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Clean Power historical energy subsidies nuclear oil renewable energy

Published on December 26th, 2012 | by Zachary Shahan

19

A Thought On Subsidies (Reader Comment)

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December 26th, 2012 by Zachary Shahan 

 
Anti-wind and anti-solar folks (yes, there are a few out there — mostly tied to the fossil fuel industry) love to bring up renewable energy subsidies. However, there are so many reasons why they really shouldn’t be eager to do so. For example, fossil fuel and nuclear subsidies dwarf renewable energy subsidies.

historical energy subsidies nuclear oil renewable energy

energy subsidies

Subsidies in first 15 years of subsidies for various energy sources.

Additionally, many indirect subsidies never even get counted in most subsidy analyses — such as the tremendous extent to which we subsidize oil through our military and the tremendous health externalities not included in the price of fossil fuels (neither of which are included in the price of fossil fuels).

But there’s another point which gets even less attention. Here’s a reader comment that I thought was worth a repost:

Yes, we have supported oil, wind and solar with subsidies. Look how that’s played out.

Wind, 30 years ago, produced electricity at $0.38/kWh. Now it’s producing at $0.04/kWh to $0.06/kWh and on its way down to $0.03/kWh in the near future. (Already, we’ve seen a 9.5x drop.)

Solar panels, 30-40 years ago, cost as much as $100/watt. Solar panels are now being manufactured for prices approaching $0.50/watt.  (That’s almost a 200x price drop.)

Oil, in 1946, was $18.89 a barrel (2012/current dollars) and in 2012 it’s running about $100 a barrel. (More than a 5x increase.)

Support for oil might have kept prices from rising further, but it has not made oil cheaper.

Support for wind and solar have made them much cheaper. Our investments are returning massive dividends.

Wind has gone down to 1/6th its early price, solar to 1/100th, and oil has risen by more than 5x. Exactly how has that oil subsidy worked out for us?

Image Credits: Climate Progress

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • Vladimir Markovic

    THE CHEAPEST WAY TO REPLACE DENGEROUS NUCLEAR POWER PLANTS WITH RENEWABLE
    ENERGY SOURCES.

    Have you ever stood on the river coast, watching
    unbelievable quantities of water flowing near you every second, each minute, in
    hours, days, months and years? Can you imagine how much power we would need to
    stop this water movements or how much energy we would need to move such water
    quantity by machine power?

    It seems to be that huge amounts of energy which causes
    slowly movements of water masses we could not use – at least not with high
    efficiency. But, it is a case only if we are using classic and known water
    turbines which were designed only for high water speeds. Similar effects are to
    be reached also when using windmill propellers with high efficiency in the air
    and very poor efficiency when operating deep in to the water stream. After
    visiting more pages referring TIDAL projects like VERDANT, all VOITH – Siemens
    and ALSTOM designs, etc., you can easily find out that all of them are carrying
    the same disadvantages which are causing 12 to 20 times larger investment and
    operational costs, than it is acceptable and instead of 35 € to 40 € per MWh,
    are resulting with prices which varies between 500 € to 800 € per MWh of
    received power.

    This is forcing us to build the dams and artificial
    lakes what is in the most of cases nearly impossible, very expensive and
    ecologically always very delicate. So, the only solution was to design completely
    new type of power turbines, able to extract energy from slow moving water streams.
    After many years of experiments and development the SP turbines (Stagnation
    pressure turbines) were designed. On this project I have been working nearly 20
    years (http://www.izumi.si). Up to last year I used to develop only
    smaller units (SP 1) with Power up to 80 kW, but now days I am working with new
    designs (SP 2) for which I applied a new Patent and which are 10 times more
    powerful.

    SP 2 units are incomparably cheaper, technically
    extremely simple and designed to operate in river or see streams and their life
    time can be longer than 50 years. The units are placed on the bottom of the
    river or Sea, they are only 3 m
    high (instead of 15 to 30 m
    by known TIDAL units), but their horizontal diameter is very large because SP2
    are propelled on radial way and not like other TIDAL turbines which are axially
    propelled. Therefore, I made calculations and planes for two types of SP 2
    units – 22 and 32 meters
    of diameter – very convenient to be used in larger rivers or as TIDAL units –
    with life time of more than 50 years:

    SP 22 with 300 kW of Power, costs of 1,5 Million € and
    price for each MWh of 45 €

    SP 32 with 500 kW of Power, costs of 1,9 Million € and
    price for each MWh of 40 €

    In deeper water with height of nearly 6 m, capacity of each can be
    doubled, what means that the price for electricity can be lowered on 25 € to 35
    € for each MWh. All is invisible from the coast, works without dams and
    ecologically is practically ideal.

