NCPA - National Center for Policy Analysis

Green Energy Is the Real Subsidy Hog

November 26, 2013

Renewables receive three times as much money per energy unit as fossil fuels, says Bjorn Lomborg, director of the Copenhagen Consensus Center.

For 20 years the world has tried subsidizing green technology instead of focusing on making it more efficient.

  • Today Spain spends about 1 percent of gross domestic product throwing money at green energy such as solar and wind power.
  • The $11 billion a year is more than Spain spends on higher education.
  • At the end of the century, with current commitments, these Spanish efforts will have delayed the impact of global warming by roughly 61 hours, according to the estimates of Yale University's well-regarded Dynamic Integrated Climate-Economy model.

A myth about fossil-fuel subsidies worth debunking is that the United States subsidizes fossil fuels more heavily than green energy. Not so.

  • The U.S. Energy Information Administration estimated in 2010 that fossil-fuel subsidies amounted to $4 billion a year.
  • Renewable sources received more than triple that figure, roughly $14 billion.

Actual spending skews even more toward green energy than it seems. Since wind turbines and other renewable sources produce much less energy than fossil fuels, the United States is paying more for less.

  • Coal-powered electricity is subsidized at about 5 percent of one cent for every kilowatt-hour (kwh) produced, while wind power gets about a nickel per kwh.
  • For solar power, it costs the taxpayer 77 cents per kwh.

Inaccurate information of this sort is needlessly misinforming public policy. Subsidizing first generation, inefficient green energy might make well-off people feel good about themselves, but it won't transform the energy market.

Source: Bjorn Lomborg, "Green Energy Is the Real Subsidy Hog," Wall Street Journal, November 11, 2013.


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