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Fossil Fuel Subsidies Dwarf Support for Renewables

A report from Bloomberg New Energy Finance details international government energy spending on biofuels and renewable energy.
July 29, 2010

Fossil fuels are the backbone of economies worldwide, so governments spend a lot to support them. A new report from Bloomberg New Energy Finance says altogether governments spent between $43 anf $46 billion on renewable energy and biofuels last year, not including indirect support, such as subsidies to corn farmers that help ethanol production. Direct subsidies of fossil fuels came to $557 billion, the report says.

This disparity raises the question–if the report is right and fossil fuels require so much backing, can they compete with renewables without government support? After all, some renewables–such as sugarcane based biofuels and some wind farms–can already compete with fossil fuels. Without the huge government subsidies for fossil fuels, wouldn’t they be eclipsed by renewables?

The answer, for now, is no. So far renewables just can’t provide enough fuel and power to displace fossil fuels. The infrastructure to make and distribute them isn’t adequate, and many renewables have shortcomings that can make them difficult to work with–solar panels, for example, only generate electricity when the sun is out. If the fossil fuel subsidies disappear, gasoline and electricity prices will increase. That will help renewables compete, and increase in scale, but it will take years–likely decades–for them to reach levels high enough to replace all fossil fuels.

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