Fossil Fuel Subsidies Must End – Investor Group tells G20

by John Brian Shannon

In advance of the G20 Hamburg Summit in July 2017 investor groups that control $2.8 trillion in assets report that fossil fuel subsidies are counterproductive to G20 economies.

This latest call to remove fossil fuel subsidies came two years after the G20 Brisbane Summit where leaders announced their intention to, “reaffirm our commitment to rationalise and phase out inefficient fossil fuel subsidies that encourage wasteful consumption.”G20 Brisbane Leaders’ Communiqué (November 2014, Item #18)

The 16-member mega-investor group says G20 nations should set a clear timeline “for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020,” and mobilize “to accelerate green investment and reduce climate risk” in a report submitted to G20 foreign ministers preparing for the upcoming G20 Summit in Hamburg, Germany.

G20 fossil fuel subsidies total $452 billion a year according to the Overseas Development Institute and Oil Change International.

A Must Read: Empty promises:
G20 subsidies to oil, gas and coal production

Fossil Fuel Subsidies chart from Empty Promises - G20 subsidies to oil, gas and coal production. Image courtesy of ODI and Oil Change International
Annual G20 Fossil Fuel Subsidies (2015)

Meanwhile, annual subsidies for renewable energy in the G20 nations amounts to only 1/4 of the annual subsidy awarded to fossil fuels, which have received mega-billions of subsidy dollars every single year since 1918.

G20 Fossil Fuel Subsidies total 452 billion globally 2015, while Renewable Energy Subsidies total 121 billion globally 2015
Annual G20 Fossil Fuel Subsidies = $452 billion. Renewable Energy Subsidies = $121 billion (2015)

For the next few paragraphs, let’s look at the United States exclusively…

Fossil Fuel Subsidies - Energy subsidies from 1918-2009. Image courtesy of Nancy Pfund
1918-2009 Fossil Fuel Subsidies vs. Renewable Energy Subsidies in the U.S. The Historical Role of Federal Subsidies in Shaping America’s Energy Future: What Would Jefferson Do?

The average annual subsidy for Oil and Gas alone in the U.S. from 1918-2009 totals $4.86 billion.

Adding all those (oil and gas only) subsidy years together gets you the astonishing figure of $442,260,000,000. in total from 1918-2009 — that’s half a trillion dollars right there, folks.

Which doesn’t include wars to protect foreign oil exporters to the United States.

Nor does it include so-called ‘externalities’ which are the negative costs associated with the burning of oil and gas — such as the 200,000 annual premature deaths in the U.S. caused by airborne pollution, along with the other healthcare costs associated with air pollution, the environmental costs to farmers and to the aquatic life in our rivers and marine zones, and higher infrastructure (maintenance) costs.

Fossil Fuel Subsidies chart from DBL Investors What Would Jefferson Do. Total Capital Gains tax allowance coal subsidy 1.3 trillion 2000-2009
Fossil Fuel Subsidies chart from DBL Investors What Would Jefferson Do? which shows the capital gains allowance (a type of subsidy) enjoyed by the U.S. coal industry that totals $1.3 billion over the 2000-2009 timeframe.

This chart shows only the U.S. capital gains allowance! There are other coal subsidies, direct and indirect, at play in America — in addition to the externality costs of coal.

On the Externality Cost of Coal
Harvard Medicine

Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment. These costs are external to the coal industry and are thus often considered “externalities.”

We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public… over half a trillion dollars annually.

Many of these so-called externalities are, moreover, cumulative.

Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non-fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive. — Full Cost Accounting for the Life Cycle of Coal (Harvard Medicine)

Fossil Fuels = High Subsidy Costs, High Externality Costs and Lower Employment: When Compared to Renewable Energy

In addition to the direct and indirect subsidy costs of fossil fuels, there are the externality costs associated with carbon fuels, but almost more important, is the ‘lost opportunity cost’ of the carbon economy.

Over many decades in the U.S., conventional energy producers have tapered their labour costs to only a few persons per barrel of oil equivalent (BOE) while renewable energy hires more workers per BOE, which will result in a significant net gain for the U.S. economy.

Infographic: More Workers In Solar Than Fossil Fuel Power Generation | Statista You will find more statistics at Statista

Even with the paltry subsidy regimes presently in place for U.S. renewable energy in the year 2017 — once fossil fuel subsidy costs, the externality costs of fossil fuels, and the ‘missed opportunity’ costs (fewer jobs per BOE) are factored-in to the equation, renewable energy really begins to shine.

