The global fossil industry received a “staggering” US$3.1 trillion in direct and indirect subsidies in 2017, 20 times more than renewable energy, the International Renewable Energy Agency (IRENA) revealed in an analysis released last week.
The 18-month data exercise was an attempt “to accurately quantify enduring subsidies for polluting energy sources that have long been condemned as a scandal by climate campaigners,” Recharge News reports.
Direct fossil subsidies totalled $447 billion, nearly three times the $166 billion available to renewables through mechanisms like feed-in tariffs, said Michael Taylor, IRENA’s head of renewable cost status and outlook. But he added that those direct payments were “dwarfed” by “unpriced externalities”, the costs of fossil fuel combustion that are not borne by producers.
“The largest of these by far was the cost of air pollution at $2.3 trillion,” Recharge says.
IRENA sees “rebalancing” and reducing existing direct subsidies through 2050, so that renewables receive $209 billion and fossils still get $139 billion, mostly to support carbon capture and storage initiatives. That prospect shows that, “contrary to popular wisdom, the energy transition can be achieved without ever-ballooning subsidies,” Taylor said.
At the same time, he told Recharge new subsidies could emerge to support the emergence of hydrogen technologies. “I think it’s very useful that a lot of countries are looking at hydrogen at the same time,” he said, adding that a lack of coordination had impeded solar photovoltaics and onshore wind from becoming cost-competitive as quickly as they could have.
In a forum last week hosted by Spanish news outlet el Economista, IRENA Director General Francesco La Camera pointed to the surge of new energy investment that will be needed to drive the transition off carbon.
“By 2030, more than half of the world’s energy generation may come from renewables, five times more than what is currently planned. But this increase implies that substantial spending will be necessary,” he said. “From now until 2030, total investment in energy transformation will approach $50 trillion,” though that effort will produce a GDP increase of about $16 trillion over the same time span.