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by John Brian Shannon | February 2, 2015
By now, we’re all aware of the threat to the well-being of life on this planet posed by our massive use of fossil fuels and the various ways we might attempt to reduce the rate of CO2 increase in our atmosphere.
The First Option: Economic Incentives to Lower Fossil Fuel Use
Disinvestment in Fossil Fuels (A) or Outright Elimination of Fossil Fuel Subsidies (B)
A) Divestment in fossil fuels is under discussion as one way to lower carbon emissions
The case for divestment generally flows along these lines; By making investment in fossil fuels seem unethical, investors will gradually move away from fossil fuels into other investments, leaving behind a smaller, but hardcore cohort of fossil fuel investors.
Resulting (in theory) in a gradual decline in the total global investment in fossil fuels, thereby lowering consumption and CO2 additions to the atmosphere. So the thinking goes.
It worked well in the case of tobacco, a few decades back. Over time, fewer people wanted their names or fund associated with the tobacco industry — so that the tobacco industry is now a shadow of its former self.
Interestingly, Solaris (a hybridized tobacco plant) is being grown and processed into biofuel to power South African Airways (SAA) jets. They expect all flights to be fully powered by tobacco biofuel within a few years, cutting their CO2 emissions in half. Read more about that here.
b) Another way to curtail carbon emissions is to completely remove fossil fuel subsidies from the equation
In 2014, the total global fossil fuel subsidy amounted to $548 billion dollars according to the IISD (International Institute for Sustainable Development) although it was projected to hit $600 billion before the oil price crash began in September. The global fossil fuel subsidy amount totalled $550 billion dollars in 2013. For 2012, it totalled $525 billion dollars. (These aren’t secret numbers, they’re easily viewed at the IEA and major news sites such as Reuters and Bloomberg)
Yes, removing those subsidies would do much to lower our carbon emissions as many oil and gas wells, pipelines, refineries and port facilities would suddenly become hugely uneconomic.
We don’t recognize them for the white elephants they are, because they are obscured by mountains of cash.
And there are powerful lobby groups dedicated to keeping those massive subsidies in place. Ergo, those subsidies likely aren’t going away, anytime soon.
The Second Option: Reducing our CO2 footprint via a carbon tax scheme
But for all of the talk… not much has happened.
The fossil fuel industry will spin this for decades, trying to get the world to come to contretemps on the *exact dollar amount* of fossil fuel damage to the environment. Long before any agreement is reached we will be as lobsters in a pot due to global warming.
And know that there are powerful lobby groups dedicated to keeping a carbon tax from ever seeing the light of day.
The Third Option: Levelling the Subsidy Playing Field
Continue fossil fuel subsidies at the same level – without any carbon tax.
Quickly ramp-up renewable energy subsidies to match existing fossil fuel subsidies.
Both divestment in fossil fuels and reducing fossil fuel subsidies attempt to lower our total CO2 emissions by (1) reducing fossil fuel industry revenues while (2) a carbon tax attempts to lower our total CO2 use/emissions by increasing spending for the fossil fuel industry
I prefer (3) a revenue-neutral and spending-neutral solution (from the oil company’s perspective) to lower our CO2 use/emissions.
So far, there are no (known) powerful fossil fuel lobby groups dedicated to preventing renewable energy from receiving the same annual subsidy levels as the fossil fuel industry.
Imagine how hypocritical the fossil fuel industry would look if it attempted to block renewable energy subsidies set to the same level as fossil fuel subsidies.
In 2014, renewable energy received 1/4 of the total global subsidy amount enjoyed by fossil fuel
Were governments to decide that renewable energy could receive the same global, annual subsidy as the fossil fuel industry, a number of things would begin to happen;
- Say goodbye to high unemployment.
- Say goodbye to the dirtiest fossil projects.
- Immediate lowering of CO2 emissions.
- Less imported foreign oil.
- Cleaner air in cities.
- Sharp decline in healthcare costs.
- Democratization of energy through all socio-economic groups.
Even discounting the global externality cost of fossil fuel (which some commentators have placed at up to $2 trillion per year) the global, annual $548 billion fossil fuel subsidy promotes an unfair marketplace advantage.
But instead of punishing the fossil fuel industry for supplying us with reliable energy for decades (by taking away ‘their’ subsidies) or by placing on them the burden of a huge carbon tax (one that reflects the true cost of the fossil fuel externality) I suggest that we simply match the renewable energy subsidy to the fossil subsidy… and let both compete on a level playing field in the international marketplace.
Assuming a level playing field; May the best competitor win!
