Fossil Fuel Subsidies Dwarf Support For Renewables 172
TravisTR sends word of research from Bloomberg New Energy Finance which found that direct subsidies for renewable energy from governments worldwide totaled $43-46 billion in 2009, an amount vastly outstripped by the $557 billion in fossil fuel subsidies during 2008.
"The BNEF preliminary analysis suggests the US is the top country, as measured in dollars deployed, in providing direct subsidies for clean energy with an estimated $18.2bn spent in total in 2009. Approximately 40% of this went toward supporting the US biofuels sector with the rest going towards renewables. The federal stimulus program played a key role; its Treasury Department grant program alone provided $3.8bn in support for clean energy projects. China, the world leader in new wind installations in 2009 with 14GW, provided approximately $2bn in direct subsidies, according to the preliminary analysis. This figure is deceptive, however, as much crucial support for clean energy in the country comes in form of low-interest loans from state-owned banks. State-run power generators and grid companies have also been strongly encouraged by the government to tap their balance sheets in support of renewables."
Article is very low on details (Score:2, Interesting)
If you want to make the largest impact possible to reduct emissions you can't neglect your current power grid.
Re:Relative (Score:5, Interesting)
Figures don't lie -- but liars figure (Score:4, Interesting)
If you're a greenie, you'll like this rah-rah study. Maybe you need some re-energization.
However, if you're not, maybe you'd like to know exactly _how_ true numbers have been distorted:
Dollar-wise, the biggest distortion is to consider road maintenence and building as a subsidy. This is slippery, since the substantial fuel taxes were justified and accepted by the voters on the basis they would pay for roads. Most places, the road funds are in surplus and contribute to general revenue, not draw from it.
Another large item in the US, but totally unaccounted is the oxygenated gasoline regulations. In many areas, the (obsolete and ineffective) legal requirement is for gasoline to contain 2% oxygen, earlier met with MTBE (which doesn't biodecompose fast enough) and now met with ethanol. In addition to the $1.50/gal direct subsidy, this legal requirement puts a demand floor under deathanol. How much is it worth? Who knows, but probably a large fraction of the direct subsidy.
Accounting for electricity is tough -- renewables use the same grid, and so anything is common. But renewables have poor reliability characteristics, so regs like equal buy/sell price actually are an uncounted subsidy. They certainly require more standby generation.
Re:No Surprises Here (Score:2, Interesting)
For those of you objecting to this report (Score:5, Interesting)
Now, here is where you can get the study. [eli.org]
What this shows is just 6 years. It does not show the money that was originally put into many of these programs. For example, Nuke had LOADS of R&D done by the feds. Still does. And it still needs more (hopefully this time, the feds will not stop the IFR project that has been quietly started at UIUC; GD kerry for pushing it and CLinton for not having enough backbone to say no). And Coal had LOADS of fed and state assistance to get started. Free land; loads of pollution with zero clean up (see pix of eastern aChina to get an idea of what some parts of America was like in the 60's).
Even now, the subsidy that is being calculated in the above study has NOTHING about the air, water, and ground pollution that is allowed. If burning coal and oil had to pay for their pollution in all these areas, then they would quickly run to the top in terms of costs. WELL OVER Solar PV (which today is the current king of costs).
Numbers aren't scaled by energy production (Score:1, Interesting)
But if fossil fuels are providing ~86% of global energy use [wikipedia.org], it should be obvious that government subsidy of any type of energy production is inevitably going to be dominated by subsidies to fossil fuels. Do the math. 0.86/0.07 is ~12.3x as much energy being supplied from fossil fuels as renewables. In terms of money ($557 billion/$46 billion) it's about the same ratio (12.1). All this says is that governments are subsidizing energy production. Period. If anything, it suggests they're investing slightly more in renewables in terms of the resulting contribution to the overall energy mix, but that easily could be in the rounding error. The two are close. Also, I don't know if the report takes account of the substantial amount of revenue that most governments receive in the form of royalties for fossil fuel production from public lands. Are these net subsidies or just costs? I couldn't find the original report on the Bloomberg site.
The article's conclusion that it will take decades to bring renewables up to a significant chunk of fossil fuel energy production is correct, which is why there should be heavy investment now, so that as oil supplies start to dwindle in the next few decades we will have something to fall back on, other than burning the floorboards to heat our houses.
People have a poor understanding of just how challenging it will be to replace a significant portion of fossil fuels. We have alternatives, but the amount of fossil fuels we are using is HUGE. I did a simple calculation that tried to replace crude oil with vegetable oil (i.e. biofuels) by diverting *all* global production of vegetable oils to fuel supply (peanut oil, canola oil, everything). It came out to something like a measly 10% of global oil consumption for fuel. And obviously you can't divert all food production like that or increase production by several times without problems.
Re:Where is the study? (Score:1, Interesting)
The whole point is why is an industry that is so insanely profitable receiving subsidies in the first place? One day we will need alternative forms whether you care about the environment or not. I'm also including things like all the lovely oil spills. The fossil fuel companies don't need the support it's just free money to them. The money is better spent on the future of power and the name fossil fuels should tell you they aren't making anymore so one day we'll need something else. If you don't believe the alternative sources deserve it then can we agree the fossil fuel companies certainly don't? This is corporate welfare, period.
Re:No Surprises Here (Score:5, Interesting)
What people don't seem to understand is the motivation for US subsidies. The US government wants to encourage as much domestic production as is reasonably possible, and they don't want a government entity to have to produce it (like countries with nationalized oil industries do). The only way to do this, therefore, is to make it more attractive for oil companies to extract oil that would otherwise be uneconomical. "Relaxing the amount of royalties to be paid", as the link above calls it, is I believe the main way the US government supports the oil industry.
If these royalties reductions weren't in place, many of the wells in America would simply be uneconomical. The stripper wells mentioned by someone before wouldn't stand a chance, and collectively they account for 18% of US production (according to Wikipedia [wikipedia.org]). Without deep water credits, much of the gulf production would be an economic non starter (and gulf production is about a third of US production). And the overriding thing that people ignore is that 50% of zero is less than 5% of something. If you force a stripper well producing 2 barrels a day to pay a regular royalty, you're not going to bring in more money for the government, you're going to force that well to be plugged and abandoned, and it's probably never going to be economical to redrill it. Both the government and the industry loses.
It is expensive to extract oil in America's increasingly depleted fields, particularly compared to the younger and much larger oil provinces of the middle east and elsewhere. Because of this, the US government grants the oil industry here better incentives than in those countries to try and keep them in America - simply put, they allow the companies to keep more of the oil they produce. Maybe Americans are no longer comfortable with that deal, but they must remember that hiking royalties will significantly lower US production and will necessitate greater imports from unsavory places.