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The Fossil Fuel Subsidy Red Herring

Alex Trembath's picture
The Breakthrough Instititute

Alex Trembath is a policy associate in the Energy and Climate Program at Breakthrough. He is the lead or co-author of several Breakthrough publications, including the 2012 report "Beyond...

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  • May 14, 2015
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Every few months — or constantly, depending on your attention span — we hear another round of passionate recommendations that fossil fuel subsidies be phased out to level the playing field for clean energy. Most recently, World Bank president Jim Yong Kim emphasized that “we need to get rid of fossil fuel subsidies now” in his agenda for promoting clean energy.

Sounds like a sensible goal, but there’s reason to think that eliminating fossil fuel subsidies wouldn’t be nearly as transformative as is often suggested. In this post, I’ll briefly explain why that’s the case.

Energy subsidies are a tricky business. Clean energy advocates insist that fossil fuel subsidies prop up mature technologies and stymie newcomers like renewables and advanced vehicles. Renewables and nuclear tribalists alike condemn subsidies to other camp’s favored technologies. These days, there’s at least some piece of published analysis to back up any argument about energy subsidies, whether it be their usefulness, waste, or inequity.

Here’s a 2011 report, commissioned by the Nuclear Energy Institute, quantifying energy subsidies over time:

It looks like fossil fuels are the big winner, while zero-carbon technologies have the deck stacked against them. Again, though, other reports tell whatever story the authors want. Here’s renewable advocates Nancy Pfund and Ben Healy in 2011, somewhat in contrast to the NEI report:
 

By their telling, renewables have received almost no relative subsidy support, and are dwarfed by fossil and nuclear alike.

Of course, NEI has an interest in making nuclear subsidies look reasonable, as do Pfund and Healy for renewables. So these reports are easy to dismiss by opponents. But all accounts seem to agree that fossil fuels are by far the largest beneficiary of public subsidies. That suggests that fossil fuel subsidies should be phased out, a move that would significantly benefit emerging zero-carbon technologies. Right?

Not so fast. While fossil fuel subsidies do account for the bulk of historical subsidies, the per-unit subsidization of fossil energy today remains much lower than it is for renewable energy technologies.

The US Energy Information Administration recently released their latest account of federal energy subsidies, and I quickly ran the numbers to calculate the cost per megawatt-hour of generation. The numbers are certainly imprecise, especially on renewables, but they show what orders of magnitude we’re talking about.
 

Direct subsidies per unit energy to US power generation technologies
  Subsidies (million 2013 dollars) TWh $/MWh
Coal/Refined Coal 1085 1572 0.69
Natural Gas/Petroleum Liquids 2346 1033 2.27
Nuclear 1660 789 2.10
Biomass 629 57 11.04
Geothermal 345 165 2.09
Hydropower 395 266 1.48
Solar 5328 19 280.42
Wind 5936 168 35.33

So maybe fossil subsidies aren’t the hulking barrier to the clean energy revolution that they’re made out to be. They should still be eliminated as wasteful and inefficient, right? Again, not so fast. Many fossil energy subsidies in rich countries are unnecessary — see this 2013 paper by Joseph Aldy. But many subsidy programs in poor countries are fuel subsidies for low-income populations. As this 2012 Nigerian case study by Morgan Bazilian and Ijeoma Onyeji shows, “Justifications for removal [of fuel subsidies] often do not adequately reflect the specific environments of developing country economies.” Often, a choice to end a fuel subsidy is a choice to make energy more expensive for the poorest among us.

Finally, while some fossil fuel subsidies should absolutely be eliminated or phased out, they are simply not the main explanation for fossil fuels’ continued dominance in global energy systems. The International Energy Agency’s recent World Energy Outlook estimates that a “partial” phase-out of fossil fuel subsidies — itself a recommendation that recognizes the value of some fossil fuel subsidies — would mitigate 360 million tons of carbon dioxide annually by 2020. That’s not nothing, but it’s only 1.1 percent of the approximately 32 billion tons of CO2 emitted from fossil fuel production in 2014. 

This shouldn’t surprise us. Fossil fuel subsides totaled $548 billion globally in 2013. That sounds like a big number, but in 2013 global GDP was $77.6 trillion. That means that fossil fuel subsidies make up just 0.7 percent of global GDP, despite making up 87 percent of global energy supply (and therefore powering at least 87 percent of economic growth, arguably).

