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Massive Subsidies Keep Fossil Fuels Winning

By Sara Murphy – Nov 17, 2013 at 8:00AM

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Think renewables get propped up by government? You should try fossil fuels on for size.

People who bellow that renewable energy sources can't survive without government support need to take a long, hard look at the generous subsidy frameworks that have long buttressed traditional fossil fuels. While renewables certainly benefit some financial assistance, fossil fuels get five times more in subsidies from global governments, says Fool contributor Sara Murphy in the following video.

On the dole
While there is plenty of debate out there about these subsidy numbers, the figures Sara cites come from the International Energy Agency, hardly a slouch in the solid-research department. The IEA this week published its annual World Energy Outlook, and one of the main takeaways for Sara was that fossil fuels continue to be the leviathan of the world's energy landscape, in no small part because of the tremendous assistance they receive from taxpayers across the globe.

While IEA expects renewable energy generation to double by 2035 under existing policies, these clean-burning, alternative fuels are not closing the gap on oil or coal.

Fossil fuels make up 82% of the world's current energy mix -- exactly as much as they did 25 years ago. The IEA estimates that fossil fuels' share will drop only slightly to 75% by 2035.

Subsidy regimes certainly play a role. Around the world, governments handed out $544 billion of fossil-fuel consumption subsidies in 2012. This has been true for ages. ExxonMobil (XOM -0.85%), for instance, has enjoyed tremendous taxpayer funding for its overseas pipeline projects, and the company is hardly unique in this regard. While IEA expects subsidies for renewables to double by 2035, that still brings support for alternative fuels nowhere close to their carbon-intensive forebears.

It should shock no one, then, that carbon dioxide emissions from energy are expected to continue their upward trajectory. The IEA predicts that absent reform, the world is well on its way to dangerous levels of warming. Watch the video to hear more about these developments.

Sara Murphy has no position in any stocks mentioned. Although she is a taxpayer, so maybe she should. In any case, you can follow her on Twitter: @SMurphSmiles. The Motley Fool has no position in any of the stocks mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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