Government Subsidies for Fossil Fuels, Renewable Energy
In response to my piece: Government Subsidies for the Energy Industry in the U.S., senior energy analyst Glenn Doty makes these points which I’ve greatly abbreviated; I encourage readers to click on the link and read the whole enchilada.
— The issue isn’t the relative value of government subsidies for fossil fuels, it’s the relative value PER UNIT ENERGY. The identified 70.2 billion dollars in tax breaks and development subsidies for fossil fuels…(would work out to) $8.50/MWh electricity.
— (The subsidies for wind are) so poorly managed as a result of incompetence, corruption, and fraud, that we’re seeing very poor returns, which of course gives the Republicans very legitimate talking points about the waste of money in the green sector and how environmentalists don’t care about the environment… it’s all about distributing money to their friends.. THAT’s what we need to be concerned about. We need to remove the beam from our own eye before worrying over the motes found in the eyes of others.
You make a wonderful point here about the misuse of funds, the corruption, the selfishness, etc. I have no doubt that every word of this is true, and it brings me terrible sadness. I only wish I had more power to get involved and fix this (over and above my petitioning in favor of things like “MoveToAmend“).
Your point about the subsidies per terawatt-hour is one I’ve heard before, though I’m not quite convinced that it’s a fair way of looking at the issue. In a way, it’s equivalent to the argument that I’m sure someone made in the 1990s about using public funds to build the Internet, i.e., that the cost per user will be extraordinary, since there are so few people who care about sharing information online.
I really don’t think it’s an oversimplification to say: Subsidies should be applied to activities that promote social good, not those that cook the planet.
I am personally an advocate for removing all energy subsidies for all forms of energy including nuclear and letting the economy sort it all out. That could go a long way towards balancing our national budget. I personally feel that renewable energy will win out.
I do agree that the biofuels programs do not achieve what they should and I won’t argue that solar and wind are probably better uses of that money. Due to the corn lobby most biofuel subsidies go to ethanol made from corn and they use the least energy efficient method of making ethanol from the least suited feedstock for the purpose. The crop is grown using fossil fuels to run the diesel farm equipment at about 5 gallons per acre according to the department of agriculture, then boiled using fossil fuels as the heat source to turn the starch into sugar then fermented and then boiled again in the distillation process using even more fossil fuels as the heat source again.
Instead, the diesel farm equipment could be run on straight vegetable oil pressed from a crop such as soy which will yield about 40 gallons per acre, the corn could be malted (germinated) allowing sunlight and nature to convert the starch into sugar, fermented as usual and distilled in a solar still using sunlight as the source of energy. In the end no fossil fuels need to be used at all.
As to the claim that I hear constantly about trading food for fuel, most of the corn grown in this country goes to feeding livestock to produce meat. Ironically, making ethanol out of corn uses only about 30% of the corn material and the remainder after the creation of ethanol is still fed to cattle. That remainder is also more easily digested by the livestock making if more valuable as a feed after the process than before. Also, referring to my statement above about pressing oil out of a soy crop for use as diesel fuel the same yield percentage applies and the same use as cattle feed for the remains also applies. In this case the remains are a high protein low fat feed. Once again more valuable than the original crop as a feed.
As to the Republican claims of inefficiency I must sadly agree that the government doesn’t get what it is paying for most of the time. However, that being said, the party of business has no reason to complain. No matter how the money is spent, whether to pay government workers who purchase goods and products from companies or contracting companies directly to provide goods and services, businesses end up with ALL of the money spent by the government. Every penny the government spends, which is more than it takes in currently, ends up in the pockets of businesses. Businesses win always.
Brian
Brian,
Renewables would not do well at all if all subsidies were removed from all forms of energy. Wind would compete in good wind regions, but that’s all. The solar industry would crumble (at least in America), and there would be no geothermal wells drilled, no hydrostorage plants built, no extra transmission capacity for balancing wind variation… etc…
The fossil fuel production currently gets a much larger subsidy than what is stated by simply being allowed to dump their CO2, SO2, and other emissions for free. If no subsidies were offered to renewables, then fossil fuels would continue to have a completely insurmountable advantage for decades.
