oil subsidies

Government Subsidies for Big Oil Towers at $255 Billion Over Solar and Renewable Energy

by Cliff on December 28, 2010

in Environmental Commentary,Solar News

Big oil spends millions of dollars filling the airwaves with baloney about the need for government subsadies to support solar and other renewable energy with big media a willing accomplice. A common humbuggery is solar and renewable technology is expensive and solar could not compete without government support. That facts paint a much different picture.

What you do NOT hear about is the practical consequence that follows oil naturally; Fossil fuel exploration, extraction, transport, refining, environmental clean up and protection are expensive and the fossil fuel industries couldn’t compete without government support.

Without considering either the military cost of securing fossil fuel supplies or the health and environmental costs of pollution, (Golf oil spill anyone?) worldwide fossil fuel subsidies totaled $312 billion in 2009, according to the International Energy Agency, which is based in Paris. (source; Solar Business Journal)

For comparison, the California Solar Initiative, the largest residential and commercial solar photovoltaic subsidy program in the United States, is budgeted at about $3 billion … over 10 years. That breaks down to an average of $300 million a year, or about one one-thousandth of the amount spent globally on fossil fuel subsidies in 2009, a significant part of it by the United States.

Worldwide, subsidies for solar and other renewable energy totaled about $57 billion in 2009, a fraction of those for fossil fuels, the agency said. While public debate in the United States focuses on controversial cap-and-trade policies, the issue of climate change, and the failure of the United States, China and other nations to agree on binding resolutions to reduce greenhouse gases, actions may speak louder than words.

Locally, regionally, state by state and with federal help, the United States has been advancing the development of solar and wind energy and other renewable sources of electricity. China has become a solar manufacturing powerhouse, to the extent that the United States and other nations are concerned about being able to keep up.

At the United Nations Climate Change Conference in Cancun, Mexico, a popular destination for California tourists, media attention is drawn to the failure to reach a binding global accord on emissions reductions and the contribution of solar and renewables. Meantime, out of the public glare, important steps are being taken.

At their recent meeting in Seoul, South Korea, nations in the group known as G-20 reaffirmed a commitment established a year earlier in Pittsburgh to “rationalize” and phase out fossil fuel subsidies. The G-20 Seoul Summit Leaders’ Declaration reaffirmed the agreement to “phase out over the medium term inefficient fossil fuel subsidies.” In addition to the United States and China, G-20 members include India, Russia, Germany, Japan, the United Kingdom, France, Italy, Canada and Indonesia, among others.

Getting the prices right, by eliminating fossil-fuel subsidies, is the single most effective measure to cut energy demand in countries where they persist, while bringing other immediate economic benefits,” said Nobuo Tanaka, executive director of the International Energy Agency, in a recent news release.
The United States is a signatory to the agreement on reducing fossil fuel subsidies.

“Phasing out fossil fuel subsidies is important because it encourages energy conservation, solar and renewables improves our energy security, helps us meet budget goals and provides a critical down payment on our commitment to reduce greenhouse gas emissions,” in a sublimation statement from the White House said following the Seoul declaration in early November.

The White House statement said, “Leaders also agreed to take concrete steps to make the world’s physical oil markets more transparent and to continue to improve the regulation of financial oil derivative markets. These actions are expected to reduce the volatility of oil prices, thereby benefiting both energy producers and consumers.” The statement added that the United States would start to address its fossil fuel subsidies by seeking to begin phasing out some of them. “President Obama is committed to working with Congress to phase out over $3 billion a year in preferential tax incentives for the coal, oil, and gas industries, consistent with the FY2010 and FY2011 budget proposals,” it said.

Phasing out some of the $312 billion a year that governments provide in fossil fuel subsidies would help level the playing field for solar and other renewable energy sources. But Mr. Tanaka said more action is needed to create a sustainable energy system globally.

“We need to use energy more efficiently and we need to wean ourselves off fossil fuels by adopting solar and other technologies that leave a much smaller carbon footprint,” he said. The International Energy Agency, which released its annual World Energy Outlook in early November, expressed doubt about meeting an international goal of holding the global temperature increase to less than 2 degrees Celsius by 2035.

“Solar and renewable energy can play a central role in reducing carbon-dioxide emissions and diversifying energy supplies, but only if strong and sustained support is made available,” Mr. Tanaka said. Regardless of what else happens, oil prices are set to rise, the agency said in its news release, “reflecting the growing insensitivity of both demand and supply to price.”

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