Even though governments throughout the world are vowing to expand green energy, they continue to give far more subsidies to fossil fuels than renewable – 10 to 12 times more, according to recent reports.
Bloomberg New Energy Finance identified US$43–$46 billion last year allotted by governments for renewable energy. Meanwhile, oil, coal and gas received $557 billion in subsidies from the 37 countries that represent 95% of global subsidisation of fossil fuels in 2008, says the International Energy Agency (IEA). In its latest World Energy Outlook the IEA says that government support for both electricity from renewables and biofuels was $57 billion in 2009, of which $37 billion was allocated to the former.
With such a gap in government support, does the oil industry have any reason to worry?
It appears so. Several nations have begun analysing the disparity with an eye toward rolling back at least some of the subsidies. G20 leaders, in particular, have expressed consternation about the inequity, and are discussing a phase-out of the subsidies. Their concern is that fossil fuel subsidies distort markets, encourage fuel gluttony and undercut efforts to expand clean energy.
Consumers in the 37 countries analysed by IEA on average paid only 71% of the market price for oil. Middle Eastern nations, in particular, are known for large subsidies to fossil fuels. For example, in 2008, Iranian consumers paid 38 US cents per gallon for gasoline and Saudi Arabians about 61 US cents, says the US Energy Information Administration (EIA).