The subsidity Illusion

Governments around the world are shifting gears on their sustainability commitments. Goals that once seemed set in stone are being rewritten, delayed, or abandoned altogether. The narrative is changing, from urgent action to cautious reconsideration. And with that shift, a dangerous reality is emerging: the vast majority of low-emission projects are not economically viable without subsidies.

The Harsh Truth: The Market Won’t Save Us

For years, we’ve been told that green technology and low-carbon solutions will eventually be able to stand on their own. That the free market, given enough time, will drive the transition to sustainability. But today, that assumption is crumbling. From renewable energy to carbon capture, from electric transportation to sustainable fuels, these industries are still deeply dependent on government support. Not because they’re failures, but because the economic playing field has never been level.

Take Sustainable Aviation Fuel (SAF) as an example. As of January 2025, airports in the EU must deliver at least 2% SAF. In response, the International Air Transport Association (IATA) complains that competition among fuel suppliers is limited, with some suppliers dictating pricing and contract terms. In other words, the market isn’t working as expected.

But here’s the irony: air travel itself thrives on subsidies. When external costs, like the social cost of carbon, are factored in, aviation imposes at least €210 billion in climate damages annually. Yet, IATA warns that a €25 per tonne surcharge on SAF could add up to an extra €1 billion in fuel costs. The framing is clear: the burden of sustainability is an unfair tax, while the true cost of pollution is conveniently ignored.

The Bigger Picture: A System on Life Support

SAF is just one example. Look at renewable energy projects, electric vehicle infrastructure, hydrogen production, and green building materials. These innovations are not naturally profitable, at least not yet. Without sustained government investment, they simply won’t scale in time.

Governments pulling back on sustainability measures isn’t just a shift in rhetoric. It’s a death sentence for countless projects still in their infancy. Private companies are not lining up to take over where public investment stops. In many cases, the transition to a low-carbon economy is a public good, one that requires long-term financial support, something the private sector alone cannot and will not provide.

The Breaking Point: A Choice Between Progress and Regression

If governments roll back their sustainability commitments now, the consequences will be far-reaching.

  • Entire industries will shrink or disappear before they reach commercial viability.

  • Emissions will continue rising as the fossil fuel economy solidifies its dominance.

  • The economic playing field will remain tilted in favor of polluting industries that still receive enormous subsidies.

Some argue that subsidies for green technology are a sign of failure. The reality is the opposite: they are a bridge to the future. We cannot expect these industries to compete on equal footing when fossil fuels and legacy technologies still benefit from decades of systemic advantages.

What Needs to Happen
(In my opinion)

  1. Governments must double down on their commitments.

    • If subsidies for sustainability are removed, the entire transition collapses.

  2. Stop pretending the free market will fix this.

    • Clean technology needs public investment. The private sector won’t step in fast enough.

  3. Reframe the narrative.

    • Investing in sustainability isn’t a cost, it’s an insurance policy against economic and environmental collapse.

This is the moment of reckoning. Either we acknowledge that a low-emission economy requires continuous public investment, or we let political short-termism erase decades of progress.

The choice is ours.

Håvard Utheim

Håvard Utheim is a strategic advisor, concept developer, with a focus on innovation, sustainability, and transparent communication in the travel industry and beyond. He is passionate about challenging the status quo and driving positive change

https://thetransparencycompany.no
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