Environmental Engineering Reference
In-Depth Information
An aerial view of an artificial island on the Kashagan offshore oil field in the
Caspian sea, western Kazakhstan. The whole operation is being run by a
international consortium of different oil companies.
development and deployment by up to $80bn (over several years) in the
case of the US.
With the exception of the nuclear field, research and development
spending in energy, by both the public and private sector, compares poor-
ly with areas such as defence and pharmaceuticals. In terms of ongoing
production and consumption subsidies, the overall level of government
subsidy is hard to calculate, because it comes not only in cash payments,
loans, loan guarantees and tax credits but also in regulation with a finan-
cial impact. For instance, renewable energy producers benefit financially
if customers are required to buy a minimum quota of green electricity,
because this quota raises demand (and perhaps prices) for their green
electricity and lowers the risk (and perhaps the cost of capital) of investing
in it. But the cost of this regulatory support is borne by consumers rather
than taxpayers.
The really huge energy subsidies in today's world are still for fossil fuels.
These are estimated as being as high as $300bn a year, partly in tax breaks
in countries like the US for oil and gas production, but mainly in subsi-
dizing the cost of oil products for consumers in developing (often oil-
producing) countries. The 2006 Stern Review estimated that global direct
government (taxpayer-funded) support for low-carbon energy at $26bn a
year - but $16bn of this went to nuclear and $10bn to renewables. A study
