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Take the oil/coal barons off welfare first August 7, 2010

Posted by WillardWhyte in Economy, Energy, Environment, Politics.
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Another myth that the deceivers continue to spout targets government subsidies or tax preferences enacted in recent years to boost investment in, and adoption of, renewable and “clean” energy such as solar, wind, wave or hamster power.

The critics say alternative energy should be required to “stand on its own” and compete with fossil fuels without “taxpayer” props. But this critique is built upon a fallacy — the assumption that fossil fuels “compete” in a pure, “free” market unaided by governments. Not true. Those fuel sources long have benefitted from massive subsidies, as Bloomberg New Energy Finance reports here, based on figures compiled from 2008 global expenditures by  the International Energy Agency. I wouldn’t qualify either source as communist. Here’s the nut:

Global subsidies for fossil fuels dwarf support given to renewable energy sources such as wind and solar power and biofuels, Bloomberg New Energy Finance said.

Governments last year gave $43 billion to $46 billion of support to renewable energy through tax credits, guaranteed electricity prices known as feed-in tariffs and alternative energy credits, the London-based research group said today in a statement. That compares with the $557 billion that the International Energy Agency last month said was spent to subsidize fossil fuels in 2008.

“One of the reasons the clean energy sector is starved of funding is because mainstream investors worry that renewable energy only works with direct government support,” said Michael Liebreich, chief executive of New Energy Finance. “This analysis shows that the global direct subsidy for fossil fuels is around ten times the subsidy for renewables.”

There are scores of such subsidies layered into the U.S. tax code providing aid and succor to those who draw oil from underground reservoirs, transport it from one place to another, refine it and then either sell it or burn it to generate electricity.

Even more indirect “subsidy” is provided to this industry by extremely lax enforcement of clean air, clean water and safe workplace laws — measures that allow refineries to consistently exceed rules allegedly governing emissions of proven poisons into the air, suffering only hand-slap fines instead of requirements to invest in aged equipment to comply with LAWS;  measures requiring similar investment in underground coal mines to make them safe; or measures requiring remediation investment for mountaintop coal mining that fouls rivers and forests.

And that does not begin to tally the hidden subsidies within eminent domain powers granted to pipeline operators. 

I pass no judgment here on whether these privileges granted by government — hence by us — were sound policy or remain sound policy. They all do act to artificially reduce the cost of fossil fuels in the global economy, which may very well keep some fringe industry competitive, help shaky families afford winter heating, or keep some people on some payrolls.

I would weigh in with a judgment that aiding the fossil fuel producers with lax enforcement of long-existing clean air/water and workplace safety laws is wrong.

But my point is that current measly subsidies to aid alternative energy production are not tipping a previously even “playing field” in their direction. They are un-tipping in a very mild manner a playing field already heavily pitched by government subsidies in the favor of fossil fuels.

Part of the reason for doing that is to motivate investment in production of fuels and electricity from sources that will be around for as long as the Earth is around, unlike fossil fuels that are finite and will be increasingly costly as they become progressively more difficult to extract.

Part of the motivation also is to do that NOW, at a point in time when the numbers don’t add up in a way that naturally moves money toward this. The idea is to jump-start an industry that will be essential in 10-15-20 years, just as countless nations are doing in the hopes of one day being the leader in producing the science, the equipment and the juice.

We can do nothing as a nation in this regard and wake up in 10 years and find that China, or Germany, or Spain is the global leader in this realm — the Saudi Arabia of solar, wind and wave energy production.  Just as we allowed our electric battery science and production to leak to China, Korea and Japan  in the last decade because the margins were too small.

Does that seem wise? I think not.

So much of the opposition to alternative energy seems to me to stem from a knee-jerk, emotional, Red-Blue blindness rooted in whether people “believe” in global warming or not, or value environmental issues at all. Hard-core rejecters of warming trend science see anything to do with wind, sun, wave or geothermal as simply “lefty” politics based in a myth that will sap the economy, kill jobs and wimp everything up. Moonbat stuff.

And some of the fringe ideas go there — or come from there.

But if you are going to require “alternative energy” to stand solely on its own legs, you’d better apply the same reasoning to fossil fuels — zero out the subsidies, as disruptive as that would be.

At least argue against alternative subdsdies without the myth.





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