Thursday, November 1, 2012

Are Fossil Fuel Subsidies Really the Problem for Renewables?

With current events dominating the news cycle, and particularly with the scandals in my own province's electricity sector, it's easy to miss the important ongoing works from the best economists in the energy sector.  
I'm a fan of Severin Borenstein, who recently posted a short blog entry explaining how fossil fuel subsidies aren't to blame in renewables failing to be perceived as competitively priced.

Energy Economics Exchange | Research that Informs Business and Public Policy:
I had a great time last Friday at Berkeley’s Annual Energy Symposium put on by the Berkeley Energy & Resources Collaborative.  Interesting people, interesting talks, and great to catch up with former students who are now working in all parts of the energy industry and government agencies.  I particularly enjoyed the session I got to chair on subsidies/support/incentives (everyone has a different word) for renewable energy.
But a number of times during the day I heard the common wisdom that the subsidies to the fossil fuel industries are a major barrier (some said THE major barrier) to the success of renewable energy.
If only it were that simple.  Unfortunately, the common wisdom isn’t correct.  Subsidies to fossil fuel companies are bad public policy and should be ended, but they have no meaningful impact on the competitive position of renewables.
Continue Reading at the Energy Institute at Haas (at Berkeley) and/or
Read Severin Borenstein's "The Private and Public Economics of Renewable Electricity Generation" paper, referenced in the blog post, at the American Economic Association. (.pdf here)

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