What are we actually subsidising?

Talk to someone in the investment industry about the renewable energy sector and they will likely say something like “sure the returns can be good, but it all depends on Government subsidies”. Now, even as renewable energy technologies become cheaper and more efficient, it is indeed generally still the case that subsidies are required to make renewable energy projects profitable. However, recently it was brought to my attention just how much the fossil fuel industry is also still being subsidised. These subsidies include tax breaks, military protection, access to financing at favourable rates, and consumption subsidies to keep prices down for consumers.

The graphic below from Oil Change International does a good job of illustrating the problem. But also consider that the Chief Economist of the IEA (International Energy Agency) recently said that fossil fuel subsidies are “public enemy number one”.

Some people might try to justify subsidies to fossil fuels by saying that they support developments that create jobs. But actually all renewables compare favourably in terms of job creation. Just imagine what we could accomplish if all the fossil fuel subsidies went to green energy instead!


One thought on “What are we actually subsidising?

  1. I totally agree. Whenever I hear someone talk about the necessary government intervention to support renewables through FIT programs or other, the other side of the equation isn’t usually considered. I’d love to see a more transparent comparison between the costs of energy sources/technologies, breaking out the subsidies available to each.

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