By matching renewable energy subsidies to fossil fuel subsidies, ‘Energy Darwinism’ will reward the better energy solution
My opinion is that renewable energy will win hands down and that we will exceed our clean air goals over time — and stop global warming in its tracks.
Not only that, but we will create hundreds of thousands of clean energy jobs and accrue other benefits during the transition to renewable energy. We will also lower healthcare spending, agricultural damage, and lower damage to steel and concrete infrastructure from acid rain.
In the best-case future: ‘Oil & Gas companies’ will simply become known as ‘Energy companies’
Such Energy Darwinism will reward investors that simply but profoundly migrate from fossil fuel energy stocks, to renewable energy stocks within the same energy company or group of energy companies.
At the advent of scheduled airline transportation nearly a century ago, the smart railway companies bought existing airlines (or created their own airlines) and kept their traditional investors and gained new ones.
Likewise, smart oil and gas companies, should now buy existing renewable energy companies (or create their own renewable energy companies) and keep their traditional investors and gain new ones.
- The Responsible Investor’s Guide to Climate Change (Project Syndicate)
- Full Cost of Coal $500 Billion/Year in U.S., Harvard Study Finds (CleanTechnica)
- The Social Cost of Carbon Six Times Higher Than Estimated – Stanford Study (CleanTechnica)
- Duke Energy Takes Equity Stake in REC Solar, Embraces Distributed Generation (Renewable Energy World)
- Southern Company subsidiary acquires two Georgia solar projects totaling 99 MegaWatts (PRNewswire)
As Nuclear steps aside, Renewable Energy steps up to power Europe
by John Brian Shannon
Nuclear reactors are starting to shut down in Europe
It began in earnest in the wake of the Fukushima disaster when Germany inspected its problem-plagued nuclear power plants and decided to take 9 of its nuclear power plants offline in 2011 and the rest offline by 2022.
There is plenty of public support in the country for Germany’s planned nuclear closures, even with the additional fee added to each German electricity bill to pay for nuclear power plant decommissioning, which completes in 2045.
Switzerland likewise has decided to get out of the nuclear power business beginning in 2015 and decommission their nuclear power plants by 2045.
Other European nations are also looking at retiring their nuclear power plants. But the news today is about the UK, Belgium, Germany and Spain.
In the UK, four (French-operated) EDF reactors built in 1983 have been shut down after one of them was found to have a crack in its centre spine. (EDF stands for Electricity de France which is a French utility responsible for managing many nuclear reactors)
At first only the affected unit was taken offline (in June) but upon further inspection it was determined that the other three were at risk to fail in the coming months. Whether or not these four reactors can be repaired economically — all were scheduled to be decommissioned before 2020.
The shortfall in electrical generation due to these unscheduled nuclear power plant shutdowns has been met by 5 GW of new wind power generation, which has seamlessly stepped in to fill demand.
Additional to that, 5 GW of solar power has been added to the UK grid within the past 5 years. And that’s in cloudy olde England, mates!
In Belgium, 3 out of 5 of their nuclear power plants are offline until December 31, 2014 due to maintenance, sabotage, or terror attacks — depending who you talk to.
Belgium’s Doel 4 reactor experienced a deliberate malfunction last week and workers in the country’s n-plants are henceforth directed to move around inside the plants in pairs.
Also, their Tihange 2 reactor won’t be ready to resume power production until March, 2021. See this continuously-updated list of nuclear power plant shutdowns in Belgium.
Further, the utility has advised citizens that hour-long blackouts will commence in October due to a combination of unexpected n-plant shutdowns and higher demand at that time of year.
Belgian energy company Electrabel said its Doel 4 nuclear reactor would stay offline at least until the end of this year after major damage to its turbine, with the cause confirmed as sabotage.
Doel 4 is the youngest of four reactors at the Doel nuclear plant, 20 km north of Antwerp, Belgium’s second-biggest city.
The country has three more reactors in Tihange, 25 km southwest of the city of Liege.
Doel 1 and 2, which came on line in 1975, are set to close in 2015. Tihange 1, which also started operation in 1975 and was designed to last 30 years, got a 10-year extension till 2015.
The two closed reactors Doel 3 and Tihange 2 were connected to the grid in 1982 and 1983. Doel 4 and Tihange 3, which came on line in 1985, were operating normally until the closure of Doel 4 last week.
The shutdown of Doel 4’s nearly 1 gigawatt (GW) of electricity generating capacity as well as closures of two other reactors (Doel 3 and Tihange 2) for months because of cracks in steel reactor casings adds up to just over 3 GW of Belgian nuclear capacity that is offline, more than half of the total.
