population (about 2.4 billion) locked in energy poverty -- the IEA figures on energy subsidies are actually a stark reminder of the major cost gap that persists between fossil energy and costlier clean energy alternatives.The debate involving subsidies should not be about "subsidization or not," but rather: in what contexts do certain types of subsidies make sense? The former is a recipe for empty ideological debates, and addressing the latter requires some thoughtful policy analyses, with answers that are not always clear cut.
If renewables account for a 7% share of global energy energy demand, and recieve $57 billion in subsidies, that's $8.14 billion for each percentage share of global demand. In contrast, fossil fuels supply about 83% of the global energy mix (nuclear accounts for the remaining 6%, according to the IEA) and recieve $312 billion in subsidies, for $3.76 billion per percentage share of global energy supplied.
In other words renewables recieve more than double the subsidy rate per unit of energy supplied as fossil fuels. When you consider that hydropower, which rarely requires or recieves subsidy, accounts for the vast share of global renewable energy production, the relative subsidy rate for wind, solar and other renewables per unit of energy produced is much higher.
This is why I always come back to the urgent need to make clean energy cheap, in real, unsubsidized terms. Ending fossil energy subsidies will help level the playing field, but only real innovation to drive down price and improve performance for a full suite of clean energy technologies can ensure that a meaningful share of global energy demand can be supplied by low-carbon alternatives to fossil fuels.
10 November 2010
An Interesting Look at Energy Subsidies
the Breakthrough blog, Jesse Jenkins has this interesting analysis of numbers provided by the IEA's WEO 2010 (emphasis added):