Fossil Fuel Subsidies Five Times Higher than Wind Power Subsidies

Zoë Casey
June 21, 2012 | 3 Comments

UK newspapers have again picked-up on the issue of government subsidies to wind power saying that one Cabinet Office minister — Oliver Letwin — backs an end to subsidies to onshore wind farms by 2020. But the Guardian reported that Mr. Letwin’s comments have “irritated” Ed Davey, the UK climate change secretary, who last week set out his backing for wind energy.

It makes me wonder — how do politicians and media can get away with talking about removing subisidies from renewables without even mentioning the existence — let alone withdrawal — of much larger subsidies for much more established energy technologies? It is hard to understand.

This latest reporting on wind energy highlights the huge gaps between rhetoric and reality: public subsidies for wind power are dwarfed by those channelled to fossil fuels and nuclear. OECD figures show that coal, oil and gas in the UK were subsidised to the tune of £3.63 billion in 2010, while onshore and offshore wind received only £700 million in the year to April 2011 — that’s more than five times less than fossil fuels.

Moreover, International Energy Agency figures show that coal, oil and gas subsidies in 37 countries received a total of $409 billion in 2010, compared to $66 billion for renewables.

Government support has already played an important role in expanding Europe’s use of wind power. And while the industry aims to be competitive in a fully liberalised market, wind power needs subsidies to get it on a level playing field with dominant fossil fuels which have received subsidies for decades.

The industry is working hard to become fully cost-competitive with fossil fuels. And that is setting aside the fact that much of the environmental and human health cost of extracting, transporting and burning fossil fuels to make electricity is not included in the cost of fossil fuels. Costs have already fallen over recent years — largely due to improved turbine design and the increased efficiency of blades and other components. A recent report by the Grantham Research Institute found that onshore wind power will be cost competitive with fossil fuels by 2016 in the UK. Meanwhile, the biggest and best-sited wind farms in the world are already cost competitive, and onshore wind is already considerably cheaper than nuclear power.

In his comment, Letwin said: “I anticipate that subsidies for both solar photovoltaic and onshore wind will come down to zero over the next few years and should have disappeared by 2020, since both of these forms of energy are gradually becoming economic without the need for subsidies.”

He cannot say the same for nuclear which seems to be a favourite technology among many who criticise renewables for being dependent on subsidies!
Reacting to Letwin’s comments, Davey said: “We absolutely have to be green in this government, and being green means being straight with investors and companies and not messing them around.”

What is actually needed is a timely phase out of subsidies for ALL fully mature energy sources, which wind is rapidly becoming. Read more in this previous post of mine.

Meanwhile, climate activists have launched a 24-hour ‘Twitter storm’ calling for an end to government subsidies to oil and coal. The call has been supported by many high-profile people including Stephen Fry and Robert Redford. The hash tag #endfossilfuelsubsidies went up to number two in the ranking of globally trending topics and number one in the U.S.

Activists also delivered a petition of more than 750,000 signatures to 10 Downing Street in London this morning calling for an end to fossil fuel subsidies, and Tweets have been projected on the Sydney Opera House and will later be projected in London, New York, New Delhi and Rio. Read more in this Guardian article.

By Julian Scola,Communication Director, EWEA

Image: Wind turbines via Shutterstock

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

3 Comments

Allen Gerhardt
2012-07-19 09:26:00.0

I would like to point out that in addition to subsidies of all types, fossil fuel use creates very large costs in health care and pollution, that makes it far more expensive than wind and even solar power. The cost of health care resulting from coal pollution alone is between $300 and $500 billion a year in the US. The cost of oil spills cancells the small bit of money coming from lease sales, and the cost of health damages from petroleum has not been considered. The cost of war for oil, in the last decade is estimated to be around $3 trillion. Renewable energy could get total subsidy and it still would be less costly than coal and oil use.
Nuclear power is a similar story. The cost of the Chernobyl disaster makes all the electricity in the USSR from nuclear power void in value. The cost of Fukushima will run in the hundreds of billions of dollars in the near term, and like Chernobyl, leaves large amounts of land completely unusable for several generations or more. The cost of fuel waste storage has not been paid, and remains to plague economies for thousands of years.
We cannot afford to continue with fossil fuel and nuclear power, and we cannot afford to ignore the savings from clean and renewable energy sources. All these complaints about subsidies for renewable energy are just greed expressing itself from vested interests, that seek to continue established extortion schemes.

ANONYMOUS
2012-06-25 09:05:50.0

To add to the above comments, it is also slightly disengenuous to imply that the levels are comparable, as the level quoted for fossil fuels is 5 times higher, but the energy generated is a far greater proportion of the oveall energy mix. This means that the per kWh level is lower for fossils than for RE. There is no doubt that a propaganda war is being fought over this subject, but the only way through is to present clear and simple facts.

ANONYMOUS
2012-06-22 23:15:53.0

The global taxpayer "subsidy" situation between coal/oil/NG and renewables is not as black and white as the author suggests. Nor do the figures quoted accurately represent the real situation. Calling every market cost effect from government regulation a "subsidy" is misleading. Some are indeed true "subsidies" (ie. direct cash payment from government to business), while others are actually income tax credits, tariffs, or price controls. The real financial impact of each can vary greatly. I don't know about other countries, but in the US the domestic coal/oil/NG producers do not receive any actual subsidy payments. They only receive income tax write-offs for certain expenses like exploration and drilling. US renewables on the other hand receive direct cash subsidies for production. Income tax write-offs would be of no real value since most US RE projects would not currently generate much profit without subsidies or price supports. Most importantly, to be honest about the situation we should weigh the massive contributions coal/oil/NG make to most country's economies and government revenues versus the tax benefits they receive. In 2010, the Exxon Mobile corporation alone paid almost $10 billion to the US government in taxes and fees. That's far more than all of the US RE companies combined. Personally, I'd love to see a prosperous world economy powered entirely be renewables. But the technology is not there yet. It does no one any good to try to pretend it does.

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Zoë Casey

The European Wind Energy Association (EWEA) is the voice of the wind industry, actively promoting the utilisation of wind power in Europe and around the world.