Renewables, Cheaper than Fossil Fuels, But Weaker Politically
|February 10, 2014||Posted by Staff under Environmental, Subsidies & Waste & Public Debt|
This 2014 excerpt of IPS, Feb 10, is by Samuel Oakford.
Though critics of renewables often cite their higher cost per kilowatt-hour (kWh) compared to traditional sources, when externalities like carbon emissions, effects on health, and resource scarcity are considered, that dynamic is reversed, the IMF found. Global subsidies of fossil fuels rose to $1.9 trillion worldwide; renewable subsidies top out at 88 billion dollars globally.
During his January State of the Union address, U.S. President Barack Obama told Congress “climate change is a fact” and called for the phasing out of an estimated four billion dollars in tax breaks and incentives – many dating back a century, when oil exploration was dangerous and far more expensive – that U.S. companies enjoy every year.
Generally, consumption subsidies that lower prices at the point of sale have prevailed in the developing world, while producer subsidies have been more common in industrialised countries.
But unlike traditional forms of state welfare that attempt to target the needy, consumption subsidies funnel wealth to those who consume the most. In low and middle-income countries, the richest 20 percent of households receive six times the benefits from subsidies as the poorest fifth. Among gasoline consumers alone, the disparity widens to 20 to one.
Fossil fuels not only have the advantage of subsidies, but they are the incumbent. Because renewables have very low fuel costs the real issue is up-front financing. Renewables are competitive at the moment, but it takes political will to change.
Ed. Notes: The author wants to shift subsidies from the entrenched ways to the clean ways he likes. But what if all subsidies to all energy sources were eliminated? And if taxes on our efforts were repealed, too? And if government recovered the annual rental values of natural resources (as do many Muslim countries) and paid citizens a dividend (as does Alaska)? And if government defended people’s right to a healthy environment and made polluters pay? Doing all that would level the playing field. On a level playing field, renewables could laugh at subsidies.