Renewable Energy Subsidies & Fossil Fuel Phase-Out

The Energy Information Administration (EIA), a statistical and analytical arm of the U.S. Department of Energy, has released it latest report on subsidies to the energy sector, covering the 2007 fiscal year. Total energy-specific subsidies and support to all energy forms are estimated at US$ 16 billion for 2007: about double the amount estimated in 1999 by the EIA.

There are signs aplenty in rural Asia of the profligate use of energy - electrical and fossil fuel - but little evidence that such use is being assessed against its true costs. This is because supplying cheap power (and in some cases free power) is a valuable political lever. In rural Asia, the value of such 'support' can be judged by the scale of popular opposition to its withdrawal.

January saw the debate over biofuel policies in the European Union intensify, including over how (and if) biofuels should be supported by governments.

A U.S. consulting firm has released a study that says renewable power and biofuels could supply up to 16 percent of global electric and transport needs, but that government policies such as mandates and subsidies will need to be key drivers.

Austria's conservative Austrian People's Party (AVO) has agreed to a compromise on subsidies to renewable forms of energy which would increase those subsidies from 17 to 21 million Euros a year, according to the Austrian daily Die Presse. The subsidies are being touted as necessary for the country to meet its target of 10% power consumption through renewables by the year 2010.

The U.S. Congress is in the process of enacting its new federal legislation in areas of agricultural and energy policy. In July, the House Agriculture Committee passed its version of the farm bill, while the Senate will tackle its version in September. Meanwhile, both Houses have passed quite different versions of the energy bill. These bills will also need a stamp of approval from the Executive Branch in the fall. Subsidy Watch has asked three experts to highlight what they consider the good and bad in these bills.

A new study released by the Swiss Energy Ministry (BFE by its initials in German) has concluded that subsidies will be needed to encourage increased production of renewable energy in Switzerland. The study, released 3 July, looked at financing for renewable energy in eight other European countries.