Renewable Energy needs more encouragement than fossil fuels

Posted on February 1, 2011 by

Getting energy from the renewable energy resources is common suggestion now. To secure world’s energy demand and subsequently increasing energy generation requires two things to be done either independently or simultaneously. The first option is to use present resources more efficiently and second one is to start increasing the share of energy generation based on renewable energy. Both these options help in maintaining the equilibrium but requires rapid pace of implementation. Depleting natural resources, mainly fossil fuels have hit a alarming proportion in the 21st century.  Despite recent advances in renewable energy technologies and their deployment, non-renewable sources still remain the dominant mode of energy generation worldwide.

Source 1973

Energy Mix (%)


Energy Mix (%)

Oil 46.1% 33.2%
Coal/Peat 24.5% 27%
Gas 16% 21.1%
Nuclear 0.9% 5.8%
Combustible renewables and waste 10.6% 10.0%
Hydro 1.8% 2.2%
Others including solar, wind, geothermal etc 0.1% 0.7%

(Source: International Energy Agency)

As can be seen from the table above, renewable sources such as Hydro and Nuclear have come to occupy more share of total energy generation, but added together, they still do not contribute more than 10% of Energy mix of the world.

Increasing pressure for energy security is forcing Governments across the world to boost the renewable energy and energy efficiency sectors. Monetary incentive for renewable energy deployment is the standard approach of the governments globally to promote investment in RE. The governments at the same time, have not been able to reduce the subsidies from fossil fuels, partially due to political compulsions. This has ensured that the fossil fuels are still more subsidised then comparable renewable energy sources. The governments behave as if they do not have any option but to continue to bear the burden of subsidy. Right from the start of industrial revolution in Europe, fossil fuels have become essentially the first or preferred source of energy, putting renewable energy sources as a futuristic second option.  It is high time that the resource scarcities of fossil fuels is realized and RE sources are brought in the main stream.

RE, by its very nature requires subsidy/incentive due to high generation or harvesting cost. Given this fact, the subsidies for RE should be higher than the ones for fossil fuels. But in fact, the picture is just opposite – fossil fuels are still more subsidised than RE sources.

A mechanism for reducing subsidies on fossil fuels and increasing the money available for subsidizing RE is carbon tax. This has been used by countries such as Finland, Denmark, Australia along with many others to impose carbon tax on the fossil fuel based energy generation. Finland was the first country who implemented carbon tax on carbon intensive fuels. On 2010, India introduced carbon tax of Rs. 50/metric tonne of coal both produced and imported into India.

Carbon tax (or also reducing subsidies, which India is undertaking slowly) allows the Government to slowly increase the cost of use of fossil fuels. This also raises funds for climate change adaptations and mitigation activities. Carbon tax value is based on the calorific value and GHG emission potential of the fuel. Higher calorific value based fuel have higher value of tax and lower calorific value based fuel can enjoy low tax value.

There is no government across the globe which is actively discouraging RE investments but it is the active encouragement at a rate more than fossil fuels that will make RE the mainstream option in near future.