Energy subsidies | Levelling the Subsidy Playing Field

Originally published at JBS News by John Brian Shannon John Brian Shannon

By now, we’re all aware of the threat to the well-being of life on this planet posed by our massive and continued use of fossil fuels and the various ways we might attempt to reduce the rate of CO2 increase in our atmosphere.

Divestment in the fossil fuel industry is one popular method under discussion to lower our massive carbon additions to our atmosphere

The case for divestment generally flows along these lines;
By making investment in fossil fuels seem unethical, investors will gradually move away from fossil fuels into other investments, leaving behind a smaller but hardcore cohort of fossil fuel investors.

Resulting (in theory) in a gradual decline in the total global investment in fossil fuels, thereby lowering consumption and CO2 additions to the atmosphere. So the thinking goes.

It worked well in the case of tobacco, a few decades back. Over time, fewer people wanted their names or fund associated with the tobacco industry — so much so, that the tobacco industry is now a mere shadow of its former self.

Interestingly, Solaris (a hybridized tobacco plant) is being grown and processed into biofuel to power South African Airways (SAA) jets. They expect all flights to be fully powered by tobacco biofuel within a few years, cutting their CO2 emissions in half. Read more about that here.

Another way to curtail carbon emissions is to remove the massive fossil fuel subsidies

In 2014, the total global fossil fuel subsidy amounted to $548 billion dollars according to the IISD (International Institute for Sustainable Development) although it was projected to hit $600 billion before the oil price crash began in September. The global fossil fuel subsidy amount totalled $550 billion dollars in 2013. For 2012, it totalled $525 billion dollars. (These aren’t secret numbers, they’re easily viewed at the IEA and major news sites such as Reuters and Bloomberg)

Yes, removing those subsidies would do much to lower our carbon emissions as many oil and gas wells, pipelines, refineries and port facilities would suddenly become hugely uneconomic.

We don’t recognize them for the white elephants they are, because they are obscured by mountains of cash.

And there are powerful lobby groups dedicated to keeping those massive subsidies in place.

Ergo, those subsidies likely aren’t going away, anytime soon.

Reducing our CO2 footprint via a carbon tax scheme

But for all of the talk… not much has happened.

The fossil fuel industry will spin this for decades, trying to get the world to come to contretemps on the *exact dollar amount* of fossil fuel damage to the environment.

Long before any agreement is reached we will be as lobsters in a pot due to global warming.

And know that there are powerful lobby groups dedicated to keeping a carbon tax from ever seeing the light of day.

The Third Option: Levelling the Subsidy Playing Field

  • Continue fossil fuel subsidies at the same level and not institute a carbon tax.
  • Quickly ramp-up renewable energy subsidies to match existing fossil fuel subsidies.

Both divestment in fossil fuels and reducing fossil fuel subsidies attempt to lower our total CO2 emissions by (1) reducing fossil fuel industry revenues while (2) a carbon tax attempts to lower our total CO2 use/emissions by increasing spending for the fossil fuel industry

I prefer (3) a revenue-neutral and spending-neutral solution (from the oil company’s perspective) to lower our CO2 use/emissions.

So far, there are no (known) powerful fossil fuel lobby groups dedicated to preventing renewable energy from receiving the same annual subsidy levels as the fossil fuel industry.

Imagine how hypocritical the fossil fuel industry would look if it attempted to block renewable energy subsidies set to the same level as fossil fuel subsidies.

Renewable energy received 1/4 of the total global subsidy amount enjoyed by fossil fuel (2014)

Global Energy Subsidies (2014, in billions USD). Image courtesy of IISD.
Global Energy Subsidies 2014. (billions USD). Image courtesy of IISD.

Were governments to decide that renewable energy could receive the same global, annual subsidy as the fossil fuel industry, a number of things would begin to happen;

  • Say goodbye to high unemployment.
  • Say goodbye to the dirtiest fossil projects.
  • Immediate lowering of CO2 emissions.
  • Less imported foreign oil.
  • Cleaner air in cities.
  • Sharp decline in healthcare costs.
  • Democratization of energy through all socio-economic groups.


