This is a surprise from Newsweek. Some recent examples of green subsidy: Fisker Automotive will receive a $529 million subsidy from the US government to build hybrid cars for the US market in California. This follows a previous subsidy award of $465 million to Tesla Motors to build electric cars. Both awards were made on the recommendation of former vice-president Al Gore. Don’t get me wrong, I’m an electric car fan, I drive one myself. But such projects should succeed or fail on their own merit and without public funds in my opinion.
By Stefan Theil | NEWSWEEK
Published Oct 24, 2009
Excerpts from the magazine issue dated Nov 2, 2009
Climate change is the greatest new public-spending project in decades. Each year as much as $100 billion is spent by governments and consumers around the world on green subsidies designed to encourage wind, solar, and other -renewable-energy markets. The goals are worthy: reduce emissions, promote new sources of energy, and help create jobs in a growing industry.
Yet this epic effort of lawmaking and spending has, naturally, also created an epic scramble for subsidies and regulatory favors. Witness the 1,150 lobbying groups that spent more than $20 million to lobby the U.S. Congress as it was writing the Clean Energy bill (which would create a $60 billion annual market for emission permits by 2012). Government has often had a hand in jump–starting a new -industry—both the computer chip and the Internet got their start in American defense research. But it’s hard to think of any non-military industry that has been so completely and utterly driven by regulation and subsidies from the start.
It’s a genetic defect that not only guarantees great waste, but opens the door to manipulation and often demonstrably contravenes the objectives that climate policy is supposed to achieve. Thanks to effective lobbying by American and European farmers, the more cost–efficient and environmentally effective Brazilian sugar-cane ethanol is locked out of U.S. and EU markets. Even within Europe, most countries have their own “technical standard” for biofuels to better keep out competing products—even if they are cheaper or produce a greater cut in emissions. Because the subsidies are tied to feedstocks, there is zero incentive to develop better technology.
Both the International Energy Agency and the Organization for Economic Cooperation and Development have asked Germany to end its ludicrous solar subsidies that will total $115.5 billion by 2013.
Read the article The Dark Side of Green at newsweek.com
You need electricity to run them. How are you going to get it, out of windmills?
We must remember that during this same year, there were found two big oil deposits, one in from of Rio de Janeriro, Brazil and another in the US Gulf.
There is a lot of oil and NG in the world, then why such an hysterical, new aged, droggie and nervous desperation for making big toys for dumb daddy?
This is our present and future if AGW takes hold by way of legislation:
Subsidies for products that can’t sustain a profit (even after normal start up costs), and special taxes to prop up these non-self-sustaining products (read products with no real profits)
Enron style inside dealing and manipulation of carbon credits
Political corruption at the national level as ever more economic decisions are made in the political arena (yes, I know it’s already happening)
The rich and well connected (clients of Al Gore) finangle special deals from government that make them more rich and poerful (and thus well connected) while the little guy is pushed into a secondary role (like in third world countries)
Pushing up the costs of self-sustaining energy supplies like oil, coal, and even natural gas (even though America has a glut of natural gas)
It’s a recipe for the death of democracy and the birth of plutocracy.
The stakes are that high.
The US & EU need to re-think their Brazil strategy. Bring in their ethanol along with the flex-fuel autos they’re making, and we’ll dramatically reduce our dependency on the middle-east almost overnight.
That would also free up the 1/3 of US crop production that goes to our own ethanol, and put it back to being used for food.
Interesting photo choice, those little cars have two stroke petrol engines.
Wind energy is very high in subsidy. Joe Romm suggested separate banks for favored lending. The loans would be to favored energy only. They would not be based on profits or earnings but on the product.
So called renewables can’t provided a competetive source of energy, and if they could do so they would not need to be subsided. The article points out one interesting fact – if the government subsidises something, it stiffles inovation, resulting in ever higher subsidies. The corporations, being clients of the government, no longer function as efficient allocators of capital, but become synonymous with government waste. Therefore we are sleepwalking into a Soviet style command economy with predictable results.
