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Extreme Energy - davis.k12.ut.us
Extreme Energy - davis.k12.ut.us

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Sci_ch9_Lesson_3_notes

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Name: Date: Pod: Name: Date: Pod: Name: Date: Pod: Do Now

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Energy subsidies

Energy subsidies are measures that keep prices for consumers below market levels or for producers above market levels, or reduce costs for consumers and producers. Energy subsidies may be direct cash transfers to producers, consumers, or related bodies, as well as indirect support mechanisms, such as tax exemptions and rebates, price controls, trade restrictions, and limits on market access. They may also include energy conservation subsidies. The development of today's major modern energy industries have all relied on substantial subsidy support.Fossil fuel subsidies reached $90 billion in the OECD and over $500 billion globally in 2011. Renewable energy subsidies reached $88 billion in 2011. If we also take into account the price difference offered to developing countries of the fossil fuels (in developing countries, fossil fuels are sold below the regular price), then fossil fuels are subsidised with an additional 550 billion dollars per year. According to Fatih Birol, Chief Economist at the International Energy Agency without a phasing out of fossil fuel subsidies, we will not reach our climate targets. The IMF estimates that for 2015 the economic cost of energy subsidies worldwide will amount to US$5.3 trillion, or US$10 million every minute. This is not to be confused with actual amount of subsidies which are projected to amount to around US$333 billion for 2015. This would be a decrease from 2014 which reflects the slump in oil prices rather than policy changes.
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