Renewable energy production like Windspire vertical wind turbines does not receive equitable subsidies. (photo: Corvar152 via Flickr)

NewScientist tackled the International Energy Agency’s annual World Energy Outlook report which was released today. NS environmental reporter Michael Marshall pointed out that enormous subsidies have been paid out for fossil fuels by governments around the world, to the tune of $312 billion in 2009.

Of course this figure doesn’t include other externalities required to support fossil fuel exploration and production, specifically petroleum. The figure would be much, much higher if the cost of military and security resources protecting petroleum was included in the total subsidies. We’re talking about an astronomical sum of money to support our global addiction to fossil fuels.

However, the IEA report

suggests that governments should agree to eliminate all fossil fuel subsidies by 2020. This, it says, is a “triple-win solution”, because it would improve energy security, decrease greenhouse gas emissions and cut government costs.

Getting rid of the subsidies would cut global energy demand by 5 per cent, and carbon emissions by 5.8 per cent, by 2020, the report says. Clearly, that’s only a fraction of the emissions cuts required to stave off dangerous climate change, but it’s a significant fraction – and an easy cut to make, says the IEA.

The reduction in energy demand would come from realization of the true price of fossil fuels. How much gasoline would you buy if the real price, something between $5 and $15 per gallon, were charged at the pump? How rapidly would our choices in transportation change? How much would automobile manufacturing change?

The other problem highlighted in the IEA’s report is the inequity in subsidies for renewable energy compared to fossil fuels. For every five dollars in subsidies that fossil fuels receive, only one dollar in subsidies is offered to renewable energy development and production.

Clearly the entire world needs to do some resetting of its energy investment priorities and soon, if we are to make any headway on carbon dioxide emissions and the rate of climate change stemming from fossil fuel consumption.

What do you think? How should we handle the disparity in subsidies between fossil fuel and renewable energy sources?