The article failed to point out the other obvious flaw however, namely that so called renewables represents an attempt to return to energy sources that have already been abandoned by our forefathers because they are no damn good. The reason is not hard to find – energy density of wind is so low as to render it wholly unsuitable for an energy intensive economy.
The Spanish experience was mentioned, but they failed also to mention the follow on study that resulted in 2.2 real jobs lost for every “green” job. This should not be surprising to anyone at all familiar with the Broken window fallacy.
It was the nineteenth century French economist Bastiat who came up with this interesting little parable. The story is best paraphrased by Hazlitt: “A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sun. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.
Bastiat knew that the fallacy came about because the crowd only reason upon what they can see, not on what is unseen. ” That the shopkeeper would have otherwise visited the tailor to buy a new suite. The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene.”
The fallacy of the broken window is so well known that it is amazing that anybody still commits this error. Yet this is exactly what is happening with the claim that subsidies will create new “green” jobs, because the money that is used to create them can no longer be invested in real jobs. This must be so because society has a fixed amount of labour, land and capital that it can draw upon to meet production. Any form of subsidy is a claim on these inputs, and hence is effectively to “break windows and replace them.”
That is why the Spanish lost more real jobs than “green” ones, and the same will happen in every other country that attempts to direct production in this manner.
Dan Lee,
The US has enough food for its needs. It is not our job to feed everyone on the planet. If there is a food shortage somewhere else, it is not caused by us using OUR resources to meet OUR needs. We will gladly sell our food to anyone who can pay. I have never heard anyone complain about OPEC and their failure to produce enough oil for the world. With OPECs failure to produce enough cheap oil to fill our vehicles, why should we not make ethanol out of our surplus? Why is only the US blamed? I say let them eat their oil.
As with all well thought exercises, now that Climate Change appears to have been slain – new challenges must be created. Thus an about face by struggling MSM newsrag Newsweek. The purpose in this next phase will be to tarnish the idea of alternative energy. It’s proponents, the antithesis of greens, will argue for continued fossil fuel agendas.
What will be studiously avoided is mention of the $700B annual payments Americans make to foreign oil interests. Or the destablizing effect of having to defend foreign oil interests. Or the national security jeopardy resulting from reliance on foreign oil interests.
There are reasonable questions about the way funds have been spent. While Tesla has proven through successful investment, start-upand production phased development of the world’s best passenger electric vehicle – you might ask what has Fisker done. Or why ethanol should remain subsidized. All issues that should be addressed.
What cannot be obfuscated is the losing proposition that is long term foreign oil imports. Domestic energy production and electrification of transport are two first steps in the logical goal of energy independence.
Dan Lee (09:49:08) wrote:
“The US & EU need to re-think their Brazil strategy. Bring in their ethanol along with the flex-fuel autos they’re making, and we’ll dramatically reduce our dependency on the middle-east almost overnight.
That would also free up the 1/3 of US crop production that goes to our own ethanol, and put it back to being used for food.”
Dan, your comment does not hold up to close inspection:
Brazillian ethanol works for Brazil because it is limited mostly to Brazil, where the number of cars per capita is much lower than the U.S. . The wholesale exportation of Brazillian ethanol would drive up the price of food in Brazil by converting food producing land into ethanal acreage (and have ripple effects the world over), and being that I’m a reasonable conservationist, put even more development pressure on the Brazillian, Amazon rain forest.
Ethanol is one of those alternative energy ideas that don’t pan out in practice (even though sugercane is the one crop that will produce more energy output than it takes in energy inputs).
What we really need to decrease Middle East oil dependence is full exploration & production of offshore oil deposits off American shores. Notice I said “decrease”, we will never be totally independent of Middle East oil, but America sure can decrease this dependence and world dependence on Middle East oil by creating oil sources in other parts of the world, particularly the United States, so the Middle Eastern oil just one important source of oil among many sources.
