The Price Tag Of Renewables, Part 2

Guest Post by Willis Eschenbach

Anthony has posted a story about a laughable analysis of the cost of propping up renewables through subsidies. And long-time WUWT contributor KD helpfully pointed me to the document itself. Now that I have the actual document, here’s what they say about subsidies (all emphasis mine).

First, they point out that the cost of shifting to renewables will be on the order of $800 billion dollars per year. Overall, they say the cost will be $45,000,000,000,000 ($45 trillion dollars) by 2050, and could be as high as $70 trillion.

In other words, a substantial “clean-energy investment gap” of some $800 billion/yr exists – notably on the same order of magnitude as present-day subsidies for fossil energy and electricity worldwide ($523 billion). Unless the gap is filled rather quickly, the 2°C target could potentially become out of reach.

Now, a trillion is an unimaginable amount of money. Here’s a way to grasp it. If I started a business in the year zero AD, and my business was so bad that I lost a million dollars a day, not a million a year but a million dollars a day, how many trillion dollars would I have lost by now?

Well, I wouldn’t have lost even one trillion by now, only about $735 billion dollars … in other words, less than the estimated PER-YEAR cost of switching to renewables.

Then they go on to claim that hey, $800 billion per year is no big deal, because fossil fuel subsidies are nearly that large.

While the clean-energy investment gaps (globally and by region) may indeed appear quite sizeable at first glance, a comparison to present-day energy subsidy levels helps to put them into context. According to estimates by the International Monetary Fund and International Energy Agency, global “pre-tax” (or direct) subsidies for fossil energy and fossil electricity totaled $480–523 billion/yr in 2011 (IEA 2012b; IMF 2013). This corresponds to an increase of almost 30% from 2010 and was six times more than the total amount of subsidies for renewables at that time. Oil-exporting countries were responsible for approximately two-thirds of total fossil subsidies, while greater than 95% of all direct subsidies occurred in developing countries.

Now, this is a most interesting and revealing paragraph.

First, despite what people have said on the previous thread, they have NOT included taxes in their calculation of subsidies.

Next, to my great surprise an amazing 95% of all subsidies are being paid by developing nations. This underscores the crucial importance of energy for the poor.

In addition, they say that most of the money used to pay the fossil fuel subsidies comes from … wait for it … the sale of fossil fuels.

Next, it means that nothing that the developed world does will free up much money. Only 5% of the subsidies are in developed nations, they could go to zero and it wouldn’t change the big picture.

It also means that since these subsidies are not going to drivers in Iowa and Oslo, but are propping up the poorest of the global poor, we cannot stop paying them without a huge cost in the form of impoverishment, hardship, and deaths.

Finally, unless we shift the fuel subsidy from fossil fuels to renewables, which obviously we cannot do, the comparison is meaningless—we will still need nearly a trillion dollars per year in additional subsidies to get renewables off of the ground, over and above the assistance currently given to the poor … where do the authors think that money would come from?

I fear that like the pathetically bad Stern Report, this analysis is just another batch of bogus claims trying to prop up the war on carbon, which is and always has been a war on development and human progress, and whose “collateral damages” fall almost entirely on the poor.

And at the end of the day, despite their vain efforts to minimize the cost, even these proponents of renewables say it will cost up to $70 trillion dollars to make the switch, with no guarantee that it will work.

Sigh …

w.

The Usual Disclaimer: If you disagree with someone, QUOTE THEIR WORDS. Don’t go off about something like “I see that you are claiming that X will do Y, I think that’s wrong blah blah blah”, that goes nowhere because we don’t know what you are objecting to. Please have the courtesy to quote the exact words that you disagree with, so we can all be clear about the substance and nature of your objection.

[UPDATE] 

I see that in the study they make much of the disparity between fossil fuel subsidies ($523 billion annually) and renewables subsidies, which they proudly state are only about a sixth of that ($88 billion annually).

However, things look very different when we compare the subsidies on the basis of the energy consumed from those sources. To do that, I use the data in the BP 2014 Statistical Review of World Energy spreadsheet in the common unit, which is “TOE”, or “Tonnes of Oil Equivalent”. This expresses everything as the tonnes of oil that are equivalent to that energy. I’ve then converted the results to “Gallons of Oil Equivalent” and “Litres of Oil Equivalent” to put them in prices we can understand. That breakdown looks like this:

Fuel, Subsidy/Gallon, Subsidy/Litre

Fossil fuels – $0.17 per gallon, $0.04 per litre

Renewables – $1.19 per gallon, $0.31 per litre.

So despite the fact that renewable subsidies are only a sixth of the fossil subsidies, per unit of energy they are seven times as large as the fossil subsidies.

This, of course, is extremely bad news for the promoters of the subsidies. It means that to get the amount of energy we currently use, without using fossil fuels and solely from renewables, it would require seven times the current fossil fuel subsidy, or $3.5 TRILLION DOLLARS PER YEAR.

