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Wind power sees lower public subsidies than fossil fuel

Public subsidies for the development of wind power in the UK are dwarfed by the tax breaks enjoyed by fossil fuels, according to The Guardian.

Financial support for fledgling renewable energy industries has increasingly come under attack in recent months, but the new data shows that the older industries benefit to a far greater extent, the Guardian reports.

Gas, oil and coal prices were subsidised by £3.63bn in 2010, according to data from the Organisation for Economic Co-operation and Development, whereas offshore and onshore wind received £0.7bn in the year from April 2010.

All renewables in the UK benefited from £1.4bn over the same period, according to data from the Department of Energy and Climate Change (Decc).

The government argues that investing in wind, marine, solar and other renewable energy sources will help meet the nation’s legally binding cuts in greenhouse gas emissions, as well as providing economic opportunities for the UK and a more diversified and less volatile energy supply.

It points to rising global gas prices as the major reason for the sharp rise in home energy bills in recent years.

Opponents argue investing in renewables is unaffordable in this economic climate.

The Treasury was unable to provide figures for the tax relief and other subsidies enjoyed by fossil fuels, but the OECD data is described as “very robust” by subsidies expert Peter Wooders, who worked for British Gas and is now at the International Institute for Sustainability Development.

Almost 90 per cent of the fossil fuel subsidy comes from the reduced rate of VAT paid by households. Mr Wooders told the Guardian if such price cuts were intended to reduce energy costs for poorer households, they were a “very blunt tool” with many better-off people also gaining.

“Just about any other way than fossil fuel cost subsidies will be more effective,” Mr Wooders said.