The International Energy Agency made the news with
the headline claim that fossil fuels attract six times the subsidy of renewable
energy. Inevitably, the headline was picked up and repackaged by most NGOs,
trade bodies and commentators into a simple message - big oil is dipping our
pockets to make a fast buck at the expense of clean energy.
However, like most headlines, when unpacked the
reality is somewhat different. For example, according to the REN21
report, in 2010 renewable energy accounted for a little over 15% of global
energy consumption, compared to 80% for fossil fuels. However, approximately
half of that renewable consumption was traditional biomass, the global poor
burning wood and animal waste with appalling health impacts. Discounting
long-standing hydro and (mostly) Chinese solar water heaters, new renewables
such as wind and solar PV accounted for less than 1% of global energy
consumption, as did biofuels. So while it’s claimed that fossil fuels attract six
times the subsidy of renewables, fossil fuels generate not far off 80 times more
energy than heavily subsidised new renewables. Per unit of energy actually consumed
then, renewables appear to attract subsidy over 10 times greater than fossil
fuels.
But of course energy dense fossil fuels don’t attract direct production
subsidy, they create genuine wealth, both directly through driving the economy,
and indirectly through taxation. What is often seen as subsidy is in fact tax relief
in oil rich states depressing the local price of fuel to share sovereign wealth
with their populace, and developing nations depressing the price of fuel to
support farmers. So if we want to end fossil fuel tax relief, it will be the
poor who end up paying the most.
To be clear, the growth of new renewable energy has
been driven solely by political targets and involuntary consumer support through
direct production subsidy. If we are genuinely interested in socially
progressive low cost energy and environmentally progressive clean energy, we
need to deal in inconvenient truths measured in Joules and Watts, not creative
accounting. Most importantly, we need clean energy that’s cheaper than coal. And
yet the two technologies which can displace coal at scale, nuclear and gas, are
both belligerently opposed by the very NGOs who demand firm action on climate
change. So yes, let’s create a level playing field for clean energy in all its
forms, let’s invest in basic R&D, and commercial scale technology demonstrators,
but let’s not allow NGOs to keep one hand tied behind our backs.