And to throw in: Nucleat power also needs to be considered. New, advanced technology in nuclear power has made it safer and easier. If France can get 70% of its electrical power from nuclear, America can at least increase its percentage (doubtful we’d ever get close to 70%).
And there are more advanced technologies on the horizon that could contribute — but won’t get the investment if we are stuck on the current crop of “green” technolgies.
Domestic energy production and electrification of transport are two first steps in the logical goal of energy independence.
And drilling your vast oil reserves.
There’s something wicked inside of me, I can’t explain it. But when I see pictures like the one at the head of this article I find myself seized by an almost uncontrollable urge to get get me a Hummer and squash all of them, wtihout mercy.
Do the “lemmings running” it’s a good excercise. All your troubles will end after running. Believe me!
Of course, construction of the the transcontinental railroad –
Was also one giant boondoggle of a subsidy.
So ain’t nuttin’ new.
I would remind our writer at Newsweak that TI holds the patent for the microcircuit and an early calculator (arguably a computer of sorts) and it was _not_ the product of a government ‘jump start’ grant.
That patent can (could at one time anyway) be inspected/seen just inside the doors of the corporate offices locacted in the North Building at the TI campus at US-75 and I-635 in Dallas … on one encounter with Jerry Merriman (listed on the patent) years ago now he personally described the experience of getting the first prototytpes operating (including the meticulous removing of ‘shorts’ that hadn’t etched completely away on the “integrated circuits” that were on the fabricated wafers).
Patent:
http://smithsonianchips.si.edu/patents/3819921.htm
More info, early calculators:
http://www.xnumber.com/history_pages/history6.htm
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The complete and utter economic devastation that could/would be caused by continuing this farcical agenda is starting to make itself evident.
It is perhaps pertinent here to highlight the financial exploits of Al Gore, but that is just trivial to what is really going on. There are many that are exploiting the AGW agenda to their immediate advantage and equally as many who are going to come crashing down to the detriment of all of us.
Already we have seen the demise of a large wind turbine company in the UK. Many similar enterprises are to follow in the coming years, why?, because wind power, wave power, electric whatever’s, orbital reflectors/other weirdnesses or geothermal power are not viable answers to the perceived and/or mythical problem until they are proved to be so (economically, practically or even morally).
I am not saying that these options are not viable in the long term as an answer to future energy needs. Some are certainly interesting and need support. My personal favorites here would be geothermal, improved nuclear technology and the continued use of known and yet to be discovered carbon reserves.
No I do not believe that trace amounts of CO2 are causing any discernible change in anything except increased plant growth. My interest lies squarely with the survival of our own species and as natures own invention we have as much right to dominate and exist as did the dinosaurs. We have only ruled for a tiny fraction of the period the dinosaurs did but we are perhaps the first beings that are able to understand (sort of) the nature of the universe. These other green beings would have us going back to living in caves and waiting for, well nothing really. Whats the point then?
“Green Jobs” that always reminds me of the great line from that song “Put another log on the fire”
It goes “Ain’t I gonna take you fishin’ someday?”
How we are going to get economic growth out of higher priced energy is simply beyond me.
Raw political pork. No more, no less. And yes, I own a NEV.
To my mind political agreement with ‘climate change’ is neither sinister nor hard to understand. It is popular amongst democratic politicians because they think there are votes in it. Not only that but there are entire organisations who will campaign for and donate to them if they are opposed by a non-believer or a party of non-believers.
This is why all major parties in the UK accept the need to combat ‘climate change’. They see it as an opportunity (we’re greener than you are) and a threat to them if they do or say anything else.
Public Opinion polls showing greater and greater scepticism on the subject, i.e. there are likely to be votes on the other side, are the only thing that will turn this around. Blogs like this, scientific dissent and above all lots and lots of cold weather is what will change perceptions.