And of course, since there’d be no fossil fuel sales at that point, there’d be little money to pay for the subsidy.

Sometimes, the idiocy of the savants is almost beyond belief.

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July 3, 2014 11:46 am

Reblogged this on Norah4you's Weblog and commented:
Läs och begrunda: First, they point out that the cost of shifting to renewables will be on the order of $800 billion dollars per year. Overall, they say the cost will be $45,000,000,000,000 ($45 trillion dollars) by 2050, and could be as high as $70 trillion.
In other words, a substantial “clean-energy investment gap” of some $800 billion/yr exists – notably on the same order of magnitude as present-day subsidies for fossil energy and electricity worldwide ($523 billion). Unless the gap is filled rather quickly, the 2°C target could potentially become out of reach.
Från rebloggen nedan!
Stackars Miljöpartisterna. Nu visar till och med beräkningar utifrån fakta inte fiction att växling till återvinningsbart kostar mer än det smakar.
Se även: Åsa Romson trampar i klaveret, Norah4you 2 juli 2014

Peter Miller
July 3, 2014 11:49 am

In around 20 years from now, the world will look back at today’s climate science and ask just why did they impoverish so many people to try and solve a non- problem.
The answer, as so often happens, is that the polítical left need causes to justify their existence, and if there are no good causes to be had, then you just have to make them up. And that is what today’s climate science is all about.

Chuck Nolan
July 3, 2014 11:50 am

Thanks Willis.
Looks like they’re at it again…? some more…? still?
They use Progressive Math.
cn

Ralph
July 3, 2014 11:53 am

And just the other day, Gov. Mooonbeam was lamenting the fact that with all the higher mpg cars out there that the state had mandated, California isn’t taking in enough tax dollars to support the freeway maintenance. So now they’re talking of taxing how many miles we drive?
Yeeeaah, that’ll work…

Bloke down the pub
July 3, 2014 12:10 pm

I’m sure someone will correct me if I’m wrong but, my understanding of the subsidies for fossil fuels in the G8 is that they come in the form of tax offsets, offered in return for making massive investments in future energy supply. Subsidies for renewables come in the form of guaranteed high prices even when the energy is surplus to requirements.

george e. smith
July 3, 2014 12:14 pm

Well I’m having a hard time catching on to the “fossil fuels subsidies” concept.
It seems to me, for example, that the largest beneficiary of the USA oil industry operations is the US Federal Treasury, who evidently get more revenues from O&G than do those companies’ shareholders.
But at a more fundamental level, energy “subsidies” do not arise out of Scottish mist.
Somehow somewhere, there has to be a base energy source, that provides the unsubsidized energy and profits, that then leads to the taxes, from which are drawn the SUBSIDIES that fund ALL of the subsidized fossil fuel non-businesses.
You cannot run a growing profitable global enterprise on subsidies. Somewhere there has to be a power supply; the tortoise, on whose back, everything rests.
So I think, the “subsidized fossil fuel” concept, is pure mythology.
We started out in the fig trees, with free clean green renewable energy (figs), and it was unable to sustain, even a microscopic fraction of the current world population, of humans plus their indentured servants (farm animals).
It took fossil fuels (and fire) to enable us to survive and prosper down on the ground, without the figs, and there wasn’t anything to subsidize our energy sources.
Humanity and global industry, have grown despite wastage, such as the destructive effects of wars, and that is impossible with subsidies. Something REAL has to provide a net gain, or the system must collapse.
Free clean green renewable energy, is not a sustainable system.

Alan Watt, Climate Denialist Level 7
July 3, 2014 12:19 pm

So if most of the current subsidies are going to the poor in developing countries, if you switch everyone to renewable substitutes at a higher unit cost, then all the subsidies going to the poor today to buy “bad” fuels will have to continue to allow them to by “good” fuels, plus an additional amount equal to the market price difference between “good” fuels and “bad” fuels.
And as you note if most of the current subsidies come from sale of “bad” fuels you can’t simply shift that money to subsidize “good” fuels because you’ve destroyed the income stream. Higher costs and lower income — hardly a recipe for prosperity, regardless of how many green jobs you create.
Was that taken into account in their analysis?

William Sears
July 3, 2014 12:29 pm

Along with Smith above I also would like to see a clear definition of the term subsidy, especially as it applies to fossil fuel. How can the main source of modern wealth be subsidized? For example you say that:
“In addition, they say that most of the money used to pay the fossil fuel subsidies comes from … wait for it … the sale of fossil fuels.”
If it pays for itself how is it a subsidy? If renewable energy must be subsidized with the existing cheap fossil fuel energy how can it ever pay for itself. If I am missing something obvious please enlighten me.