Much like the lack of a carbon tax, the endurance of fossil fuel subsidies is often used by clean energy advocates as a smokescreen for how immature and challenged their favored technologies actually are. “If only we had a carbon tax and/or fossil subsidies were phased out, the playing field would be level and nuclear and/or renewables would take off!” I don’t buy it. As the above numbers show, there must be some reason other than subsidization for fossil fuels’ continued dominance. (I’d argue it’s a combination of abundance, energy density, storability, transportability, variety of applications, and, yes, infrastructure lock-in.)

So yes, we should tax carbon and we should phase out unnecessary fossil fuel subsidies. But neither of those, nor indeed the two together, are panaceas. Pursuit of those policy actions should not let us forget that an energy transition is fundamentally a technological — not a price-based or pollution regulation — challenge. If we want solar panels and nuclear reactors and electric vehicles to replace fossil fuels, they simply have to do a better job at powering the global economy. As Brad Plumer recently summarized, we’re making progress, but we’re just not there yet.

Further Reading

“Why Phasing Out Subsidies for Fossil Fuels Won’t Make Clean Energy Competitive,” Jesse Jenkins, March 2011

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Clifford Goudey's picture
Clifford Goudey on May 14, 2015

Alex, you came so close to figuring this out – it was an agonizing read.  You mentioned the 32 billion tons of CO2 emitted by the O&G sector.  You spoke favorably of a carbon tax.  Don’t you understand that the absence of a tipping fee on greenhouse gasses is the biggest subsidy of all? 

If contractors and manufacturers could simply dump their waste in the street for municipal trash collection, wouldn’t you consider that an undeserved subsidy?  How is dumping CO2 into the atmosphere for the rest of us to cope with any different?

Under a carbon tax policy, renewables would also pay their share for any emissions associated with their manufacture.  That’s the level playing field that’s needed.

Keith Pickering's picture
Keith Pickering on May 14, 2015

I agree with most of what’s here, especially the main points that past subsidies are past and not worth talking about, and (more important) deceptive. What’s important from a policy standpoint is current policy, period. 

I disagree that a fossil carbon tax will be of modest effect. It won’t be. The technology is already there but isn’t being deployed because of the cost differential. Taxing fossil will allow non-fossil industries to take off like a fistful of skyrockets.

Lewis Perelman's picture
Lewis Perelman on May 14, 2015

Alex, your central point is well taken, and too often overlooked: In relation to energy delivered or sales, fossil fuels get far less subsidies than renewables and other alternatives do.

I have one quibble though re: “Often, a choice to end a fuel subsidy is a choice to make energy more expensive for the poorest among us.” Most economists agree that subsidizing consumer prices is counterproductive. Here is what a literature review by IMF economists concluded:

This paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries. On average, the burden of subsidy reform is neutrally distributed across income groups; a $0.25 decrease in the per liter subsidy results in a 6 percent decrease in income for all groups. More than half of this impact arises from the indirect impact on prices of other goods and services consumed by households. Fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups. In absolute terms, the top income quintile captures six times more in subsidies than the bottom. Issues that need to be addressed when undertaking subsidy reform are also discussed, including the need for a new approach to fuel pricing in many countries. 

Essentially, fuel subsidies don’t really make energy less expensive for the poor. At least, they don’t make living less expensive. The cost of the subsidy is just shifted. The overall effect is to weaken the country’s finances, and ultimately make everyone poorer.

Moreover,collateral effects of fuel subsidies may be even more damaging. In India, for instance, most vehicles use diesel fuel because of heavy government subsidies. The mass of mostly dirty diesel engines spews a toxic smog that has caused an epidemic of cancer an other illnesses, as Businessweek has reported. Sickness, health care, and pollution controls impose other costs on the poor that offset — maybe more than offset — any economic benefits from fuel subsidies.

Note that government subsidies for renewable or nuclear energy bring their own set of unintended, often negative consequences; such problems are not limited to fossil fuel subsidies.


Geoffrey Styles's picture
Geoffrey Styles on May 14, 2015

Keith,

Your argument certainly aligns with intuition but what does the evidence show? Have we seen a dramatic retreat from carbon-based energy in places where carbon taxes or their proxies (e.g., cap & trade) have been tried? Or is the effect of the relatively low carbon prices in states participating in the RGGI market, to take one example, dwarfed by the impact of very large (per unit of energy) incentives for renewables in the form of production or investment tax credits, renewable portfolio standards and other policies?