What I support is simple: have a committee that is made up of doctors, agricultural researchers, climate researchers, nuclear power engineers, power grid managers, and insurance actuaries… Allow them to come up with a reasonable estimate for the cost to society of the externalities of various energy resources. If they determine that the amortized cost of CO2 to society is $10/ton, and the amortized cost of SO2 is $400/ton, and the amortized cost of polycyclic aromatic hydrocarbons (PAH’s) is $100,000/ton, and the cost of lead is $5000/ton, and the cost of cadmium, arsenic, mercury, NOx, radioactive isotopes, ittermittant power production, etc…
Once all of these costs have been calculated, determine a baseline cost to society for each power generation facility in America.
ANY project – from a 6 1.1GW nuclear reactor power plant campus to a 5 kW rooftop solar array to a family replacing their black shingles with reflective white shingles – could then be calculated based on the cost of its externalities vs the cost of the externalities of the energy production that it will displace or eliminate (note that efficiency improvements will have zero externality costs). The project should then receive a subsidy for the total externality abatement for the first 5 years (society just blanket benefits from the remaining years).
That sounds complex, but once the system is put in place it would entail no more than a couple of very simple worksheets that would be entered into a computer database and an answer would be immediately produced (obviously, it would entail an inspection prior to the project’s undertaking and once the project is complete).
If the above were immediately coupled with a 20-year loan program based on 2X the 20-year treasury yield, offered through the government for any efficiency or power program where it could be shown that a greater return on energy produced or saved would be realized than the total payment of the project… and the nation could cut it’s total emissions by ~20% by 2030.
Right now, we have absurd subsidies like paying hundreds of thousands of federal subsidies to solar gardens in Seattle or subsidies going to provide for absurd emissions-increasing monstrosities like EV’s… It’s worthy of scorn. The goal should be to direct money in a way that it generates the greatest bang-for-the-buck, and the direction of money should not be limited in any way by the type of technology being discussed. If a coal plant is considering putting a highly effective smokestack scrubber to reduce their harmful emissions, we should encourage that without hesitation. The fact that said upgrade might reduce future subsidies paid out to renewable or efficiency projects in the future would reflect the fact that the smokestack scrubber would have already done much of the good for society than the other projects might have offered. The goal should be the good accomplished for society… nothing else should even be considered.
THAT is the better way to deal with subsidies.
🙂
While what you support may seem simple to you and I do understand it and agree with it, I don’t see that group of individuals being able to come up with a pricing scheme anytime soon and after that it has to pass through our congress and the court of public opinion. We are talking about the group of people that wants to eliminate the EPA if they possibly can so their main constituency can pollute as much as possible without any penalty at all. You can’t explain this with science or logic because those things don’t work in this world. Explaining to the general public what formula this group eventually used to quantify these numbers will be insanely difficult and will create a debate of the same size and complexity as “global warming”. Trying to explain how they divined that a given tonnage of whatever pollutants made X number of people a certain amount of sick causing Y amount of dollars spent in our current flawed healthcare system to make them well will create all kinds of doubt and debate. I hate that it is this way but the fact is it really is this way.
I ran across CSPAN while channel surfing tonight in time to hear some amendments being introduced to be added to a bill for some kind of port spending. This politician got up and introduced an amendment to insure that no money from this fund built on taxes paid on services at ports be used to support the offshore wind energy project in New England because we “don’t want to have another Solyndra”. I don’t even see politics getting together to create this group much less listen to their recommendations once they do eventually come up with them. I can’t get people to consider a very simple heat exchanger that will stop them from throwing perfectly good energy down the drain and reduce their cost to heat water and the associated pollutants by at least 30%. This is something that greed alone should sell without even considering the environmental benefits. I don’t see being able to convince a large enough group of people that this committee should be formed for such a task. I understand it and I agree with it but I just don’t see it happening. I’m sure I don’t need to mention the party that politician above was associated with and it probably won’t surprise you to know that the amendment passed without any problem or even debate. I almost feel like removing all subsidies from all energy will, if nothing else, remove another debatable point of contention from the opposition’s bag of arguments. It is probably easier to get people to stop using polluting energy sources and move to renewable energy because it is a sin to destroy the planet that “God” made for us…….which is exactly what the pope is going to say shortly. Needless to say the Koch brothers have dispatched lobbyists to the Vatican to dissuade him from saying that because they know the pope can have an effect they simply have no way to counter.
