Fossil Fuel Subsidies 10x Renewables Support

Worldwide renewable power and biofuels received $43 billion-46 billion in subsidies last year, only a fraction of the government subsidies for fossil fuels, according to preliminary figures from Bloomberg New Energy Finance (BNEF).

By contrast, governments propped up fossil fuels with $557 billion of subsidies in 2008, according to figures published in June by the International Energy Agency.

Such figures raise questions about the common investor worry that renewable power is only feasible with government subsidies, said BNEF chief executive Michael Liebreich. "Setting aside the fact that in many cases clean energy competes on its own merits - for instance in the case of well-situated wind farms and Brazilian sugar-cane ethanol - this analysis shows that the global direct subsidy for fossil fuels is around 10 times the subsidy for renewables," he added.

"And that is without taking into account the enormous security and public health costs of fossil fuels, as well as the appalling pollution catastrophes on the Gulf Coast, the Niger Delta and elsewhere."

Adding up support from feed-in tariffs, renewable energy certificates, tax credits, grants and other direct subsidies, BNEF found the US deployed the most dollars to support clean energy in 2009, with $18.2 billion. Around 40% of this went to support biofuels.

China spent $2 billion in direct subsidies, but BNEF said this figure does not include low-interest loans from state-owned banks and other methods of support. The country installed 14GW of wind capacity in 2009, making it the world leader.

The German government spent around $9.6 billion on its feed-in-tariff programme in 2009, driven by "extraordinary" numbers of photovoltaic systems installed. This was the single most expensive clean energy subsidy programme of 2009, BNEF said. Germany is one of a number of governments considering cuts to their support schemes for renewables.

By. Jess McCabe

Source: Environmental-Finance