Subsidies to nurture a green market
Subsidies are intended to accelerate the spread of green products into markets in two ways:
-Subsidies should promote green products to compete with hydrocarbon products and start selling.
-Scaling up production should help the unit cost of green products to drop by the effects of mass-market production.
In that sense, subsidies have been designed for cranking up the mass production of core green-products, such as for:
-Power plants: for high-tech solar panels and wind turbines;
-Private electric vehicles: for cheaper batteries;
-House solar panels: for efficient solar panels and installation costs.
Thanks to subsidies, green costs may keep going down in the coming years.
Subsidies should not create a hole in the budget of the Treasury as the green market is still marginal.
If subsidies may be phased out, it’s because economists recommend carbon pricing for outpricing gas and coal, as subsidies are deemed rigid, and bureaucratic. Moreover, subsidies can lower the price of a green product such as an electric water heater, but they won’t diminish overuse of hot water.
Also, household subsidies have unfairly benefited to green-conscious rich people, as the investment for solar panels or EV after is paid back after too many years to concern the poor. Finally, subsidies were not intended for poor people with uncertain future, renters, apartment owners with shared roof, or car owners without driveway to plug-in their car.