The Poverty of Renewables

According to UN Secretary-General Ban Ki-moon, “Climate change harms the poor first and worst,” because the poor are the most vulnerable and have the least resources with which to adapt. But, because current policies to address global warming make energy much more costly, they harm the world’s poor much more.

MIAMI – According to UN Secretary-General Ban Ki-moon, “Climate change harms the poor first and worst.” This is true, because the poor are the most vulnerable and have the least resources with which to adapt. But we often forget that current policies to address global warming make energy much more costly, and that this harms the world’s poor much more.

Solar and wind power was subsidized by $60 billion in 2012. This means that the world spent $60 billion more on energy than was needed. And, because the total climate benefit was a paltry $1.4 billion, the subsidies essentially wasted $58.6 billion. Biofuels were subsidized by another $19 billion, with essentially no climate benefit. All of that money could have been used to improve health care, hire more teachers, build better roads, or lower taxes.

Forcing everyone to buy more expensive, less reliable energy pushes up costs throughout the economy, leaving less for other public goods. The average of macroeconomic models indicates that the total cost of the EU’s climate policy will be €209 billion ($280 billion) per year from 2020 until the end of the century.

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