And best of all — by 2020 and without any subsidies (yes, really!) renewable energy will regularly beat highly subsidized conventional energy generators at their own game — by lowering electricity costs, by lowering healthcare and infrastructure costs, and by creating thousands of new, good-paying jobs.

Who was saying that renewable energy was a pipe-dream?

German Electricity Rates to Return to 2015 Levels by 2035

Written by Gerry Runte

German Electricity Rates held down by the impact of renewable energy

In 2015 Germany enacted a law whose short title is the Renewable Energy Sources Act of 2014 (Erneuerbare-Energien-Gesetz, or EEG 2014). EEG 2014 formalizes the fundamental shift in energy policy in Germany, the Energiewende, from a coal and nuclear system to one which requires the mix of electricity generation in Germany to reach 40% – 45% renewable sources by 2025 and 55% – 60% renewable sources by 2035.

This is to be encouraged by feed in tariffs that guarantee prices for new renewable entrants while requiring grid operators to receive and purchase electricity from these sources. As expected, EEG 2014 met with some criticism, primarily a claim that it would be too expensive.

Agora Energiewende, an energy policy group, commissioned the Oeko Institute e.V. to model the effects of EEG 2014 specifically on its likely impact on consumer electricity rates. The report concluded that:

  • The cost of electricity to consumers increases through to 2023 by between one and two cents per kwh, but then declines at a rate of between two and four cents/kwh until 2035. In 2035 rates are forecast to be the same as 2015 – 8 to 10 cents/kwh.
  • By 2035 60 percent of German electricity will come from renewable energy sources, from about 28% today.
  • As the real costs for renewable generation decline, the primary drivers to the incremental costs of the German Energy Plan become the actual demand levels and the extent to which energy intensive industries are subsidized.
  • Investments in renewable energy increase through 2023 and then decline, however renewable energy’s share of the generation mix continues to rise.

The assumed generation mix that was used in the reference case for this study is presented in the figure below:

EEG 2014 Reference Case - Generation Mix
EEG 2014 Reference Case – Generation Mix. Source: Oeko Institut 2015, EEG Model

This translates to the following projected share of the overall electricity source mix for renewables:

Renewables Share of Total Electricity Mix 2010 - 2035
Renewables Share of Total Electricity Mix 2010 – 2035. Source: Oeko Institut 2015, EEG Model

EEG 2014 provides for the following feed in tariffs, cents/kWh:

2015 2025 2035
Onshore Wind 8.9 7.2 5.3
Offshore Wind 19.4 14.3 10.9
Solar 11.0 10.3 8.4
Biomass 17.7 16.0 14.5
Geothermal 25.2 19.6 15.2
Hydro 11.7 11.2 10.6
Average Mix 14.8 10.6 8.1

Source: Agora Energiewende

Note that the system average feed in tariff declines over time. Nonetheless, these tariffs are significantly higher than wholesale power costs from conventional sources. Under EEG 2014, transmission system operators (TSOs) are permitted to charge electric utilities an “EEG Levy” to compensate them for paying these feed in tariffs and the utilities pass these charges on to consumers.

The EEG Levy assumed in this analysis, along with the base cost of electricity, is shown in the following graphic.

EEG Levy and Basic Bill costs in Cents per kWh
EEG Levy and Basic Bill costs in Cents per kWh. Source: Oeko Institut 2015, EEG Model

Based on the assumptions inherent in this analysis, the overall cost of electricity to the consumer rises a few cents in the early 2020’s and then declines to rates comparable to rates experienced in 2010.

The Big Loophole

Not all consumers are subject to the EEG Levy, however. Many electricity intensive industrial and commercial end users have received exemptions from the EEG Levy, a point of considerable controversy in the country. Some 58 TWh are totally exempted and 110 Twh are partially exempted.

Most notably residential customers pay full freight. Were there less exemptions, the EEG Levy would be much lower, as shown in the figure below. No exemptions for any customer basically cuts the levy in half.