Even discounting the global externality cost of fossil fuel (which some commentators have placed at up to $2 trillion per year) the global, annual $548 billion fossil fuel subsidy promotes an unfair marketplace advantage.

But instead of punishing the fossil fuel industry for supplying us with reliable energy for decades (by taking away ‘their’ subsidies) or by placing on them the burden of a huge carbon tax (one that reflects the true cost of the fossil fuel externality) I suggest that we simply match the renewable energy subsidy to the fossil subsidy… and let both compete on a level playing field in the international marketplace.

Assuming a level playing field; May the best competitor win!

By matching renewable energy subsidies to fossil fuel subsidies, ‘Energy Darwinism’ will reward the better energy solution

My opinion is that renewable energy will win hands down and that we will exceed our clean air goals over time — and stop global warming in its tracks.

Not only that, but we will create hundreds of thousands of clean energy jobs and accrue other benefits during the transition to renewable energy. We will also lower healthcare spending, agricultural damage, and lower damage to steel and concrete infrastructure from acid rain.

In the best-case future: ‘Oil & Gas companies’ will simply become known as ‘Energy companies’

Investors will simply migrate from fossil fuel energy stock, to renewable energy stock, within the same energy company or group of energy companies.

At the advent of scheduled airline transportation nearly a century ago, the smart railway companies bought existing airlines (or created their own airlines) and kept their traditional investors and gained new ones.

Likewise, smart oil and gas companies, should now buy existing renewable energy companies (or create their own renewable energy companies) and keep their traditional investors and gain new ones.

Related Articles:

The Difference between Biofuels and Fossil Fuels

Originally published at
by John Brian Shannon John Brian Shannon

The burning of fossil fuels over the past 90 years has released gigatonnes of CO2 into the atmosphere over that time.

Previous to the large-scale commercial extraction of petroleum beginning around 1920, the carbon embedded within coal and oil was permanentl­y stored undergroun­d and had stayed there since the time of the dinosaurs.

It wasn’t going anywhere near the surface of our planet or into our atmosphere anytime in the next billion years — until mankind started bringing it up to the surface and burning it

The burning of fossil fuels extracted from deep below the surface of the Earth is a huge source of new CO2 introduced into our present-day atmosphere. — John Brian Shannon, Biofuel Central

Plant-based biofuels on the other hand, utilize plant matter that grows in our 21st-century — plants which absorb CO2 out of our modern-day atmosphere every day of the year­

Jatropha tree
Jatropha fruit is toxic, but it has high oil content and it grows in semi-arid regions making it suitable for biofuels. In developing nations, jatropha plantations provide plenty of work for labourers around harvest time.

Jatropha trees, for instance, live 40 years. Only the plentiful fruits (several tonnes per hectare) are harvested each year for processing into biofuels while the rest of the tree continues to draw CO2 out of the air every day of the year. Because that’s what trees do.

After breathing in CO2 and exhaling oxygen for 40 years, at the end of that tree’s life almost exactly the amount of CO2 it captured during its lifetime returns to the environmen­t, making the Jatropha’s carbon footprint, zero. (Exactly what it captured, it released, over its 40 year lifetime)

Then, new Jatropha trees are grown and a new carbon-neutral process begins.

Not so for fossil fuels. Carbon-heavy coal and oil are a huge source of new carbon that we bring up from deep undergroun­d which, as we burn it, continuously adds new CO2 to our atmosphere

Therefore ALL fossil fuel burning adds to the overall CO2 load of our atmosphere – while plant based biofuels are CO2-neutral, as they merely recycle the same carbon dioxide, many times over.

Where am I going with this?

We should blend our fossil fuels with CO2-neutral biofuels (50/50) to taper our dinosaur era, petroleum based, CO2-additions to the atmosphere.

Biofuels now come in three generations

  • 1st generation biofuels were the first on the market, but required massive subsidies to be economically viable.
  • 2nd generation biofuels were next-up and as the technical problems are now solved, new 2nd generation biofuels are surging ahead and show dramatic CO2 reductions.
  • 3rd generation biofuels are in the pilot programme stage at this point, but early indications are that negative CO2 emissions may be possible — as megatonnes of waste carbon dioxide from nearby factories are used in algae biofuels production and the profitability of this new generation of biofuels (even without subsidies) seems likely.

