Fossil Fuel Subsidies Dwarf Support For Renewables

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."

Comments

Where is the study?

[Anonymous Coward]

It would be interesting to see how the fossil fuel subsidy number was calculated. Even assuming the calculation is accurate, I'm not sure I buy the argument that renewable energy would be more economically viable than fossil fuels if not for government intervention. The article ignores taxes on fossil fuels, which I'm sure would dwarf any subsidies.

Re:Where is the study?

[WindBourne]

Not even CLOSE to accurate.
How much money is paid for the right to DUMP pollution in the air in the burning? Nothing. We have a couple of 100 fires in old coal mines that the company that created the mine does not have to stop (too expensive). Both pollutions are HUGE. And how much is paid to offset it? Nothing by the power companies.

How much money is paid by Power companies for the right to send out mercury? The vast majority of mercury that is emitted by man is from power plants. In fact, out here in West USA, nearly all of the mercury in our waters come from power plant emission, or in a few areas, from old mining tailings.

The money that BP will pay for the gulf is but a fraction of the damage that it caused. Exxon paid very little of the clean-up in Alaska. And Nigeria has large amounts of environmental damage, all caused by oil companies that do not care about spills.

In addition the taxes that will be paid on the oil that will likely be sold elsewhere (such as Alaska oil) is a pittance compared to how much we are stealing from out children.

Finally, the thought that we burn oil is just amazing to me. Oil truely is one of the worlds wonder chemicals. It permeates our society in every aspect. Yet, we throw away the majority, and really do not pay but a fraction of the real costs of burning oil and coal. It is time to stop this for our national security.

Re:Isn't anything bio+energy bad?

[piotru]

Maybe off point, but with my wife we used to joke: if the color is green, it must be healthy.
Last year we went to a vineyard in France, where the owner explained he had not applied for the "Bio" label because he used modern selective fungicides, thus his soil is alive. The "Bio" use copper sulfide at such quantities as to completely eradicate the microbial life from their soils. I prefer not to think what they drink from their wells. As agricultural engineer I think this case of "Bio" is entirely harmful.

Re:Relative

[WindBourne]

Of course, when you compare to what Coal and Nukes got in their beginning, this is absolutely NOTHING. Both Coal and Nuke power got HUGE subsidies in their early days. Which is exactly why they remain at the top on these. Which is also, why I have suggested changes to our subsidies structures for years.

Re:No Surprises Here

[TastyCakes]

Yes, this article is somewhat misleading. First, it's talking about world wide subsidies, which considering most of the world's oil is owned produced by state owned companies is likely a very complicated calculation. This article puts US subsidies at between $15 and $35 billion, numbers that include some very dubious things in there, such as construction of the highway system, the strategic petroleum reserve etc.
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). 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.

Re:No Surprises Here

[PopeRatzo]

The only way to do this, therefore, is to make it more attractive for oil companies to extract oil that would otherwise be uneconomical.

If it's "uneconomical" to drill that for as much as 2 million barrels of domestic supply, wouldn't you think this is a big incentive to increase development of alternative sources of energy?

The reason these subsidies irk a lot of people is because the same conservative "grass-roots" "think-tanks" and the Chamber of Commerce that are all about letting the God of the Free Market control everything would howl with outrage if these subsidies to oil companies were to be cut off or even reduced.

There's no where near a concerted effort to develop alternative energy in the US, despite environmental disasters of enormous scale, including a million barrels now dumped into the Kalamazoo River in Michigan. Yet, any time alternative energy is mentioned, you'll hear scoffing and arguments such as "Alternative energy is never going to replace energy" or "If it was going to happen, it would have happened already" or "Solar energy can never be useful because it wasn't useful ten years ago".

What they're really saying is "Nothing's going to replace fossil fuels until we find another source of energy that will enrich the same corporations and to the same extent that are currently getting rich from fossil fuels". If there was a way that BP or Exxon could get hugely rich off of solar energy, solar energy would have replaced fossil fuels decades ago.

Re:No Surprises Here

[PopeRatzo]

The fossil fuel industry shows profits in the hundreds of billions.

And they still expect to be paid by the government to convince them it's worth their time to make hundreds of billions.

I'm sorry, but that's just ridiculous. And the same people who believe the free market should determine everything about our lives also believe those subsidies to oil companies are absolutely necessary. And a remarkable number of those people are the same ones who will tell you that we absolutely must continue to pay huge cost overruns and ridiculous markups to military contractors, because otherwise, they might not want to make all that great hardware with which we fight our glorious wars.

Oh, and absolutely no negotiating with pharmaceutical companies, because otherwise they won't want to do the research and make the pills that earn them hundreds of billions in profits. And although CEOs must be free to negotiate hundred-million dollar salaries because that's the free market at work no workers must be allowed to collectively negotiate their salaries because that would HURT the free market. Got that? CEO's negotiating = Good / Workers negotiating = Bad