NCPA - National Center for Policy Analysis

Global Warming Policies Hurt the Poor

March 24, 2014

Global warming policies hurt the poor much more than global warming itself, says Bjørn Lomborg, director of the Copenhagen Consensus Center.

Everyone is paying more for energy (and less reliable energy, at that) because of green energy subsidies, which only push up costs throughout the rest of the economy.

  • In 2012, solar and wind power was subsidized to the tune of $60 billion, but the total benefit to the climate was only $1.4 billion, meaning that $58.6 billion was completely wasted.
  • An additional $19 billion was spent subsidizing biofuels, with no climate benefit whatsoever.
  • From 2020 until the end of the 21st century, the cost of the European Union's climate policy will be $280 billion per year.

Who ultimately feels the burden of these policies? The poor, as the rich can more easily pay for more expensive energy.

  • In the United Kingdom, electricity consumption has dropped by almost 10 percent since 2005, thanks to these policies. But energy prices have seen a staggering 50 percent increase because of renewables.
  • Additionally, that 10 percent drop in consumption is just an average. The poor have reduced their consumption by much more than 10 percent, whereas the rich have not reduced their consumption at all. It is now 63 percent more expensive to heat a home in the United Kingdom than it was five years ago. At the same time, wages have declined.
  • In Germany, the wealthy can install solar panels on their homes and receive generous government subsidies. It is the poor who cannot receive subsidies (because they cannot afford to install solar panels, or may not even own homes), yet they are forced to pay the higher electricity costs.
  • In developing nations, where 3 billion people cannot access cheap energy, these green energy policies are even more destructive. 3.5 million people die each year from indoor air pollution, which is caused by burning twigs and dung inside homes to keep warm. Electricity from coal-fired power plants would solve this problem, but Western countries have opposed funding coal power projects, supporting renewables instead. Africa currently gets 50 percent of its energy from renewables.
  • China has lifted 680 million out of poverty by using coal power since 1971, when 40 percent of its energy came from renewables. Today, China only gets 0.23 percent of its energy from wind and solar power.

The difference between traditional energy and renewables is stark. Investing in renewables can bring one person out of poverty for a price of $500. But by using gas electricity, more than four people could be lifted from poverty for that same amount.

Source: Bjørn Lomborg, "The Poverty of Renewables," Project Syndicate, March 17, 2014.


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