The three generations of biofuels

Corn, palm tree, and sugar-cane are examples of 1st generation biofuel crops. They are poor choices for biofuel production as they have their own environmental negatives attached to them and they require massive subsidies to compete in the marketplace.

1st generation biofuel crops require billions of gallons of precious water, plenty of fertilizer, pesticides and land management.

And it goes without saying of course, that replacing food crops with biofuel crops is a very bad idea.

Fortunately, 2nd generation biofuel plants grow in conditions and areas which are inhospitable for food crops.

Some examples of 2nd generation biofuel plants which grow in semi-arid regions are; Jatropha, Millettia and Camelina and the cultivation of these provide plenty of jobs for developing nation labourers.

“China has set aside an area the size of England in which to grow 2nd generation biofuel crops.” — Will Thurmond, Biodiesel 2020

Biofuels that are produced with algae or enzymes are known as 3rd generation biofuels and are the most efficient way of producing biofuels, using only water, plant matter, relatively small amounts of algae and microscopic enzymes to do the work.

And talk about good karma, algae thrive when CO2 is added to the conversion chamber (called a ‘biofuel reactor’ which is basically a 500,000 gallon soup pot) and helps to convert the ingredients into high quality gasoline.

In the new algae-to-gasoline plants, tonnes of CO2 from nearby industry are added to the ingredient list to help boost the speed of the process and to increase the final amount of gasoline produced.

Like any other green plant, algae ‘eats’ the CO2 and emits pure oxygen just like the trees in your neighborhood.

Each batch takes 5 days and at continuous production that means CO2-eating and oxygen production is happening every day of the year.

Green gasoline inside clear plastic pipes. Algae requires four days of sunlight and mild temperatures to process the ingredient mix into pure gasoline. Wageningen University Integrated Sustainable Algae (InteSusAl) demonstration pilot project in the municipality of Olhão, in the Algarve region of southern Portugal. Image courtesy of AlgaePARC (Algae Production and Research Centre) at Wageningen University & Research Centre.

It’s better to continuously recycle a large amount of carbon-neutral plant-based CO2 (recycling it millions of times over) than to bring new carbon in the form of coal and oil to the Earth’s surface with it’s carbon-heavy load to burn it, thereby adding unfathomable gigatonnes of new CO2 to our 21st century atmosphere.

Yet another biofuel bonus

Boeing 787. Image courtesy of Boeing.
Boeing 787. Image courtesy of Boeing.

Lower CO2 emissions are a well-known bio-jet fuel benefit, regardless of which biofuel generation they hail from.

Boeing’s Sustainable Biofuels Research & Technology Program reported 80% lower CO2 emissions for camelina bio-jet fuel when compared to conventional jet fuel.

All 1st, 2nd, and 3rd generation biofuels are low carbon fuels (at the combustion stage) but only 2nd generation biofuels are economically viable at this point in time. New formulation 3rd generation biofuels look to have even lower CO2 emissions than the 2nd generation biofuels already on the market.

Depending on the type of biofuel crop employed, lowered CO2 emissions (as compared to conventional petroleum-based jet fuels) in the range of 50-80% are proven

New algae bio-jet fuels are showing CO2 emission reductions of better than 90% when compared to petroleum-based jet fuel.

There is every hope that within 10 years that new algae bio-jet fuel will prove to be CO2-negative as the algae requires huge volumes of carbon dioxide gas to grow at best possible speed.

Airline operators and the U.S. military note that the new bio-jet fuels extend engine life, emit less soot and smoke, and are easier on fuel system components such as fuel pumps and injectors

Notes about sugarcane:
Sugarcane moves from its present 1st generation biofuel ranking
to 2nd generation biofuel ranking if certain guidelines are followed.

Sugarcane is usually considered a 1st generation biofuel crop, but;

1) if farmers refrain from burning sugarcane fields after each harvest (twice yearly) and
2) if the rest of the plant (not just the ‘cane’ but also the roots and leaves) are converted to biofuels via a new type of cellulosic bioreactor, and
3) where sugarcane fields aren’t displacing food crops, sugarcane is an excellent choice for a high-yield 2nd generation biofuel.