In Britain, EDF Energy, owned by France’s EDF, took three of its nuclear reactors offline for inspection on Monday after finding a defect in a reactor of a similar design. – Reuters
In Germany, the nuclear power generation capacity missing since 2011 has been met by a combination of solar, wind, bio, natural gas, and unfortunately some coal. But that sounds worse than it is.
According to the Fraunhofer Institute, renewable energy produced about 81 TWh, or 31% of the nation’s electricity during the first half of 2014. Solar production is up 28%, wind 19% and biomass 7% over last year.
Meanwhile, with the exception of nuclear energy, all conventional sources are producing less. The output from gas powered plants was half of what it had been in 2010 and brown coal powered plants are producing at a similar level to 2010-2012. – CleanTechnica.com
Let’s see what our friends at the Fraunhofer Institute have to say in their comparison of the first half of 2013 vs. the first half of 2014.
Although unspoken by power company executives operating in Germany, Spain, and some other European countries, the panic felt by traditional power generators is due to the massive changes in ‘their’ market since 2009.
Things move slowly in the utility industry — ten years is seen as a mere eyeblink in time, as the industry changes very little decade over decade. Recent changes must be mind-blowing for European power company executives.
It occurs to me that the end of the conventional energy stranglehold on Europe parallels the ending of Star Wars VI.
Help me take this mask off
It’s a mask to hide behind when conventional power producers don’t want the facts aired.
Fossil and nuclear don’t want their Subsidies or Externalities advertised. Global fossil fuel and nuclear subsides topped $600 billion dollars in 2014, while the externality cost of fossil and nuclear may be as high as $2 trillion dollars annually. That’s a lot of hiding, right there.
Fossil fuel and nuclear power power producers don’t want the subsidies they’re paid to be publicly advertised — and they don’t want the renewable energy industry to have subsidies at all
Externalities are simply another form of subsidy to the fossil fuel and nuclear power industries which often take the form of massive public healthcare spending or massive environmental spending to mitigate the gigatonnes of toxic airborne emissions, or to monitor or repair environmental catastrophes such as oil spills.
Spain has ended it’s Feed-in-Tariff subsidy scheme for renewable energy, while keeping conventional power producer subsidies in place.
Not only that, suddenly homeowners aren’t allowed to collect power from the Sun or harvest power from the wind unless it is for their own use. Electricity cannot be collected by Spanish residents and then sold to the grid for example, nor to anyone else.
Spain’s government has taken it yet another step in a bid to keep the conventional energy companies from drowning in their tears. After a meteoric rise in wind and solar capacity, Spain has now taxed renewable energy power producers retroactively to 2012 and ruled that renewable energy will be capped to a 7.5% maximum profit. Renewable energy returns over the 7.5% threshold becomes instant tax revenue for the government. (Quite unlike conventional energy producers in the country which can make any amount of profit they want and continue to keep their subsidies)
While all of this has been going on, Spain and Portugal have quietly lowered their combined CO2 output by 21.3% since 2012 (equal to 61.4 million fewer tonnes of CO2) thanks to renewable energy.
But you’ll die
Not only has European renewable energy now stepped up to fill the multiple voids due to nuclear power plant maintenance and sabotage shutdowns, it has scooped incredible market share from conventional power producers.
In January 2014, 91% of the monthly needed Portuguese electricity consumption was generated by renewable sources, although the real figure stands at 78%, as 14% was exported. – Wikipedia
Unwittingly, the German and Spanish power companies have provided the highest possible compliment to the renewable energy industry, which, if publicized would read something like this;
We can’t compete with renewable energy that has equal amounts of subsidy. Therefore, remove the renewable energy subsidy while we keep ‘our’ traditional subsidies, until we can reorient our business model – otherwise, we perish!
Nothing can stop that now
Ending the European renewable energy Feed-in-Tariff schemes will only temporarily slow solar and wind installations as both have reached price-parity in recent months — and that, against still-subsidized conventional power generators!
Even bigger changes are coming to the European electricity grid over the next few years. Nothing can stop that now.
Tell your sister; You were right about me
Conventional power producers in Europe provided secure and reliable power for decades, it was what has powered the European postwar success story — but having the electricity grid all to themselves for decades meant that Europe’s utilities became set in their ways and although powerful, were not able to adapt quickly enough to a new kind of energy with zero toxicity and lower per unit cost.
Renewable energy, at first unguided and inexperienced, quickly found a role for itself and is now able to stand on its own feet without subsidies. Quite unlike conventional power generators.
Considering the sheer scale of the energy changes underway in Europe, conventional energy has been superceded by a superior kind of energy and with surprisingly little drama.