International Energy Agency

Fossil Fuel and Renewable Energy Subsidies on the Rise

Aug 212012

Alexander Ochs, Eric Anderson, and Reese Rogers | Aug 21, 2012

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.² Two thirds of these subsidies went to renewable electricity resources and the remaining third to biofuels.³

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.⁴ Unit subsidy costs for renewables are expected to decrease as technologies become more efficient and the prices of wholesale electricity and transport fuels rise.⁵

Globally negotiated efforts to reduce fossil fuel subsidies have been hindered by competing definitions of subsidies. Calculation methods also vary. The common price gap approach to calculating consumption subsidies uses the difference between the observed domestic prices of energy and the world market prices as an estimate of the impacts of a country’s policies on market prices.⁶ Some oil exporters, however, argue that production cost rather than market price should be used as the baseline.⁷ The difficulties in accurately measuring data are compounded by the lack of transparency among countries with regard to energy subsidies.⁸

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Worldwatch Report on Fossil-Fuel Subsidies: With No Gain, Less Societal Pain

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Aug 212012

By Cheryl Kaften, August 21, 2012

Total subsidies for renewable energy stood at $66 billion in 2010 – less than one-tenth of the government financing provided globally to the fossil fuel industry, according to new research from the Washington, DC-based Worldwatch Institute.
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“These so-called hidden costs, or externalities, are in fact very real costs to our societies
that are not picked up by the polluter and beneficiary of production but by all taxpayers,” said Alexander Ochs, director of Worldwatch’s Climate and Energy program and report co-author. “Local pollutants from the burning of fossil fuels kill thousands in the United States, alone, each year, and society makes them cheaper to continue down their destructive path.”

Shifting official support from fossil fuels to renewables, Ochs pointed out, is essential
for “decarbonizing” the global energy system.

Such a shift could help create a triple win for national economies by reducing global greenhouse gas emissions, generating long-term economic growth and reducing dependence on energy imports.
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“At the same time, a phase-out of fossil fuel subsidies would level the
playing field for renewables and allow us to reduce support for clean energy sources as well,” said Ochs. “After all, fossil fuels have benefited from massive governmental backing worldwide for hundreds of years.”

Progress toward a complete phase-out, however, has been minimal, according to Ochs. The
2009 pledge by the Group of 20 major economies to reduce “inefficient fossil fuel subsidies” has been left “vague and unfulfilled.” The lack of a definition has left countries to make their own determination if their subsidies are inefficient. As of August 2012, G20 countries had not taken any substantial action in response to the pledge: Six members opted out of reporting altogether (an increase from two in 2010), and no country has yet initiated a subsidy reform in response to the pledge.

[You can find the whole article HERE; further reporting HERE | HERE | HERE | HERE]

Energy Agency Looks to Natural Gas “Golden Age”

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May 302012

Wed, 30 May 2012 04:57 GMT, Source: Content Partner // Inter Press Service
By Carey L. Biron

WASHINGTON, May 30 (IPS) – If a series of “golden rules” can be followed, a new report from the International Energy Agency (IEA) suggests, global natural gas usage could grow by more than 50 percent by 2035.The report, released on Tuesday, came under sharp criticism from environmental groups for charting a route to a “golden age” in the extraction and use of natural gas.
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“We have an opportunity for natural gas to address the intermittency problems of renewable energy sources – it could become an ally of renewables,” Alexander Ochs, the director of the climate and energy programme at the Worldwatch Institute here in Washington, told IPS. Ochs also reviewed a draft of the IEA report.

Ochs says that there are a number of actors within the gas sector that will welcome the new IEA recommendations as a way of cutting down on the potential of a future environmental catastrophe that could lead to industry-damaging policy restrictions.

“The problem isn’t with this report. The problem is that if you don’t have good regulations in place, there go your opportunities,” he says. “And if you don’t have smart technologies in place, you lose this ally.”

Ochs does warn that the report underplays the potential use of renewables in the upcoming decades, however, by suggesting that green technologies other than hydro will only make up five percent of total energy demand in the next quarter century.

“I think the IEA could well be wrong in the numbers it’s using. Technically and economically, more than half of our electricity could come from renewables as early as 2030,” he says.

“But if gas sees a golden age and becomes cheap globally, it could get in the way of renewables. Then, rather than being an enabler, it becomes a deal breaker.”