Wednesday, December 22, 2010

The Subsidy Gap

During the recent debate over government subsidies for the ethanol industry, proponents pointed out the discrepancy between the tax credits provided for renewable fuels and those provided for fossil fuels. According to the Environmental Law Institute, the US allotted $72 billion to fossil fuels from 2002–2008, while roughly $29 billion went to renewable energy over the same period.

The most recent World Energy Outlook from the International Energy Agency (IEA) shows that this is a worldwide trend.  According to the IEA,  $557 billion in subsidies went to the coal, oil and gas sectors from the 37 countries that represent 95% of global subsidisation of fossil fuels in 2008. The IEA says total government support for both electricity from renewables and biofuels was $57 billion in 2009, of which $20 billion was allocated to the latter.

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