Reference vs. althernative subsidy exemptions
Reference vs. althernative subsidy exemptions. Source: Oeko Institut 2015, EEG Model

The EEG Levy cannot be viewed in isolation, however. No doubt, applying the levy to all industries would have some concomitant effect on the economy and some exempting is necessary. That said, however, even with loopholes, maintaining a relatively flat trajectory on consumer rates while radically increasing the renewable energy mix in electricity generation to over 60% will be quite an achievement.

Gerry Runte is Managing Director of Worthington Sawtelle LLC a consulting and research firm which provides a full portfolio of business planning and strategy services to both new and existing participants in emerging energy markets.

Recent engagements include market assessments, policy analysis and development; business strategy; go-to-market planning and launch; product commercialization strategies; feasibility studies; and due diligence on behalf of investors.

Gerry has 38 years of experience in the energy industry, much of which at the executive level. He holds a B.S. and M.Eng in Nuclear Engineering from Pennsylvania State University. Contact gerry.runte@worthingtonsawtelle.com; tel: +1 (207) 361-7143; skype: gerry.runte

Ubitricity streetlamp plug-in charges German EV’s

by John Brian Shannon
Originally published at JohnBrianShannon.com

One major impediment to the adoption of electric vehicles is the high cost of public charging stations for EV’s, as the charging units are very expensive.

Ubitricity.de has come up with a novel solution whereby ordinary streetlamps could be fitted with an electric vehicle charging point for the reasonable cost of 500 to 800 euros per streetlight, which is certainly more doable than the 10,000 euros of your typical EV public charging station in Europe.

Ubitricity.de - Reuters screenshot
Ubitricity.de – Reuters screenshot

>> Click here to see the Reuters Ubitricity video. <<

Streetlamps in selected cities within Germany are now being fitted with a charging point allowing electric vehicle drivers to recharge their car battery.

Drivers prepay the cost of the electricity via Ubitricity to charge at these locations. Ostensibly, every streetlamp post and parking meter in Europe could be fitted with one of these charging points.

Not only do German drivers have the option of charging their EV’s at home, now they can now pick up a charge while they shop, have coffee with friends, or while they spend the day at their workplace.

“We are convinced there is room for this technology to be applied everywhere it’s needed, but we think that in most places there is a pressing need for investment in a charging infrastructure to allow the installation of charging points, not only here on lamp posts, but also in the workplace, at home and in underground carparks.

Governments are keen to cut the number of gas guzzling cars on the roads to reduce greenhouse gas emissions. Many are offering cash incentives to drivers to buy electric. But take-up has been slow partly due to the lack of charging stations.

There are lots of lamp posts which are already very well connected to the electricity network. Equipping a lamp post costs between 300 and 500 euros, depending on the circumstances at that location. When you consider the production price of our charging sockets, it is a long way from the 10,000 euros which must typically be invested in a charging station.” Founder of Ubitricity, Frank Pawlitsche

All you need is an Electric Vehicle, your prepaid Ubitricity account and Ubitricity connector cable, and you’re set

Ubitricity portable, streetlight-attachable EV charging unit
Ubitricity portable, streetlight-attachable EV charging unit

The great thing about the Ubitricity parking spots with their electric vehicle recharging connector is that they’re normal parking spots with a charging port added. Your mobile phone app displays the Ubitricity locations.

You can park there all day and return to a car that is fully energized and ready to go! No more petrol stations for you.

It’s a wonderful idea. Streetlamps and parking meters are everywhere it seems and combining a parking spot with an EV charging port is a stroke of genius.

Boy those Germans are smart. Gut gemacht! (Well done!)

Driving electric is a cornerstone of Germany’s Energiewende energy policy

Only when driving on renewables will EV users avoid greenhouse gas emissions — not just locally but on a global scale. Renewable energies and EVs are natural partners of a sustainable energy and transportation sector. — From the Ubitricity website

Not only Ubitricity — but also BMW is getting into the act

BMW i3
BMW i3 receiving a charge at a Ubitricity charge point. Image courtesy of ubitricity.de

Drivers of the much-loved BMW i3 electric vehicle will soon have their own BMW charging network and software to guide you to nearby charge points.

Eventually, BMW will build their network across Europe to facilitate EV travel across the continent.

BMW has a vision to offer buyers their choice of petrol powered, or as an option, electric powered, or hybrid/electric powered cars across all model lines.

BMW is also famous for installing wind turbines, solar panels, and biomass power plants at it’s German factories, and going completely off-grid!

