Monday, June 14, 2010

Subsidizing Carbon

Critics who complain that renewable energy technologies like wind or solar can't compete without government help overlook the billions in subsidies for dirty energy sources. Ezra Klein writes in Newsweek that the price of gasoline would jump to $4.60 if it included all of the externalities. Not that we would stop using it at that price:
If an energy source as dirty as coal had to pay its true cost, we’d likely stop using it. But, disasters aside, that’s not the case with oil.
The Environmental Law Institute last year released a study that finds that U.S. fossil fuel subsidies far exceeded support for renewable energy over from 2002 to 2008:
I suspect that number is low. Indirect subsidies like lax regulation and liability caps are much harder to calculate.

Dave Roberts writes in Grist that global subsidies of dirty fuels is higher than was thought. He points to a story in the Financial Times on a draft report from the International Energy Agency that finds that subsidies of fossil fuels in developing countries totalled $557 billion in 2008:
The IEA estimates that in 2008 – the latest year for which data are available – 37 large developing countries spent about $557bn in energy subsidies, according to a draft seen by the Financial Times. Previous estimates put it at about $300bn. Iran, Russia, Saudi Arabia, India and China top the ranking, according to the report.
Roberts hopes that if we can't put a price on carbon, at least we could do would be to stop subsidizing it:
Given the dim prospects of a serious cap on carbon, it seems to me that in the wake of the oil spill greens ought to be putting way more emphasis on removing these subsidies. Obama signed the statement at the G20 pledging to reduce them and reiterated that sentiment in his speech last week. It would be a crucial first step in unwinding the century-plus worth of advantages the fossil-fuel industry has accrued over its clean competitors.

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