Brian
Brian,
The Solyndra example is a perfect illustration of my point: Our current corrupt and incompetent manner of handing out targeted subsidies does nothing but give our opposition ammunition.
ANYONE could have predicted the demise of Solyndra. It was STUPID. Just as anyone could have predicted the crash of “Greenfuels”, and “Beacon Power”… And dozens or even hundreds of outright fraudulent companies that are taking advantage of the taxpayer’s support for the environment and just running con jobs. Some of those con jobs may manage to limp into small niche industries that do nothing other than increase pollution – like “Tesla Motors” (which might have leveraged itself to a near 50/50 breakeven chance by exploiting billions of dollars in taxpayer funds for a highly polluting toy for rich people), while others (like Saphire energy) are clearly going to collapse within one day of the government funding running dry, and their management are just raking it in and trying to squeeze as much as they can before the inevitable collapse.
Republicans have successfully run against the renewable industry because they can find plenty of very real world examples to prove their point.
It’s like the black communities vs the police issue. Most police officers are honest people serving their community in a dangerous but extremely important job… while a small few are racist bullies and/or sadists that were drawn to the job so they can enjoy pushing people around. In the past – the bad old days – there used to be many racist assholes in the police force, but now there are very few. However, the only way to get the black community to accept and welcome the service of the police force is if the police truly hold their bad actors accountable, and prove that their good actors are indeed good actors.
The only way to diffuse the republican’s distrust of the renewable industry is to eliminate the centralized micromanaged control of the subsidies at large. The Koch brothers would love such a plan, as the first thing they’ll do is order much higher grade smokestack scrubbers on over 100 coal power plants they control, and net a small profit from each one.. and society would then net a large gain.
By removing the corruption and favoritism, and absurd subsidies for the worst performers, they’ll have no ground to stand on, and many of their backers would see more benefit than harm.
I agree 100% with what you’re saying in the main. But the way I remember Solyndra is that their substrate (copper indium gallium selenide or “CIGS”) was very promising until the unpredicted decline in the price of silicon-based PV. No?
Craig,
Soylindra’s problem wasn’t with CIGS, it was with their PV design. They had little glass cylinders with the substrate printed on thin sheets that were affixed to the inside of the cylinder. In that case, while some of the substrate would then be receiving full sun, much of it would be in full shade for a majority of the day. The cost of the cylinder with the printed substrates on the inside was a substantial increase in the cost – with associated installation and fixture charges, all in return for an extremely small increase in capacity factor.
If memory serves (I don’t have time to look this up), in 2008-2009 Soylindra was boasting installed costs of ~$7-8/W, while some of their competitors were priced at ~$5/W. All for a ~5% increase in cf? No. That simply wasn’t a viable idea. The DOE wasted tons of money on it, and they encouraged individual investors to lose tons of money on it… but there was never a chance that an alternative geometry PV panel solution would work in the real market. It was a bad idea.
I only agree somewhat with what you are saying. The type of money that went to Solyndra does not guarantee 100% that every venture will be a success. There will be failures and this is built into the equation. As far as I know, less than 10% of this money went to failures. The remainder worked out well and made up for the losses. If I recall correctly, and I am not going to research it right now, internet startups fed by the same type of money experienced a much greater failure rate. Even so, if not for this type of investment we could possibly not have the internet as we do today. In it’s infancy, the fossil fuel industry and the industries that produced the products that use these fuels also had these types of subsidies, much to the chagrin of he buggy and whip manufacturers, and many vehicle manufacturers that probably had these subsidies failed. It should also be mentioned that republican candidates for president that were also governors have applied similar money from their states coffers to similar companies on a similar scale with relation to their state’s budgets with at least the same or greater amount of failures but somehow that is OK.
