I am not an expert in the field, but my understanding is that the us is at, or at least very close to, grid parity for renewable energy sources like solar and wind power. From what I can tell it also appears as if the government is subsidizing coal and natural gas production more then they are renewable resources.

As such I'm curious what would happen if all energy subsidies, for both renewable and non-renewable sources, went away today. Would the net result be to push renewable energy sources closer to grid parity, as they now compete on more equal footing instead of having coal getting strong subsidies? In theory that would mean decrease government spending while simultaneously moving a step closer towards greener energy to make both political parties happy. I'm sure I'm over simplifying a complex topic, but I'm trying to determine what issues I'm glossing over that may complicate such a policy.'

I'm aware that grid parity doesn't mean we immediately switch to green energy, as the existing non-renewable infrastructure means that for now non-renewable energy sources would be cheaper to produce; but encouraging grid parity would help ensure that in the future we would see production of more green energy sources and thus move us towards a greener future, so changes to make green energy more competitive would still prove beneficial in the long run.

I know that such a policy change is unlikely to happen given the powerful lobbying the goal/gas companies have, and there would be real concern from coal miners about loosing jobs (though that begs the question of rather increasing green energy sources at the expense of coal/natural gas is a net increase or decrease of jobs in the energy sector?). However, other then those significant factors are there other reasons the government couldn't phase out all subsidies to help encourage greener energy, or possible complications that would arise?

  • Can you clarify your premise that fossil is subsidized more than renewables? In what specific way do they receive subsidies, besides the obviously pretty important part where they emit entirely way too much? This has been brought up before and one person claimed that the fossil folk get generic business tax breaks, like everyone, but not much else. Did you have something specific in mind in your claim? Commented Feb 19, 2020 at 3:14
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    Perhaps you could also show supporting evidence for the existence of actual subsidies? That is, something other than policies implemented for other reasons that incidentally happen to benefit fossil fuel industries.
    – jamesqf
    Commented Feb 19, 2020 at 4:24
  • You might be interested: If grid parity has already been reached, why is it so expensive to switch to renewable energy? politics.stackexchange.com/questions/49295/…
    – Allure
    Commented Feb 19, 2020 at 4:30
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    the US leases mineral extraction rights on the continental shelf to oil companies for about $3b/yr, yet in just the gulf alone, the extracted oil from those regions (1.7mb/day) is worth $31b/yr (1.7m*$50*365); supplying a company with product for 10% cost is big subsidy; imagine if they sold PVs for $0.05/watt...
    – dandavis
    Commented Feb 19, 2020 at 23:20
  • @dandavis: Now how is that a subsidy? All they're selling is the right to drill wells. The oil companies have to pay the cost of drilling, accept the risk that any well will be a "dry hole", pay the cost of pumping out the oil and shipping it to refineries... You could equally well argue that the $3 billion/yr is a tax imposed by the government.
    – jamesqf
    Commented Feb 20, 2020 at 4:31

1 Answer 1


Privatized profits, socialized risks

Almost all serious scientists agree that we cannot emit greenhouse gases at the current rate. A removal of subsidies would do nothing to limit the ability of coal power plants to emit greenhouse gas. An emissions trading scheme is a kind of reverse subsidy, and state intervention in the market.

What is a subsidy?

Assume that nuclear power plants were supposed to buy insurance for all possible damages and also the cost of nuclear waste disposal at fair market rates. They'd be gone in an instant.

Standby power plants

Opponents of renewable energy point out that one wants electrical power even at nights when the wind does not blow. No solar, no wind, which leaves what? Hydro? Biogas?

The more thoughtful comment is that power grids need quick-acting power plants to buffer dips and peaks in demand. Power plants which can be fired up and shut down in minutes. As I understand it, gas-burning power plants are very good for that, better than either solar and wind or nuclear power. But since they do emit greenhouse gas, one would want to shut them down again as soon as possible.

Wouldn't this kind of power plant need to be subsidized to stay on standby and not run most of the time?

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    @user1721135, big batteries are expensive and bad for the environment. They could also use hydroelectric pump storage (pump water up the mountain when you have energy to spare, run turbines on the way back down) or generate and store hydrogen by electrolysis. Still, as long as you have a mix of renewables and fossil fuel, it is smart to use any available renewable and to use the fossil fuel to buffer peaks in demand.
    – o.m.
    Commented Feb 19, 2020 at 15:59
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    Wind blows at night, but I concede your point that most renewables are not necessarily on-demand. However, the subsidies can be better tuned to support the small amount of capacity needed to accommodate temporal deficiencies in renewable power without encouraging competition with renewable power. Indeed, rather than subsidize non-renewable energy, it might be more effective to mandate that renewable sources be able to provide power 24/7, thus putting the burden on them how to best manage that - batteries or a shared non-clean energy plant or something else.
    – cpcodes
    Commented Feb 19, 2020 at 17:30
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    Also, if anyone was required to insure against all possible damages, nothing would be done. That's rarely how insurance works. When I insure my car, I only insure up to an amount that I deem likely. It's always possible that I could drive my car into a crowd of people and incur responsibility for millions or billions of $ of medical and property damage. But I certainly don't pay for a billion dollar insurance policy, because such an incident is possible, but far from probable. Energy industry insurance is the same way - tanker spills, deep water leaks, etc., are only reasonably insured.
    – cpcodes
    Commented Feb 19, 2020 at 17:46
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    WRT nuclear power, it is only a subsidy if it is treated differently. Fossil fuel power plants are not required to be insured against all possible damages, or even pay for those it actually causes, nor are other forms of generation. (AFAIK, at least.)
    – jamesqf
    Commented Feb 19, 2020 at 18:38
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    Your answer carries a false statement about nuclear. Nuclear in Canada already carries its own insurance.
    – puppetsock
    Commented Feb 20, 2020 at 15:06

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