James F. Evans, Adolpho Giurfa:
Having read The Prize by Daniel Yergin, (for which he won a Pulitzer Prize for Literature), the US will not easily (nor soon) adopt a strategy to drill for oil in the US.
Yergin makes a compelling case that oil has too much value strategically, in a war, to be imported where such imports can be cut off. Japan learned this lesson the hard way. Leaving our known oil deposits in the ground – where nobody can blow them up – is a wise strategy in a world growing ever more aggressive and war-like.
I advocate for using Picken’s Plan – produce natural gas for vehicular use, and wind and solar power to reduce natural gas power plant fuel consumption.
Fisker. Have they ever made production cars? I see that they now say they can build one for $39k, provided the government kicks in a $7,500 subsidy (in addition to its loan to build its works). Isn’t that really a $46,500 car? The car it is building will be assembled in Finland and sold for about $80k. I don’t see the general population being able to afford these.
And what is Tesla building that I can buy for the same price as a Jeep Patriot?
For land freight, the railroad is far more fuel-efficient than semis.
Much renovation needs to be done for rail (old lines).
We are NOT going to get any economic growth OR recovery out of higher ‘Green priced’ energy. It’s a pyramid scheme with to top tier making off with the goods.
The good news about stimulus in economy is that it works on the contrary sense EVER, ask any economist.
We have a great example here of the “command” model of economics v. the free market model. The free market always outperforms the command economy except for some short-term periods.
When the government chooses to subsidize a company or technology, they are artificially selecting a winner. Those companies have less incentive to be competitive and other, better technology has a lesser chance of emerging.
Just say no.
The corn used for ethanol production is not sweet corn used for human food consumption, it is field corn which is grown as an industrial commodity. The waste product of ethanol from corn is dried distillers grain and solubles which has higher nutrition value than the corn it came from thanks to the enhancement due to the yeasts who turn the fermentable sugars and starch content into ethanol. The DDG&S is then used as a high quality feed supplement for live stock.
Ethanol from corn is only an interim step, like the biplane was an interim step in the development of commercial air transportation. We are rapidly moving toward cellulose and algae based ethanol production. Ethanol from corn will continue as a niche product due to the high quality livestock feed it produces and the increased market value of the corn it creates, but only in local markets where Corn is the dominant agricultural crop anyway. It will not and was never intended to be a total displacement fuel for oil, it is just one of many incremental moves to a more diversified transportation fuel system.
Use of ethanol as a gasoline blending agent directly increases our fuel supply and reduces our petroleum fuel imports. If the goal of reducing oil imports is to reduce dependence on foreign sources it makes no sense to substitute another foreign energy supplier for the middle east by making Brazil a critical supplier.
The reason ethanol fell out of use was a combination of ultra cheap local oil production (while we were still producing most of our own oil), and Prohibition which shut down domestic ethanol production in the 1920’s. When prohibition ended gasoline was so entrenched that ethanol was never able to re-establish itself as a motor fuel because it was more valuable as a distilled spirit due to the onerous taxation on ethanol. It was not until the late 1970’s after the Arab oil embargo that that issue resolved it self both through price hikes in foreign oil and changes in regulations about fuel ethanol production which set procedures for fuel ethanol production. At that time ethanol absolutely needed subsidies in order to develop and mature production methods. It is only the last few years that production processes have matured sufficiently for it to become competitive.
If all direct and indirect subsidies to oil were removed ethanol would be economically competitive without any subsidies. As it is it can compete heads up when oil reaches the cost levels we saw during the recent oil price spike.
Unfortunately right now, the subsidies go not to the farmer or the producer of the ethanol, but to the “blender” which is the oil companies with only rare exceptions. In effect the blenders tax credit subsidizes ethanol’s primary competition in the fuel market the oil refiners and blenders, so ethanol subsidies are in fact oil subsidies as currently setup.
Larry