If your price doesn’t reflect the true cost of your product, then you are either going to go out of business, or you are going to have to foist the costs onto other people.
It’s clear that fossil fuel industries have been pursuing the latter strategy for quite some time now. But as awareness of the true costs of climate change and air pollution grows, this position becomes increasingly precarious.
The latest indication that things must change comes in the form of a European Union commissioned report—written about over at Recharge—which finds that onshore wind is the cheapest energy source of all, once externalities such as climate change impacts and health effects are taken into account.
With onshore wind costs coming in at about €105 ($133) per MWh, this figure compares favorably to gas (€164/MWh), nuclear (€133) and, most dramatically, coal (€162-233).
We should note that onshore wind also beats offshore wind (€186/MWh) and solar (€217) by a considerable margin. However, while the cost of coal and other fossil fuels is likely to go up as supplies get harder to reach and lawmakers get serious about putting a price on carbon, solar costs continue to drop dramatically and industry insiders estimate offshore wind costs could drop 40 percent in coming decades.
The report also highlights the difficulty in talking about relative subsidies that are going to fossil fuels versus renewables. While renewables received nearly twice as much money in terms of EU subsidies than fossil fuels in 2012, the report also noted that this disparity would be mostly negated if free carbon allowances to fossil fuels were taken into account.
According to Arthur Nelsen over at The Guardian, this ambiguity around how to measure subsidies was omitted from the EU’s press release on the report, a move which renewable advocates attributed to fossil fuel lobbying before publication. Frauke Thies, the policy director at the European Photovoltaic Industry Association told the paper that providing similar levels of subsidies to mature, polluting industries like coal could not be compared to subsidizing emerging technologies like solar, especially as the costs of solar are falling thanks to rapid technological advancement.