Fossil Fuel Subsidies: The True Cost of Energy
The Wichita Eagle recently published an interesting letter from Darrel Hart, president of the Wichita chapter the Citizens Climate Lobby. He pointed out that the House energy and water development bill , as it stands, provides subsidies of $95 million for wind, $632 million for fossil fuel and $1 billion for nuclear.
The letter goes on, “Clearly when it comes to winning subsidies, wind falls short. Legislators favoring carbon-based fuel spin the idea that if wind were economical, it could compete without government help. Well, what does that say about fossil fuel? It has been receiving billions in subsidies for decades.
Lopsided subsidies and favored treatment reveal the intent to pick winners and losers. A better solution is carbon fee and dividend legislation that cuts greenhouse gas emissions and corrects the artificially low price of fossil fuel created by tax dollars rigging the system against clean energy. Let markets reveal the true price of energy, and it will be the consumer who chooses the winner.”
Mr. Hart certainly has a good point, as carbon fuels are not paying their true cost. Besides the $632 million subsidies to fossil fuels, we are also providing an even greater subsidy by allowing them to release their waste products into the air without paying the external costs, i.e., the costs indirectly borne by society.
The external costs for fossil fuels include health and environmental damage from particulates, nitrogen oxides, sulfur oxides, chromium, mercury, arsenic, and carbon emissions. An EU funded research study, Externalities of Energys , found that including external costs would increase the cost of producing electricity from fossil fuels by 30% for natural gas to 90% for coal, if costs to the environment and to human health were included.
The carbon fee and dividend system Mr. Hart is recommending would put a fee on carbon at the source, which would require the fossil fuels to include their external costs.This would allow renewable energy sources to compete with fossil fuels on an even basis, and would greatly favor a switch to renewable energy.
(c) 2016 J.C. Moore