Sunday, March 15, 2015

Subsidies - Shared


Question: What would happen if solar and wind energy collecting devices got the same tax breaks as the fossil fuel industry?
"The impact of fossil fuels on renewable energy development, described in this section, may be broken down in to four key aspects, though there is some overlap between these. First, fossil-fuel subsidies impair the relative cost competitiveness of renewable energy by reducing the cost of fossil-fuel-based alternatives. Second, since many electricity systems are based on fossil-fuel generation, fossil-fuel subsidies often act to lock in and reinforce incumbent generation technologies, thereby imposing entry barriers for new entrants attempting to develop renewable technologies. Third, a shift to an electricity system including a greater role for renewable energy requires investment, which is undermined by fossil-fuel subsidies that appear to enhance the attractiveness of fossil-fuel technologies compared to renewable energy.
Finally, the underpricing of environmental and social externalities means that prices do not reflect the true cost of energy."
"The Impact of Fossil-Fuel Subsidies on Renewable Electricity Generation"                December 2014 Richard Bridle and Lucy Kitson
http://www.iisd.org/sites/default/files/publications/impact-fossil-fuel-subsidies-renewable-electricity-generation.pdf
I think the last key aspect needs more clarity on costs and price because the underwriting of solar and wind energy collecting devices by fossil fuels might add more costs to the devices if the environmental and social externalities were factored in. This added cost would need to be added to the price of the devices.  Just as important, they would be factored into the making of the devices if a total system assessment was taken. This would mean at least challenging the green description and probably the sustainable and renewable description.

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