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Subsidies for fossil fuels interfere with market development and climate protection

Myth

Renewables are highly subsidised. Their funding inhibits the free market.

Facts

Subsidies for the consumption of fossil energy are globally five times higher than for renewable energy. Including environmental damage, annual fossil subsidies are as high as 5,300 billion US dollars, according to the International Monetary Fund.

Cumulated subsidies in the German power market since 1970

  • Renewable energy
  • Nuclear power
  • Coal

Source: Wronski, Küchler (FÖS) on behalf of Greenpeace (2015)

Market conditions for conventional (mainly fossil and nuclear) energy resources and renewable energy are still unequal – generally to the disadvantage of renewable energy. The German electricity market – which is of specific relevance for the Austrian electricity market – provides a good example. Since 1970 cumulative subsidies for coal and nuclear energy have far exceeded the subsidies for renewable energy.

Globally the subsidies for the consumption of fossil energy amount to 548 billion US dollars, according to the IEA World Energy Outlook 2014. This is approximately five times as much as global subsidies for renewable energy (data from 2013). Including relevant aspects of climate change costs, the figure for fossil subsidies would amount to 5,300 billion US dollars, according to the International Monetary Fund (IMF). If only a fraction of these external costs were included in the market price, subsidies for renewable energy and energy efficiency measures could be reduced significantly or even become unnecessary.