    Interesting possibility: Germany made decision to stop operating
    with Nuclear Power plants. Regarding the fact that all Nuclear plants are
    located near by larger rivers (because of cooling needs), on river bottom we
    can install couple of hundreds of SP2 units and after changing of main turbines
    in Power plant, using a “ladle hand” system of SP2, we can propel the same
    generators and use all existing infrastructure to produce the same electric
    power – but without any dangerous nuclear fuel! With described solution, in the
    next decade, Germany
    can save more billions Euros of capital and remain with existing 13 GW of
    (today) Nuclear Power, but – only with clean and renewable energy.

    Point is that anywhere in developed World, we are able
    to have a highest quality production of cheap and simple SP1 and SP2 units. But,
    since more years we were not in position to get any kind of Bank or Venture
    capital sources for production for thousands of interested customers – for
    Rivers or See. The same time, without any arguments or explained facts, bigger producers
    which are wasting a billions for wrong and too expensive solutions, are
    completely ignoring us and there was no one single case even to answer to any
    kind of our offers or proposals. All of them are producing nearly the same and
    wrong concepts of TIDAL units. Without any market competition even their prices
    are very similar – not for 20 % but for 20 TIMES to high – then is needed to be.
    Simultaneously, they believe that their “good market name” can permanently
    remain the only argument for highest price of Power – ever existing. So, is it
    somebody there to give us some advice, what we can do to be able to survive –
    against so strong and dirty monopolistic interests of the biggest Power
    producing companies?

    Vladimir Markovic

    inventions@izumi.si

    • Bob_Wallace

      You face the same problem which many people who think they’ve solved a big problem face. Quite bluntly, that’s often because very experienced people in the field look at these ideas and don’t see merit.

      It’s not enough to talk about your solution, you’ve got to prove it.

      It’s not clear if you have actually built a “(SP 1) with Power up to 80 kW” or if you’ve only drawn one on paper. If you don’t have a working prototype which can deliver data then you’re probably going to get nowhere. Lots of stuff looks promising on paper but doesn’t work in the real world.

    • http://zacharyshahan.com/ Zachary Shahan

      Tidal power looks promising… down the road. Right now, it’s *far* more expensive than solar or wind power.

  • Ronald Brak

    Want to install rooftop solar in Australia’s most populated state? Well, Renewable Energy Certificates will help with that, but from the first of next month rooftop solar will be treated the same as a windfarm or other large scale renewable energy project, so the number of certificates you get will be decreased. Which is odd when you think about how much money point of use solar saves on transmission infrastructure. Would you like a feed in tariff for providing solar electricity to the grid? Well, the government feed in tariff for solar is zero cents per kilowatt-hour. People providing low emission solar electricity get nothing while people who provide electricity by burning coal do get paid, which doesn’t make a lot of sense. I wonder if the fact the state government owns the coal plants has anything to do with that? So if you want a feed in tariff you’d better hope your electricity distributer gives you one out of the kindness of their hearts. Or rather, their desire to maintain and gain customers. Anyway, to cut a long story short, in Australia we appear to be shifting from subsidizing solar to having solar subsidise the rest of the grid. Considering that it was 41 degrees celsius where I am a week ago, that probably isn’t too bright.

  • http://MrEnergyCzar.com/ MrEnergyCzar

    If oil companies had to pay for the $32 billion or more per year of free overseas military protection services they receive, renewable subsidies would look like nothing in comparison…

    • Bob_Wallace

      How about the $9 trillion we’ve spent on our three oil wars?

      And some other undone calculations…

      How much have we spent on homeland security because of oil?

      How many hundreds of thousands of people have died?

      • http://MrEnergyCzar.com/ MrEnergyCzar

        Through in health care costs….

        MrEnergyCzar

  • dynamo.joe

    And natural gas prices have dropped 50% since the shale fracking boom. I understand that this is a green energy site and you guys want to be all RAH RAH wind and solar. But ignoring things that don’t fit you worldview only makes the people who aren’t already drinking the cool-aid more likely to believe you are lying about everything.

    If you want to say it’s only temporary and will last a few years to a few decades because that’s an inherent property of any finite resource, that’s fine. But to say research subsidies for fossil fuels will never result in price decreases in disingenuous at best.

    • Bob_Wallace

      I see plenty of attention paid to natural gas on this site. In general it’s treated something like radiation/chemo therapy for someone with cancer. It’s needed right now but it brings a lot of problems with it.
      NG is helping us get coal plants shut down. And it helps with integrating wind and solar into the grid as we wait for better storage technology. But at the same time NG does release CO2. And being a GHG the leaks are an additional problem.