Despite decades of very high taxation on petroleum products and other fuels in Europe, these fuels have not disappeared from European economies. And it has taken Herculean subsidies (e.g., the German solar FIT, which is approaching a cumulative €50 B) to prompt signficant uptake of renewables in Europe, in spite of the high taxes on other forms of energy.

 

John Oneill's picture
John Oneill on May 15, 2015

  ‘ Despite decades of very high taxation on petroleum products and other fuels in Europe, these fuels have not disappeared from European economies. ‘

They haven’t disappeared, but they are used much more frugally than in the US. That has been much more beneficial ( or less damaging ) to the climate than the diabolical American ethanol programme.

donough shanahan's picture
donough shanahan on May 15, 2015

The other problem is the nature of the subsidy and this is often glossed over. Consumer subsidies like the 5% VAT on domestic electric in the UK is possibly one that could be gotten rid of but it would not be popular. ‘Fuel for the poor’ obviously not one to get rid of.Blanket calls for subsidy end ignore this nuance.

Robert Rapier did an excellent article some time ago

 

Geoffrey Styles's picture
Geoffrey Styles on May 15, 2015

All true, though other factors also play significant roles, including the quality and availability of practical mass tranit options and greater walkability of many city centers.

Andy Maybury's picture
Andy Maybury on May 15, 2015

Hear, hear!

By normalising the VAT on fossil-fuel-derived energy, clean energy would not seem more expensive. At the moment, one has to pay a premium to subscrible to ‘green electricity’.

Andy Maybury's picture
Andy Maybury on May 15, 2015

Thanks Alex

You make some interesting points but even the data that you show point in another direction. Perhaps it’s not so much the direct levelisation that might come about by removal of subsidies to these harmful industries but the fact that the ame amount of money would be better spent elsewhere. The amount of subsidy you record for coal, oil and gas is an order of magnitude higher than either goethermal or hydro. If subsidies to the latter were doubled and those to the former scrapped, there would still be money available to increase the subsidies on other emergent and maturing technologies.

Bob Meinetz's picture
Bob Meinetz on May 15, 2015

Alex, whether it’s oil, or grapefruit, or frisbees being sold – why is the third most profitable industry in the U.S. deserving of any subsidies at all?

http://www.forbes.com/sites/frankbi/2014/11/18/the-10-most-profitable-in...

Lewis Perelman's picture
Lewis Perelman on May 15, 2015

Bob, the industry also pays the most federal taxes:

http://www.forbes.com/sites/christopherhelman/2012/04/16/which-megacorps-pay-megataxes/

Also note that oil industry profits have declined precipitously with falling prices:

Exxon Mobil, the largest American oil company, reported a 46 percent decline in earnings: $4.9 billion for the first quarter, compared with $9.1 billion in the year-ago quarter. Revenue fell to $67.6 billion, from $106.3 billion, a 36 percent decline.

Max Kennedy's picture
Max Kennedy on May 15, 2015

The phrase “Pursuit of those policy actions should not let us forget that an energy transition is fundamentally a technological — not a price-based or pollution regulation — challenge.” demonstrates a degree of naivity that is unconscionable.  The half trillion in FF subsidy may represent a low $/unit energy but it is also 1) denying that money to development of clean energy with which it competes and 2) fails to recognise the massive subsidies in the form of so called “externalised costs”.  Mature technologies should not be subsidised and doing so diverts investment from better technology thereby enriching those that are already, if you’ll pardon the phrase, filthy rich.  Sorry, as an analysis this gets a failing grade.

Lewis Perelman's picture
Lewis Perelman on May 15, 2015

<deleted>

Lewis Perelman's picture
Lewis Perelman on May 15, 2015
Max, you seem to be overlooking the fact that majority of such subsidies are consumer price subsidies paid by governments of developing countries.<p>
 
As I pointed out in another comment here, this is generally recognized as a wasteful policy that does not really help the poor but that undermines the financial health of those governments. Nevertheless, it is not a policy the US can do much about. And even when those foreign governments recognize that the policy is counterproductive, as they often do, attempts to cut the fuel price subsidies often have provoked intense public protest, sometimes even resulting in the overthrow of governments.<p>
 
It is also important to realize that the world oil market is dominated by state-owned companies:<p>
 
