17 November 2006

Dirty energy is subsidised too

This week's 'Economist' says (Green Dreams, 16 November) that '[a]lmost all clean energy ...relies on government subsidies to make it competitive with fossil fuels.' Recent figures are hard to find, but in 1997, the World Bank estimated annual fossil-fuel subsidies at US$ 48 billion in twenty of the largest developing countries and US$10 billion in the rich countries. (Source) Add in taxpayer-financed road construction and non-pricing of the negative environmental impacts of fossil fuel consumption, and it's clear that dirty energy too is heavily subsidised.

The same article also says that 'government subsidy is a wobbly foundation on which to build a business'. I wish that were so. But subsidies on such a large scale are self-entrenching: they fund the very interest groups that are so successful in lobbying against their withdrawal.

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