      What has been said it that we have heavily subsidized oil and coal over many decades and their prices have risen.

      We have lightly subsidized wind and solar over 3-4 decades and their prices have fallen massively.

      Can you see that?

      • dynamo.joe

        I never said you shouldn’t subsidize renewables.

        The central thesis of this article is ‘subsidizing fossil fuels has never/will never reduce fossil fuel prices. That is not true as shown by fracked NG.

        Now, suppose I was on the fence where proliferation of renewables was concerned, but I know that fracking glutted the market and lead to a steep decrease in NG prices. Further suppose someone I’m Facebook friends with puts up a link to this article. What conclusion do I draw?

        “Well they lied about research subsidies and fossil fuel prices, they probably lie about everything just to promote this left wing boondoggle.”

        You KNOW there are people who think like that and while you might think that you will never change their minds you can at least refrain from giving them ammunition.

        Long reply short; like Peter if you keep lying no one will come to your aid when the big bad wolf really does come knocking at your door.

        • Bob_Wallace

          Oh, for Zarathustra’s sake.

          “Well they lied about research subsidies and fossil fuel prices, they probably lie about everything just to promote this left wing boondoggle.”
          If you’ve got friends who think like that then they’re so lost in right field that nothing will ever get through to them. Try hanging out with a better crowd.

          You have a small point. The US government did play a role in developing the fracking process. But the current very low NG prices are the result of a drilling investment bubble that brought huge amount of cash into the fields and resulted in over-drilling of wells. A few years back natural gas was the latest way to get rich quick and too much money flowed into drilling.

          The price of NG is now so low, due to the supply glut, that essentially all the drilling rigs have pulled out and gone back to drilling for oil. We’ll burn through the current surplus and prices will move back upwards.

          In the meantime the money we have invested in wind and solar will keep their prices dropping….

          • dynamo.joe

            That’s kind of my point Bob.

            A story line like ‘renewable subsidies result in long lasting/permanent cost decreases rather than the short term cost reductions which are possible with finite resource susidies’ is much more compelling and honest.

            Maybe it’s just me? ::shrugs::

          • Bob_Wallace

            Yeah, sorry. I brought an attitude from a prolonged session of dealing with a crackpot.

            Government money has apparently played a role in developing fracking technology which has resulted in lower NG costs.

            Overlooked on my part.

    • http://soltesza.wordpress.com/ sola

      In addition to Bob’s reply:

      It is pretty much unclear at this stage how big additional problems fracking brings to the table. Maybe it is 50% cheaper but may also contaminate the water supply (see those videos about methanated water in areas with fracking activity). The jury is definitely still out on the safety of fracking (to say the least).

      Also, that 50% price advantage may vanish in very short time when American producers build up export capabilities and start selling NG to countries which are accustomed to much higher prices (say European countries). You can say goodbye to your low prices then.

      Natural gas is only marginally better than oil.

    • GPMP

      Since this is an article about comparing subsidies of one type of energy source to another, it would be interesting have some analysis of government research and other subsidies for ‘fracked’ natural gas.

    • Bob_Wallace

      Tell you what Joe. Let’s give you a 50% cut in natural gas price.

      Take a look at the vast amount of money we’ve spent subsidizing oil and gas. Then look at the very small amount we’ve spent on wind and solar with their massive cost decreases. Finally, tell where our money was best spent….

  • http://www.energyquicksand.com/ Edward Kerr

    Exactly why it is that the fossil fuel lovers don’t see that they are fighting a losing battle on both the financial front and the moral front eludes me. We proponents of renewables try our best to open their eyes but they just won’t learn. Maybe we need to try harder. I’ve got it, practice, practice, practice…Now, lets see, what would be a good way to practice? I’ve got it!!!… I’ll teach my dogs calculus.

  • http://www.sepco-solarlighting.com/ Liz Karschner

    Europe is using renewable subsidies and it is working. We need to flip this scale and give oil the subsidies that renewable is currently getting and visa versa. Same with biofuels and nuclear. Let’s see where that takes us.

    • Bob_Wallace

      Europe is using FiTs (feed in tariffs). That seems to be a more effective strategy. If you can install your system for less money than what the average cost was when the FiT was instituted then you can make some money. That can cause costs to drop faster.

      We’re getting close to the point where wind and solar won’t need subsidies.

      But we should, at that point, consider keeping some sort of subsidy in place in order to artificially increase profits and bring more players to the industry.

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