Why can’t we have a level energy subsidy playing field?

by John Brian Shannon |  Reposted from JBS News

All I’m asking for is that renewable energy gets the same subsidies as fossil fuels or nuclear energy. Is that so unreasonable?

You can determine the subsidy costing by any method you choose using a per unit of energy formula — per Barrel of Oil equivalent (BOe) or per kW/h, or any other unit of energy formula you want.

North America’s energy security (similar could be said for Europe, Asia and Australia) is better served by LETTING THE MARKET CHOOSE what’s best for the continent and that can only happen when all energy producers play on the same subsidy playing field. (The cream will rise to the top)

Renewable Energy adds to national security, while Conventional Energy leaves industrialized nations vulnerable

North America’s (for example) biggest national security vulnerability (aside from bio-warfare) comes from literally hundreds of thousands of miles of electrical transmission corridors (pylons and power lines) and pipelines that crisscross the continent.

Every Pentagon General, along with every military rank down to Corporal knows it would be boringly easy for even the most inept enemy of the United States and Canada (both national grids are interconnected) to destroy the North American grid with as little as three well-placed air-to-ground missiles, or alternatively, three truck bombs. Those interconnect sites are unbelievably unprotected.

If that were to happen in mid-winter, millions of North Americans would die, and that’s indisputable.

That it hasn’t happened, proves to me that North America doesn’t have any ‘real’ enemies or it would have occurred a long time ago. (Yes, the U.S. and Canada are ‘irritated’ at some countries and some countries are ‘irritated’ at us — but by virtue of the fact that *they haven’t hit us where we’re most vulnerable* proves they aren’t real enemies, they’re only ‘irritants’)

Centralized Power vs. Decentralized Power

Conventional grid adherents are living in a previous century — a central grid WAS the best thing for North America in the 20th-century — but those days are long gone!

Fossil fuel supporters should stop helping our enemies, which they do by supporting a conventional national grid that even the U.S. military 3X over couldn’t protect!

Decentralized power is the ONLY choice for an energy-secure America!

Make better investment returns on Renewable Energy by leveling the subsidy playing field

I understand that many people are heavily invested in fossil fuels and nuclear power — and I don’t blame them, they were safe and secure investments for decades, but such industries now run counter to the national interest — good investment returns aside!

And yes, the ONLY reason you have those high returns is that those industries are heavily-subsidized by U.S. and Canadian taxpayers; Oil & Gas get $80 billion per year in the U.S. and about $10 billion annually in Canada, nuclear a bit less — but nobody really knows for sure, not even the governments — because it’s all mashed together with nuclear fuel production, long-term ‘spent fuel’ storage, nuclear warhead production and nuclear warhead disposal. (I suspect a similar situation in Europe)

Normal citizens can’t see this because those white elephants are obscured by mountains of cash!

Efficient investment vs. Inefficient investment

Energy companies have become like the Big 3 during the 1960’s and 1970’s, big, powerful, lazy, and wholly unwilling to adapt to changing market conditions.

Remember when 95% of cars registered in the U.S.A. were domestic built and sold? Well, due to the laziness of the Big 3, nowadays less than 35% of new car registrations are North American makes, and more than half of the parts are supplied by Asia or Mexico!

You call that progress???

It’s killing North America!

Renewable Energy creates more jobs than Conventional Energy (even using fossil fuel industry stats!)

Millions of people unemployed in North America because the 1% wanted higher investment returns on their energy stocks! UN-AMERICAN in the extreme!

Energy companies and their investors MUST become patriotic by becoming ‘fleet of foot’ and able to adapt to the already changed national security paradigm — and become ‘ENERGY COMPANIES’ instead of (only) Oil & Gas or (only) nuclear or (only) coal companies.

Profit is a great thing! Energy companies should make plenty of profit because energy is an ultra-important factor in the 21st-century. However, uneven energy subsidies are not a great thing.

Putting a square peg in a square hole, not a square peg in a round hole

When we train soldiers, we don’t try to put a square peg in a round hole — we choose those people based on their merit.

(The best snipers become our snipers, the best tank captains become our tank captains, and the best fighter pilots don’t peel potatoes aboard our warships!) Rather obvious when you think about it, isn’t it?

By the same token, if electricity companies were to embrace ALL energy (they don’t do that now because some energy is highly subsidized and some isn’t) they could then have the option to put a round peg in a round hole and a square peg in a square hole. As it should be!

I must add that gas-fired power generation is increasingly important towards meeting demand — moreso as renewable energy comes on stream. Natural gas burns one million times cleaner than brown coal (lignite) and up to ten-thousand times cleaner than the best black coal (anthracite) and gas power plants can be just as local to demand centres as required — quite unlike hydro-power dams and coal-fired power plants, and even nuclear power plants which usually aren’t welcome near city centres.

READ: Full cost accounting for the life-cycle of coal (Harvard Medicine)

Again, by setting an even subsidy playing field, THE MARKET will choose which kind of power to use in what location — and don’t worry — your precious investment returns will be just as high as they are now. Maybe higher!