 
Name the biggest oil company in the world. ExxonMobil? British Petroleum? Royal Dutch Shell? In fact, the 13 largest energy companies on Earth, measured by the reserves they control, are now owned and operated by governments. Saudi Aramco, Gazprom (Russia), China National Petroleum Corp., National Iranian Oil Co., Petróleos de Venezuela, Petrobras (Brazil) and Petronas (Malaysia) are all larger than ExxonMobil, the largest of the multinationals. Collectively, multinational oil companies produce just 10% of the world’s oil and gas reserves. State-owned companies now control more than 75% of all crude oil production.
<p>
 
Governments obviously have a vested interest in protecting and promoting enterprises that they own and control. On the supply side, that is the form of subsidizing that is by far most dominant. And again, this is something that the US government does not participate in, and which it has little ability to influence.
Schalk Cloete's picture
Schalk Cloete on May 15, 2015

My view on fossil fuel subsidies remains that most are not subsidies at all, but rather energy (mostly oil) producing developing nations selling their fuels closer to the actual price of production rather than the global market price. Analysis here. Coming numbers on fossil fuel subsidies will guaranteed be much lower simply because the global market price of oil has dropped substantially. 

The best example I can give here is the following from the above linked article: 

Forcing the Middle East (which can still extract oil for $20/barrel or less) to sell this oil locally at $100/barrel would be similar to forcing a solar farm in Mexico to sell electricity at the same price as that required by a solar farm in Greenland. The only reason why the lower oil prices in MENA nations are labelled as a subsidy is because the highly concentrated liquid nature of oil makes it highly suited for international trade. If oil was less suited for international trade (like solar power), the subsidies reported in the above figure would be much smaller.

Bob Meinetz's picture
Bob Meinetz on May 15, 2015

Lewis, “effective tax rate” is one of the most manipulative terms in accounting. Here’s another side to the story (which may or may not be more accurate than yours):

From 2009 through 2013, large U.S.-based oil and gas companies paid far less in federal income taxes than the statutory rate of 35 percent. Thanks to a variety of special tax provisions, these companies were also able to defer payment of a significant portion of the federal taxes they accrued during this period.

According to their financial statements, 20 of the largest oil and gas companies reported a total of $133.3 billion in U.S. pre-tax income from 2009 through 2013. These companies reported total federal income taxes during this period of $32.1 billion, giving them a federal effective tax rate (ETR) of 24.0 percent. Special provisions in the U.S. tax code allowed these companies to defer payment of more than half of this tax bill.  This group of companies actually paid $15.6 billion in income taxes to the federal government during the last five years, equal to 11.7 percent of their U.S. pre-tax income.

This measure, the amount of U.S. income tax paid regularly every tax period (i.e. not deferred), is known as the “current” tax rate. Four of the companies in this study – ExxonMobil, ConocoPhillips, Occidental, and Chevron – account for 84 percent of all the income and paid 85 percent of all the taxes for the entire group. These four had an ETR of 24.4 percent and a current ETR of only 13.3 percent. The smaller firms paid an even smaller share of their tax liability on a current basis. When the top four companies and those with losses are excluded from the analysis, the remaining companies reported a 28.9 percent ETR on U.S. income, but only a 3.7 percent current rate. They deferred over 87 percent of their tax liability.

Lewis Perelman's picture
Lewis Perelman on May 16, 2015

Bob, while there is some ambiguity in how effective rates are measured, it is widely understood that the effective tax rate of US corporations is significantly lower than the statutory corporate tax rate. So oil industry tax practices are typical of corporations in general.

That does not contradict the observation that the oil industry pays more taxes than any other.

Bob Meinetz's picture
Bob Meinetz on May 16, 2015

Lewis, the Forbes article you cite claims

when compared with the rest of the 25 most profitable U.S. companies the trio [Exxon-Mobil, Chevron, and Conoco-Phillips] also had the highest effective tax rates.

The one I cite argues they have the lowest effective tax rates. Both analyses notwithstanding – assuming the competent accountants at all major corporations will take advantage of whatever tax advantages are available, oil companies should pay more – they make more.

Or should we be giving kickbacks to the wealthiest corporations for graciously cutting the IRS in on their take? Seems a bit undemocratic.

Lewis Perelman's picture
Lewis Perelman on May 16, 2015

Bob, it’s well known that the entire US tax code is rife with corporate welfare and loopholes that mainly benefit the rich.

