Published on June 21st, 2011 | by Zachary Shahan3
The true story on power – fossil fuels and nuclear get huge subsidies, wind power not so much
(From our sister blog, Cleantechnica.)
The true story on subsidies:
1. Without subsidies – both overt and hidden – coal would be 2-3 times more expensive than wind.
2. Nuclear energy received $3.75 billion in subsidies each year from 1950-1990 as wind had received in total up to 2007, (even with all those subsidies, many of which continue today, nuclear can’t compete with other electricity sources)… and this is not taking into account considerable environmental and storage externalities;
3. Big oil got more money in tax breaks in 2011 alone ($4 billion) than the wind industry had received in total up to 2007 ($3.75 billion), and it is expected to get $77 billion more by 2021.
In other words, wind power subsidies are nothing compared to fossil fuel and nuclear industry subsidies. Without subsidies, electricity prices would be:
- Wind Power: 6-7 cents/kWh
- Nuclear Power: 11-20+ cents/kWh
- Coal Power: 9-32+ cents/kWh
And coal and nuclear costs are expected to rise considerably in coming years while wind costs fall.
Subsidies are a complicated topic, but I think it’s quite clear that wind power’s subsidies don’t compare to those given to the fossil fuel or nuclear industries.
Before we get into looking at subsidies for these energy sources, though, here’s a good summary of what energy subsidies can include from Wikipedia:
- Direct financial transfers – grants to producers; grants to consumers; low-interest or preferential loans to producers.
- Preferential tax treatments – rebates or exemption on royalties, duties, producer levies and tariffs; tax credit; accelerated depreciation allowances on energy supply equipment.
- Trade restrictions – quota, technical restrictions and trade embargoes.
- Energy-related services provided by government at less than full cost – direct investment in energy infrastructure; public research and development.
- Regulation of the energy sector – demand guarantees and mandated deployment rates; price controls; market-access restrictions; preferential planning consent and controls over access to resources.
- Failure to impose external costs – environmental externality costs; energy security risks and price volatility costs.
- Depletion Allowance – allows a deduction from gross income of up to ~27% for the depletion of exhaustible resources (oil, gas, minerals).
Quite a lot to cover. I could never cover all of these topics myself, and certainly not in a blog post, but I’m going to cover some of the big ones that have already been covered in greater detail by researchers.
Clearly, combining all subsidies and coming up with a standardized comparison is not a possibility here, but I think a general, overview comparison is helpful.
Additionally, what I include below is just on the U.S. (our main audience), but feel free to chime in on other countries if you have the info and feel free to contact me about writing up a full article on the matter.
I know we have tons of informed readers on here and am more than happy to incorporate info you have on this matter. Have started pasting in excellent comments that help fill gaps in the original text (with a note, of course). Give me more info! This is a ‘living article’.