Fossil Fuel Subsidies Six Times More Than Renewable Energy

Thursday, November 10, 2011

From an article by Bill Sills on Bloomberg.com:

Fossil-fuel consumers worldwide received about six times more government subsidies than were given to the renewable-energy industry, according to the chief adviser to oil-importing nations.

State spending to cut retail prices of gasoline, coal and natural gas rose 36 percent to $409 billion as global energy costs increased, the Paris-based International Energy Agency said today in its World Energy Outlook. Aid for biofuels, wind power and solar energy, rose 10 percent to $66 billion.

While fossil fuels meet about 80 percent of world energy demand, its subsidies are “creating market distortions that encourage wasteful consumption,” the agency said. “The costs of subsidies to fossil fuels generally outweigh the benefits.”

. . . While governments argue that fossil fuel subsidies are designed to help the poorest members of society, they generally fail to meet that goal, the IEA said. Just 8 percent of aid reached the poorest 20 percent of each country’s population last year.

“Fossil-fuel subsidies as presently constituted tend to be regressive, disproportionately benefiting higher income groups that can afford higher levels of fuel consumption,” the report said. “Social welfare programs are a more effective and less distortionary way of helping the poor than energy subsidies.”