Just about everyone agrees tax reform is needed. Getting it done is very very hard.

Joris van Dorp's picture
Joris van Dorp on May 18, 2015

I think you are comparing apples to oranges.

A wind turbine is not a power plant like a coal, gas, nuclear or hydro plant. It is merely a fuel saving device. Wind turbines save fuel, and they are competitive whenever the cost of the fuel they displace is greater than the cost of building and running the wind turbine.

So pairing a wind turbine and a natural gas plant can be economically attractive if the cost of natural gas is high enough and if the natural gas plant is already in operation. However, such a pairing doesn’t make sense if the natural gas plant also has to be built new. In that case, it’s best to build neither the gas plant, nor the wind turbine, and go for the nuclear plant from the start. It will deliver far cheaper electricity, and it will emit no greenhouse gasses nor air pollution. It will also save lives (humans, birds, bats and insects) and prevent ruination of the views of countryside caused by the addition of sprawling, skycraping windturbines.

Joris van Dorp's picture
Joris van Dorp on May 18, 2015

As you know, global fossil fuel taxes are far higher than global fossil fuel ‘subsidies’. Global fossil fuel taxes are on the order of 800 billion per year.

True fossil fuel production subsidies are only about 100 billion per year. As you note correctly, the bulk of so-called fossil fuel ‘subsidies’ reported in the popular literature are nothing more than the difference between the cost of production and the international market price of the oil of oil exporting countries. These ‘subsidies’ simply indicate that oil exporting countries sell oil to their own citizens at the cost of production. And why wouldn’t they? Calling that a ‘subsidy’ is nothing short of deliberately sowing confusion about the cost of energy.

Exporting countries of course could tax their domestic oil consumption instead of selling it at cost, but that would merely be a (perhaps bona fide) diversion of money away from the consumer to the state (which would then presumably spend that money more ‘wisely’ than the consumer would). But it would change nothing about the simple fact of life that $20 oil is cheaper than anything else. Period.

donough shanahan's picture
donough shanahan on May 18, 2015

?

Renewables already get this in the UK.

Willem Post's picture
Willem Post on May 20, 2015

Joris,

You are exactly right. Variable wind and solar energy cannot exist, unless the OTHER generators are adequate in capacity, MW, and flexibility to deal with that variable energy. 

That requires many of these OTHER generators to operate at partial output and ramp up and down, which is inefficient, i.e., increases their Btu/kWh, and their CO2/kWh.

On the Irish grid, it has been proven with real-time 15-minute data from each generator that at 17% wind energy on the grid, only 58% of the reductions that wind was supposed to reduce is actually being reduced.

Eirgrid denied the results of several reports for years, until a few months ago, and informed the EU commission in Brussels of the fact.

Willem Post's picture
Willem Post on May 20, 2015

Clifford,

That tipping fee would also apply to the build outs of RE systems with about 78% fossil fuel on a worldwide basis.

What about a fee on RE energy for requiring many of the OTHER generators to operate more inefficiently? See my above comment to Joris.

As more such variable energy exists on the grid, more capacity of OTHER generators is required to deal with it.

Joris van Dorp's picture
Joris van Dorp on May 22, 2015

Eirgrid denied the results of several reports for years, until a few months ago, and informed the EU commission in Brussels of the fact.”

Thanks for this info. I need to check that out, it sounds juicy!

Max Kennedy's picture
Max Kennedy on May 22, 2015

No Lewis, you fail to recognize the major subsidies for fossil fuels are the so called externalized costs which the world’s poor pay the vast majority of.  What is reported above vastly under values the cost.  One might want to see http://www.imf.org/external/pubs/ft/wp/2015/wp15105.pdf and even that is on the low end!

Joris van Dorp's picture
Joris van Dorp on May 22, 2015

Max, read page 36 of the IMF report you linked.

Maybe you can explain how traffic accidents, traffic congestion and road repair costs are in fact externalised costs of gasoline and diesel. Because that is what the authors of this study are assuming, in order to arrive at their massive external cost figures. I suppose whenever there is a traffic accident, we should send the bill to Saudi Arabia!?

FWIW I agree that fossil fuel burning has significant external costs, but determining how high those costs are and whether those costs really are inherently caused by burning fossil fuels per se, is not clear at all.

Are traffic accidents eliminated when we switch to corn-ethanol vehicles or electric vehicles?