It also has plans to get into the consumer electricity business throughout Europe.

You’ll soon be able to buy a BMW car and a BMW motorcycle for your driveway and BMW electricity for your home and office. All produced by renewable energy and only renewable energy.

A note about TESLA Model S drivers and their unique charging situation/opportunities

TESLA Model S at a SuperCharger location.
A TESLA Model S receiving a charge at a typical TESLA SuperCharger location. Image courtesy of edmonds.com

All TESLA vehicles can access the Ubitricity chargers but don’t forget to bring your Ubitricity charging cable — unlike the TESLA SuperCharger stations where the cable is permanently attached to the SuperCharger unit.

A benefit of TESLA SuperCharger top-ups is that they usually take 10-15 minutes. Look, there’s a Starbucks!

Another benefit is that (TESLA Model S drivers only) enjoy free charging at TESLA SuperCharger stations for the life of the car because that’s what you get for 70,000 euros.

But once your TESLA is charged, you must return to move your car in order to let other TESLA drivers access the SuperCharger, much like gas-engined drivers can’t leave their car in front of the gas pump while they go shopping.

Only the Ubitricity solution gives all EV drivers a convenient parking spot — and a charge. The ability to simply ‘Park and Plug’ at one location in today’s crowded cities is a very big plus indeed.

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Why Germany should leave coal behind

by John Brian Shannon

Germany, a thriving economic powerhouse under the Chancellorship of Angela Merkel, is also a renewable energy superstar and a country that is loaded with potential.

Lately, the Germans have taken a break from aggressively adding renewable energy to their grid by ending a lucrative feed-in-tariff (FiT) subsidy program that ramped-up the adoption of solar, wind and biomass installations across the country.

Not that these so-called ‘lucrative’ subsidies approached anywhere near what fossil fuel and nuclear power plant operators receive and have received since the postwar period began, as all energy in Germany (like most countries) is heavily subsidized by taxpayers but only the (much smaller) renewable energy subsidies get the headlines. Go figure.

Chancellor Angela Merkel made the courageous decision to accelerate the shutdown Germany’s nuclear power plants in the aftermath of the Fukushima disaster in 2011 after stress tests of German nuclear power plants showed safety concerns existed within the their nuclear fleet. She ushered in meaningful FiT subsidies to speed the German Energiewende program towards its goal of transition to renewable energy and greater energy efficiency — which had received only sporadic subsidies prior to Merkel.

Snapshot of the German Energiewende program

  • A popular Germany-only program to move towards a highly industrialized, sustainable green economy
  • Full phase-out of nuclear energy by 2022
  • 80-95% reduction in greenhouse gases by 2050
  • Minimum of 80% renewables in the power sector
  • 50% increase in energy efficiency by 2050

Germany’s utility companies haven’t seen change like this since WWII. After a century of serving conventionally-generated electrical power to a captive electricity market — approximately 1/3 of all German electricity is now generated via renewable energy if you also include biomass and hydro-power. That’s historic change by any standard.

Germany-renewable-energy-power-capacity at October 29, 2014 Fraunhofer Institute image

Although solar panel outputs are lower during the winter months, over the summer of 2014 renewable energy generated more than 75% of total demand on many of those days. Not bad, for 5 years of relatively minor renewable energy subsidy euros provided by a (now ended) Feed-in-Tariff!

Germany renewable energy generation for the first 10 months of 2014 courtesy of the Fraunhofer Institute

Another benefit of the switch to renewable energy was the added billions of euros of economic activity generated annually by European solar panel and wind manufacturing companies like Vestas, SolarWorld, Siemens, ABB, and the jobs created for hundreds of SME renewable energy installation companies in the country.

Exports of German solar panels and wind turbines went through the stratosphere once Germany proved to the world that solar and wind could replace lost nuclear power generation capacity at a much lower cost than building new, multi-billion euro, nuclear or coal-fired power plants with their massive footprint on the land and their obscene water usage levels.

Germany renewable energy power generation change (in absolute terms) for the first 10 months of 2014 compared to the first 10 months of 2013. Image courtesy of the Fraunhofer Institute

For Germany, installing their own solar, wind and biomass power plants proved to the world that large-scale renewable energy could add huge capacity to a nation’s electrical grid and that different types of renewable energy could work together to balance the over-hyped ‘intermittency problem’ of renewable energy.

