You may have heard about the great debate whether solar should have to carry its own economic weight. Fossil fuels are much cheaper and taxpayers should not have to subsidize solar energy, goes the argument. But, according to a recent report by the International Energy Agency, governments throughout the world pour money into fossil fuel subsidies.
The BBC reports that the major culprits are Iran, Saudi Arabia, Russia, India and China-which together cough up almost $200 billion in subsidies to support fossil fuels. Thestreet.com reports that total subsidies reached $312 billion in 2010 as opposed to $57 billion for renewable energy. The IEA concludes that removing the subsidies for fossil fuels would cut CO2 emissions by 5.8%.
The BBC quotes the relevant portion of the report on how this affects solar energy and other renewable energy: "Subsidies that artificially lower energy prices encourage wasteful consumption and undermine the competitiveness of renewable and more energy-efficient technologies." In other words, not only do fossil fuels get huge subsidies, contrary to popular belief, but also these subsidies are harmful to the growth of energy.
The comparative costs between fossil and renewable energy does not even take into account some of the other costs to the environment and human health. And the subsidies that the IEA counted doesn't include direct subsidies to fossil fuel companies. As Thestreet points out, "The IEA data doesn't directly address handouts to oil, gas and coal companies, but it's another way of looking at the low prices for fossil fuel sources of energy as opposed to ‘high-priced' renewable energy."
Thestreet also points out that renewable energy is gaining mainstream acceptance and the IEA "believes the single-most important driver for the clean energy sector will be the elimination of fossil fuel consumption subsidies. ‘Getting the prices right, by phasing out fossil-fuel subsidies, is the single most effective measure to cut energy demand,' the IEA says in its new report. In the U.S. market, for example, recent wind projects have stalled as a result of rate payer agencies crying foul at the higher prices being passed along to the energy consumer by way of renewable energy project development."
A recent report by the Boston Consulting Group also supports the view that renewable energy with the proper support and investment will gain speed. According to domesticfuel.com, the Boston Consulting Group recently released a report predicting that seven alternative energy technologies, including solar photovoltaic (PV), could have a major impact on our energy profile because they will become cost competitive within the next five to ten years.