Subsidising Global Warming

We hear much about the large subsidies paid for renewable energy. In Many countries a feed in tariff system have been developed to subsidise the production of electricity from photovoltaic panels and large subsidies are paid to landowners and electricity generators who install wind turbines. Both PV and wind turbines do produce electricity but what they produce cannot be stored easily and the production is intermittent. Nevertheless governments, who regard energy as electricity, are happy to spend taxpayers’ money on these measures, rather than on measures, such as solar water heating, which can produce renewable heat at a cheap cost; unlike electricity heat can be stored.

Subsidies come in different guises. In essence any measure or favourable tax treatment which distorts the market or provides an un-level playing field is a subsidy. The Overseas Development Institute thinks that as a whole the governments of the world spend half a trillion dollars in subsidising…fossil fuel!

This does make it hard for renewables to compete with fossil fuel because of the subsidy. I can provide some examples.

  • Mexico City, with its highly polluted atmosphere subsidises bottled gas for hot water production, keeping the price low.
  • The United Kingdom subsidises farmers with “red diesel” which is exactly the same as ordinary diesel which motorists buy, except for the tax.
  • Germany give financial assistance to its coal industry at the rate (roughlt) of €1.9 billion a year
  • The USA gave $1 billion fuel tax exemption to its farmers, the same amount to subsidise a strategic petroleum reserve and half a billion dollars for oil coal and gas production research.
  • Pakistan spends twice as much on fuel subsidies than it spends on education

According to the ODI (and I have no reason to doubt their figures) OECD nations spend out of the taxes $112 each year per adult on fossil fuel subsidies. This figure is reached without taking into account the hidden subsidies that fossil fuel industry receives by being insulated from having to pay for the healthcare that people need as a result of breathing polluted air or the measures and costs of fighting climate change.

The International Energy Agency informs us that global subsidies for fossil fuels are six times higher than those for renewable energy. The OECD has found that coal, the most polluting of all fossil fuels in terms of dirty air and carbon dioxide emissions, is taxed less than any other fossil fuel, based on the energy it provides.

So next time you hear a journalist or a politician whinge about subsidies paid for renewables ignore the whinge and ask the whinger to explain why on average in the developed world seven times the subsidy (in terms of energy produced is spent on the fossil fuel industry, and why the nuclear energy industry has been allowed to profit for years from energy production while the future clean up and disposal of nuclear waste will be subsidised in many cases 100% by the taxpayers of this and of many generations to come.


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