These types of subsidies are designed to get fledgling industries off the ground and running. I would argue that the fossil fuel industry is pretty well of the ground at this point in history and probably doesn’t really require any government support to keep running.
As for republican’s distrusting the subsidies, I disagree with that assessment. They hate the fact that any industry could and would intrude on the industry of their core constituency and will do whatever they can to stop it. There are plenty of examples of this but the one I read tonight was about a senator in Texas introducing a bill to eliminate the renewable portfolio standard for that state on the ground that is was a resounding success and he wants to end the subsidies. The big success in Texas is wind power. While the senator does not say he wants to eliminate the subsidies for wind power which amount to $12M-$40M/year he is not introducing any legislation to stop the $1B/year in taxpayer subsidies for the natural gas industry in that state. That doesn’t add up for me. To me it is extremely clear what he is doing.
Another program that is in danger is one that was instrumental in building a 3600 mile transmission line to attach western Texas wind farms with eastern cities so all that power can be utilized and wind farm growth will be encouraged.
If I recall correctly, you are attempting to develop a product that is primarily aimed at the wind energy industry, although I think it would work in any renewable energy setting, and what this senator is doing will directly affect demand for your potential product. If wind farm owners and developers don’t see a way to sell the product their equipment creates they will have no reason to develop any more wind energy assets. This guy is directly hurting your potential business.
For what it’s worth, I don’t see the Koch brother’s investing in anything that they don’t have to for their coal plants if they are not forced to. They have free reign to pollute to their heart’s content for free. They will sooner spend that money trying to influence politicians to eliminate their competition.
Brian
Brian,
Please understand that when I refer to “republicans” I am referring to the voters who support the republican platform… not the politicians. I believe the political establishment of the republican party is wholly corrupt and without defense in any stance they take.
I’m referring to the reason why their rhetoric still has traction with the republican voters – some (small) percentage of which might still be persuaded to change sides if their concerns were addressed.
The republican politicians are the closest thing to a complete refutation of the idea of unrestricted democracy that we have in the modern world. I have no hope for them, nor any care as to what they express. I only care about the impact of their rhetoric. In cases where their rhetoric is actually true, that should be addressed.
*shrug*
🙂
I do understand that and I tried throughout this conversation to not tie anything to a particular party as there are always those that cross party lines and they are only in power because people vote for them, but in the end I did fail at that because I just couldn’t get around the obviousness of it.
Once again today I read an article where the Texas state legislature passed a bill to deny counties and townships the right to restrict or stop fracking altogether. Funny how they will whine if they feel the federal government is stepping on their state’s rights but they have no problem stepping on local government’s rights.
And I understand your comments about voters. My first wife comes from a ranch in ND and has family in SD also. I read about oil pipes leaking and especially into bodies of running water, fracking polluting their well water, filters for the fracking waste water filled with radioactivity being found dumped illegally at abandoned gas stations because they don’t want to pay the fee to dump then legally. The reason they dump them in places like that is the state ended up putting Geiger counters at land fills to detect these things which the dumpers were mixing in with regular garbage. My stepdaughter will post articles about this on facebook and comment about how sad it is and I can only comment that they vote for this. They actually did ask for it and all she can do is agree. Understand she has the same leanings I do and may well read this.
Watched a movie tonight set in coal country. Another sad state of affairs. They vote for what happens to them also. It bums me out but I have a hard time feeling sorry for them.
Yes where their rhetoric is true that should be addressed. Where their rhetoric is false they should be taken to task and for some reason that is not happening.
Brian
Brian,
Fully agree on all counts.
LOL. Say what?? You never complete agree with me….. 🙂
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