Around the world, governments provide subsidies in the form or tax breaks, deple

Question

Around the world, governments provide subsidies in the form or tax breaks, depletion allowances, and direct funding and price supports to a variety of energy industries. Which of the following statements best represents reality.

Select one:

a. Fossil fuel subsidies are roughly 4.5 times those for renewable energy

b. Fossil fuel industries only receive direct payments from governments; there are no other forms of subsidy to fossil fuels.

c. On an energy quantity basis (i.e., $/kWh), renewable energy is subsidized twice as much as fossil fuels

d. Fossil fuel subsidies are roughly equivalent to those for renewable energy.

Explanation / Answer

Question: Which of the following statements best represents reality?

Answer: [A] Fossil fuel subsidies are roughly 4.5 times those for renewable energy.

Explanation: Subsidies by the definition itself, distort the market. Recent studies show that fossil fuel subsidies are almost 5 times those of renewable energy. However the gap between fossil fuels and renewable energy subsidies should narrow considerably and renewable energy sources should soon become competitive without the need for subsidies.

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