Real-World Economics Review Blog

from The worldwatch institute

A recent projection places the total value of conventional global fossil fuel subsidies between $775 billion and more than $1 trillion in 2012, depending on which supports are included in the calculation.1 In contrast, total subsidies for renewable energy stood at $66 billion in 2010, although that was a 10 percent increase from the previous year. Two thirds of these subsidies went to renewable electricity resources and the remaining third to biofuels.

Although the total subsidies for renewable energy are significantly lower than those for fossil fuels, they are higher per kilowatt-hour if externalities are not included in the calculations. Estimates based on 2009 energy production numbers placed renewable energy subsidies between 1.7¢ and 15¢ per kilowatt-hour while subsidies for fossil fuels were estimated at around 0.1–0.7¢ per kWh. Unit subsidy costs for renewables are expected to decrease as technologies become more efficient and the prices…

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