A new study by the USC Marshall School of Business points out that the fossil fuel industry worldwide gets a staggering 12 times more subsides than the renewable energy industry.

This artificially makes fossil fuels cheaper making it hard for renewable energy sources to compete, but it also means that even if you don’t use large amount of fossil fuels you are still paying for them. Subsidies are often in the form of tax breaks and other rebates paid for by governments. That money comes out of your schools, your roads, etc.

If you were a company that wanted to start up a new renewable energy venture, you would have to overcome these massive subsides to your competitor, you would also have to front the cost of starting a business (fossil fuel producers have been around for years and don’t have start up costs), you have to convince people to try your new energy (wind, solar, etc), AND you often have to build new infrastructure.

There is a real value in using renewable energy, it doesn’t contribute to pollution and global warming. But we don’t factor in the costs of pollution and global warming into the cost of fossil fuels (and it appears that we subsidize it to the hilt). One strategy might be to remove all subsidies from fossil fuels.

Fossil fuel companies are some of the most profitable companies in the history of the world, why do they need tax breaks and hand outs from the government? They also produce a product that is demonstrably bad for the planet, and the creatures living on it. Wouldn’t a more rational approach be to not only remove the subsidies, but to impose tariffs to cover the cost of the environmental and health damage caused by these companies?

Another approach is to subsidize renewable energy companies to the same amount as fossil fuel companies. This seems like a worse approach because it costs a lot of money. You would be giving money to two different sectors, instead of giving money to the sector you want to see be successful (the one that doesn’t cause global warming).

Unfortunately current policies seem to be favoring dirty fossil fuel energy over renewable. When you take the cost of the subsidies and add in the cost of climate change damage, health related damage, deaths from pollution, wars for fossil fuels, mine cave ins, coal ash spills, oil spills, loss of tax revenue, etc it quickly becomes an astronomical cost.

Removing the subsidies from the fossil fuel industry, and then imposing fines on them for the damage they cause would save the tax payer money, and create a revenue stream that you could use to subsidize renewable energy (if you choose to). It would also level the playing ground, fossil fuels would be priced to reflect the real cost/damage they do, and renewable energy would then be much more price competitive.

Consumers would very easily be able to see that renewable energy is a far better deal in both the short and long term then. The solution might not be to give the renewable energy sector more subsidies, but to give the fossil fuel sector none.

Finally the next time you hear someone talk about how renewable energy is too expensive, ask them if they understand the real cost of fossil fuels? It still costs them money, they just pay for it in their tax bill instead of at the pump.