As for U.S. jobs, solar produces more jobs than all other producers put together — and rising exponentially!

Renewable energy vs. 'green bullets'
More workers in solar than in all fossil fuel power generation combined (U.S.A.) — Statista

Summary

By setting a level subsidy playing field, the cream will rise to the top, and the market will choose which peg to put in which demand hole — nothing could be more efficient!

And in that case, renewable energy will win hands down!

National security will become greatly enhanced as industrialized nations will no longer be dangling from a thread via the hundreds of thousands of miles of pylons and power lines that will no longer be required, as renewable energy is local energy, while conventional energy must carry electricity many thousands of miles.

Stop choosing profits over national security!

Stop arguing against national security, stop arguing against a free market, and stop arguing that you can’t make the same or better profits via renewable energy. It’s intellectually dishonest.

And for those who want to send me ‘green bullets’ — bring it!


Related Articles:

  • Trump’s Quixotic Energy Policy (Project Syndicate)
  • On the economics of wind and solar power (The Beam)
  • Mr Trump: Tear down those energy subsidies! (kleef.asia)
  • Energy Darwinism: The Case for a Level Playing Field (JBS News)

The Inevitability of Renewable Energy

by John Brian Shannon

Renewable Energy costs have fallen to such a level over the past ten years that it now competes, sans subsidies in some locations, against heavily-subsidized fossil fuel power generation, nuclear power generation and hydro-electric dams which receive billions of dollars of subsidies every year.

Many people might be surprised to hear that; It certainly hasn’t been reported by a majority of the mainstream media.

Fuel Subsidies: The Elephant in the Room

Historically, the reason given for subsidies was to allow new industries to move past the typically turbulent first few years of operation, until they reached a sort of ‘steady-state’ when the business model was fully functional and profits alone could sustain the business, yet the conventional energy industries that have been an important and profitable part of the energy sector are still receiving billions in subsidies annually — while the new kid on the block finds that their much-smaller subsidies are tapering.

Since the first oil wells were struck in Pennsylvania in the late 1890’s, subsidies of one form or another have been an important factor in our primary and secondary energy world.

After the coal price crash in 2014 and the oil price crash of 2016, total volumes of coal and oil deliveries dropped significantly, while the actual subsidy regimes in place for those fuels did not change significantly. Therefore, any perceived subsidy drop must be viewed in the context of lower production which affected the total subsidy amounts received by those industries.

At the same time, many countries that have supported the development of renewable energy have lowered or eliminated their renewable energy subsidies. Germany is an telling example of an early-adopter that discontinued their renewable energy Feed-In Tariffs, while the United States has canceled their lucrative Production Tax Credit for wind energy projects.

And nobody seems to notice! Renewable Energy installations are continuing, the rate of new RE installations is at an all-time high and increasing on a month-to-month basis.

Renewable Energy vs. Conventional Energy

Global Energy Subsidy Totals WEO-2016

The value of subsidies to fossil fuels fell sharply in 2015 to $325 billion, down from almost $500 billion in 2014. Lower fossil-fuel prices were the main reason for the drop, but lower prices have also given additional impetus to pricing reforms in many countries, both fossil fuel importers and exporters. Even with the drop in 2015, the amount going to subsidise fossil fuels is still more than double the $150 billion spent on subsidies to renewable energy.

Renewable energy is the growth story of WEO-2016

In our main scenario, nearly 60% of all new power generation capacity to 2040 comes from renewables and, by 2040, the majority of renewables-based generation is competitive without any subsidies. In a scenario compatible with 2°C, significantly faster growth means that, in the four largest power markets (China, the United States, the European Union and India), variable renewables become the largest source of generation. — International Energy Agency | Fact Sheet: World Energy Outlook 2016

Renewable Energy jobs vs. Conventional Energy jobs.
Renewable Energy jobs vs. Conventional Energy jobs in the U.S. Image courtesy of Statista.

“According to a new report from the U.S. Department of Energy, solar power employs more people than coal, oil and gas combined.

Last year, solar power accounted for 43 percent of the Electric Power Generation sector’s workforce, while fossil fuels combined employed 22 percent. The statistic will be welcomed with open arms by those trying to refute Donald Trump’s assertion that renewable energy projects are bad news for the U.S. economy.

Around 374,000 people were employed in solar energy, according to the report while generation through fossil fuels had a workforce of just over 187,000. The solar boom can be attributed to construction work associated with expanding generation capacity.

The report states that the employment gap is actually growing with net coal generation decreasing 53 percent over the last 10 years.

During the same period of time, electricity generation through gas expanded 33 percent while solar went up by an impressive 5,000 percent.” — Niall McCarthy | Statista

Power to the People!

Conventional energy producers in business for over a century can’t seem to survive without huge subsidy amounts — while Renewable Energy barely topped $150 billion globally, and those RE subsidies are now disappearing.

Energy Darwinism:

It’s one more reason why it’s a great time to be a Renewable Energy blogger!

Energy Darwinism: The Case for a Level Playing Field

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.

Summary

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.

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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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