It turns out that in Germany, during the long, hot days of summer when solar panels are putting out their maximum power the wind actually tapers off — but at night the wind blows at a very reliable rate. Karmic bonus! That about covers the summer months.

During the winter months in Germany, the wind blows day and night and adds significant amounts of reliable power to the national grid.

Germany solar and wind energy are complementary, helping to stabilize the German electricity grid without adding pollution to the air. Image courtesy of the Fraunhofer Institute

And now, all of that renewable energy capacity is operating without FiT subsidy — quite unlike the coal, nuclear, and oil and gas power generation in the country which require huge and ongoing subsidies every day of the year to continue operations. That’s every day since 1946, meine Freunde!

Also a factor with nuclear and coal-fired power plants are the healthcare spending to combat the adverse health effects of fossil fuel burning/air pollution on humans and animals, on the agriculture sector, and the huge security infrastructure that is necessary to counter the potential theft of nuclear materials, to defeat possible nuclear terrorism and prevent nuclear proliferation.

While the rest of Europe (with the exception of notables like Norway, Sweden and Luxembourg) wallowed in recession or near-recession since 2008, the German economic powerhouse not only set global export records year-on-year, it bailed-out numerous other EU economies like Greece, Spain, Portugal, Italy, and others, and began an unprecedented domestic renewable energy program. And now, Germany is an electricity net exporter.

That’s heady stuff, even for this industrious nation of 82 million.

Germany imports and exports of electricity 2001-2014. Image courtesy of the Fraunhofer Institute

Where to next?

Not only has Germany added many TeraWatt hours (TWh) of clean, renewable energy to its electrical grid to replace lost nuclear power generation, it is now an electricity net exporter — raking in multi-millions of euros per year at present — and make that an electricity exporting superpower if they ever decide to revive their now defunct Feed-in-Tariff subsidy for renewable energy.

Replacing coal with renewable energy in Germany:

If Germany revived the previous FiT regime for 5 more years, *all lignite-fired (brown coal) electrical power generation* could be eliminated within 10 years.

If Germany revived the previous FiT regime for 10 more years, *all coal-fired electrical power generation* (not just lignite coal) could be eliminated within 10 years.

Replacing coal with renewable energy in Germany would save millions of Germans (and Polish, Swiss, Austrians, and others living downwind of German smokestacks) from breathing toxic lignite-fired air pollution. Think of the health care savings and the taxes that must support it, especially as their demographic ages. Some people believe that the health care savings alone could far exceed the cost of any FiT subsidy.

Not only that, but as a result of leaving coal behind, historic buildings, concrete bridges and roadways would require less maintenance to repair the spalling caused by the acid rain from coal burning. Additionally, Germany would save the millions of litres of water consumed annually by the coal industry.

Replacing coal with renewable energy in Germany would create thousands more jobs for solar, wind, and biomass manufacturing and construction. And the agriculture sector would begin to show ever-improving crop outputs. And, clean air for all visitors, expats and German citizens to breathe!

A note about (renewable energy) Hybrid power plants

So-called Hybrid power plants offer the best of both worlds in the renewable energy space by providing plenty of electricity day and night. This Hybrid power plant uses solar panels and wind turbines, while others can incorporate biomass or hydro-electricity dams, along with wind or solar, or both.
Hybrid power plants provide electricity day and night.

An energy policy stroke of genius for Germany could come in the form of a new subsidy (a FiT or other type of subsidy) that could be offered to promote the installation of Hybrid power plants — whereby 30% of electricity generated at a given power plant site would come from solar and the balance could come from any combination of wind, biomass, or hydro-electric generation. (30% solar + 70% various renewable = 100% of total per site output)

As long as all of the electrical power generation at a site is renewable energy and it works to balance the intermittency of solar power — it should qualify for the (hereby proposed) Energiewende Hybrid Power Plant subsidy.

When all the different types of renewable energy work in complementary fashion on the same site, energy synergy (the holy grail of the renewable energy industry) will be attained.

More jobs, billions of euros worth of electricity exports to the European countries bordering Germany, better agricultural outputs, lower health care spending and less environmental damage — all at a lower subsidy level than coal and nuclear have enjoyed for decades — are precisely why Germans should renew their commitment to renewable energy.

Seriously, what’s not to like?

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