You are here: Home Knowledge Base Environment Towards a Global Electricity Market Solutions Governments must cut subsidies for fossil-fuel-based electricity generation, especially in emerging demand centers.
Symposium 2010

Solution for Towards a Global Electricity Market

The Challenge

In principle, solar and wind are more than enough to deliver any amount of energy that the world’s population might need. But these sources are usually best exploited in areas that are far from ce ...

In principle, solar and wind are more than enough to deliver any amount of energy that the world’s population might need. But these sources are usually best exploited in areas that are far from centers of demand. It is technologically challenging to transport electricity over large distances and even more to store it. As a consequence, electricity markets have tended to develop as regional markets.

Governments must cut subsidies for fossil-fuel-based electricity generation, especially in emerging demand centers.

Electricity markets have always been policy-driven, reflecting the strategic importance of the industry. To create an efficient market for competing technologies for electricity generation, a level playing field needs to be created by reducing subsidies generally. Externalities that degrade the environment and are not yet covered by the polluter pays principle need to be internalized via taxes or levies.

At present, a number of governments in both developed and developing countries subsidize electricity production from conventional fossil sources, especially coal. The incentives set by this policy counteract the goal of “decarbonizing” electricity production. These subsidies have to be cut, while the parallel support of renewable energy sources has to be continued to provide further investment incentives. This is especially true in emerging centers of demand, for example, Brazil, Russia, India and China.

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