Article Series: Fossil Fuel Subsidies

Impact of Fossil Fuel Subsidies on Renewable Energy

In 2013, the International Energy Agency (IEA) estimates that consumer subsidies for fossil fuels amounted to US$548 billion, while subsidies for renewable energy amounted to US$121 billion. However, a simple comparison of subsidy expenditure does not reveal the extent to which renewable energy is disadvantaged. To understand the exact impact of this distorted playing field, it is necessary to explore how different kinds of subsidy can affect investment decisions in different ways in specific energy sectors.

The Impact of Fossil-Fuel Subsidies on Renewable Electricity Generation

In this paper the GSI examines how fossil fuel subsidies can affect the deployment of renewable energy from an economic and a political economy perspective. The paper discusses how fossil fuel subsidies affect the cost-competitiveness of renewable electricity generation, the incumbent advantages that subsidies have created for fossil-fuelled generators and the ways in which fossil fuel subsidies influence decisions to invest in renewable electricity.