Is air pollution eliminated when we switch from natural gas burning to biomass burning?

Are geopolitical risks reduced when we switch from importing oil from the Middle East, to importing ethanol from Brazil, or solar power from North African deserts?

I doubt it.

By the way, the whole IMF report is a good read in my opinion, I found it quite informative. Apart from the absurd decision to include traffic congestion and traffic accident costs as being a subsidy for petroleum products, the report does contain a lot of interesting ideas and information. It also contains a lot of discussion which directly contradicts the breathless, sensationalist reporting recently seen in the media about this study.

Grace Adams's picture
Grace Adams on May 22, 2015

If the United States ever starts using nuclear power plants that can use up leftover energy in spent fuel rods from current model of US nuclear power plants, then I will accept that maybe nuclear power will be sustainable until all their fuel is used up.  Until then, I would rather have much more geothermal than the United States has now.

Grace Adams's picture
Grace Adams on May 22, 2015

So subsidies for poor for energy should be better targeted so poor get most of benefit.  Connecticut in United States has Low Income Heating Energy Assisistance program that is means tested.  Some bureaucrats benefit from having more work to do to justify their existence during the heating season, but it is a fair attempt at targeting benefit to poor.

Grace Adams's picture
Grace Adams on May 22, 2015

If we use both some stick to punish use of fossil fuels and some carrot to reward use of some combination of efficiency, frugality, and renewable energy, that ought to reduce emissions at least some while still giving poor somewhat of a break on overall cost of energy.

Lewis Perelman's picture
Lewis Perelman on May 23, 2015

Spot on, Joris. As I have often pointed out to Max et al (to little avail), internalizing externalities is an idea that is much easier in theory than it is in practice. Being external to the market, the value of various impacts is largely subjective and arbitrary. Not only do various contending political interests value impacts differently, but what may be a cost to one faction may be beneficial to another. So abstract evaluations of benefits and costs are as likely to stoke political conflicts as to settle any. The persistently futile meetings and exercises of the UNFCCC is one notable example.

That is not to deny that there are some examples of consensus agreements that have been able to manage some externalities more or less effectively. Initiatives to reduce SO2 emissions, to replace ozone-destroying CFCs, and to protect endangered wildlife are often cited cases. But to the extent these work, they usually do so less then completely — with ‘leakage’ of one sort or another — and do so when there the economic stakes are relatively limited in scale; where impacts are also limited and readily measurable; and when cost-effective alternatives are available to mitigate economic burdens.

Those helpful conditions mostly do not apply to the case of GHG emissions and potential climate impacts.

Andy Maybury's picture
Andy Maybury on May 23, 2015

Joris

No one is saying that the alternatives have no externalities. Air pollution and vehicle accidents associated wit biomass burning or electric vehicles needs to be associated with them.

Your straw man falls apart way too easily!

Joris van Dorp's picture
Joris van Dorp on May 26, 2015

Fully agree.

Good job on explaining this issue with reference to ‘past’ issues of CFC’s and SO2. We often hear that since we have (all but) solved CFC’s and SO2 in the past, CO2 should also be easily solved. But as you note correctly, solving CO2 is a completely different animal, and past experience with solving CFC’s and SO2 tell us next to nothing about how to solve CO2.

Joris van Dorp's picture
Joris van Dorp on May 26, 2015

If subsidies to the latter were doubled and those to the former scrapped, there would still be money available to increase the subsidies on other emergent and maturing technologies.”

Unless, of course, the particular subsidies for coal, oil and gas are necessary to make sure the lights stay on. If the lights don’t stay on, other emergent and maturing technologies will be hurt along with everything else.

Note that included in ‘subsidies’ for coal, oil and gas are the cost of the civil servants required to regulate those industries. Should we end those subsidies, thereby privatising regulation? I think not. Likewise, research on improving fossil fuel technologies at universities and public labs is also included in the ‘subsidy’. Should we eliminate those research programs? Are we confident that fossil fuel companies will finance such research themselves? And make available their findings to others, free of charge? That seems doubtfull.

Also note that the tax revenues from coal, oil and gas sales dwarf the ‘subsidies’ in a ratio of 8 to 1 in OECD countries. So eliminating those subsidies (and thereby eliminating those industries and their resulting tax revenues) will dramatically *reduce* public resources, making the subsidisation of alternative energy that much more difficult.

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