The hidden toll that subsidies for electricity, fossil fuels, and transport have on social welfare, economic growth and technological innovation needs to be exposed through better research says a new paper in Ecological Economics by Benjamin K Sovacool.
Energy subsidies, which have mostly supported fossil fuels and nuclear power over the previous half century, have historically kept energy prices artificially low, compared to market rates. But they come at a high cost to governments and taxpayers. The Indian government, for example, spends as much as it does on fuel subsidies for kerosene and liquid propane, used to light rural houses, as it does on education. India subsidises fossil energy consumption by $21 billion every year, which works out at $16 per person. Given that 500 million of its people live on less than $2 per day, this is a surprisingly large amount.