July 3, 2014 12:52 pm

Outstanding post. For more on foreign oil and natural gas subsidies:
http://www.businessweek.com/articles/2014-03-13/why-fuel-subsidies-in-developing-nations-are-an-economic-addiction
A discussion on US tax deductions that are often classed as subsidies to oil and gas (they aren’t) can be found at api.org.
A discussion of foreign income taxed by the US is in:
http://taxfoundation.org/article/how-much-do-us-multinational-corporations-pay-foreign-income-taxes
Our corporate income tax on foreign earnings has claimed yet another victim recently, it looks like Walgreens is moving overseas to join Medtronic, Weatherford, Halliburton, Pfizer, Aon, Eaton, Rowan, Transocean and many others. I guess the last corporation to move out of the US will have to turn off the lights. They will have to wait until the sun is shining and the wind is blowing at the right speed or the lights will be off anyway.

TerryBixler
July 3, 2014 1:02 pm

Willis
Work to do what?

Joseph Murphy
July 3, 2014 1:04 pm

@george e. smith
The tortoise’s back is promises of future profits. I will gladly pay you on tuesday for a hamburger today. It is similar to the so called Keynesian economics here in the US (IMO US economics is a far cry from Keynesian economics).

Gary Pearse
July 3, 2014 1:08 pm

Willis, you have touched on one part of the idiocy of such green analyses, but there is much more. Aren’t the so called “subsidies” for fossil fuel production the usual business deductions for capital costs, labour and consumables? These companies make substantial outlays for exploration, development, capital costs, labour, consumables, delivery…. They pay income tax after deduction of allowable costs and they employ hundreds of thousands of people whom they pay, and who pay income taxes. All this and they still turnout cheap energy for the consumer. The fossil fuel price also carries retail taxes that in Canada and elsewhere make up half or more of the price. The fossil fuel companies are, indeed, subsidizing the government. With renewables, you have similar allowable deductable costs but in addition massive subsidies are paid by government plus manifold increases in prices for the energy subsidized by the consumer. I think a thorough holistic analysis must be done to take away the misleading term subsidies and to reveal numbers for renewables that are in comparison, perhaps triple the stated trillions. Comon, there must be some oil industry tax folks out there who know how to do an informative article on this stuff. Stop letting these lying clowns set the terms of the debate.

JJM Gommers
July 3, 2014 1:15 pm

Look, the year 2100 is still far away but elections only a couple of years. Now facing the reality about the enormous costs and the difficulties of the implementation; the politicians start to bank on two horses. For example the closure of 5 coal plants in the Netherlands is postponed. The green agenda still holds but starts to be behind schedule.

johanna
July 3, 2014 1:16 pm

I can’t believe that the “fossil fuel subsidy” argument is still around. In developed economies, the government would go broke without taxes on oil, coal, petrol etc.They charge for use of the land, they extract royalties, and then they hit consumers with taxes which often exceed the actual price of the product.
Try running that sort of argument when you do your next tax return. You could end up in jail, for fraud.

Windsong
July 3, 2014 1:19 pm

Hi Willis: Thank you for your long hours on these topics. One thing that occurs to me is that the warmists and their supporters in media are afraid to use the words “carbon dioxide” in tandem when referring to CO2, and have convinced everybody they are working hard on reducing “carbon emissions.” As in soot, reinforced with images of smokestacks and references to asthma, but using their chosen term is misleading.
I know the shorthand “carbon,” // “… this analysis is just another batch of bogus claims trying to prop up the war on carbon …” // is widely used, but it is currently a war on plant food, not soot.
If time and space permit, request we say/write “carbon dioxide” and skip the preferred warmist term du jour.

Joe Prins
July 3, 2014 1:21 pm

Check out the price of gasoline in Iran and you get an idea what the subsidies are all about.

u.k.(us)
July 3, 2014 1:24 pm

It’s a good thing money doesn’t grow on trees, there might be nary one left.
When was the last time, that throwing money at a problem, produced a net gain over time ?
In and of itself.

3x2
July 3, 2014 1:27 pm

“A Trillion here, a Trillion there, pretty soon, you’re talking real money.”
Martin Durkin had a good illustration (Britain’s Trillion Pound Horror Story) of a Trillion (£). He claimed that if you made a stack of a Trillions worth of £50 notes it would be some 6.5 thousand miles high.
Now perhaps it’s late here in England and I’ve had a long day but 79 Trillion would get us to The moon and back.
Oops … posted on the wrong thread. Tis the hazard of tabbed browsing

JohnnyCrash
July 3, 2014 1:31 pm

The solution will be micro power plants. As long as we need city-sized power plants we will have politicians in the mix. At some point new tech will enable house or street sized power generation. Until then politicians, their cronies, and their sheeple enablers will keep the cost of energy sky high. Arguing with a liberal about the benefits of cheap energy is like playing tennis without a net. The average person living in a developed world is simply not capable of grasping the amount of work electricity does for them. Imagine spending a full day to wash your only 2 pairs of clothes, or using a wood stove to cook. You have to gather the wood, chop the wood, transport the wood, then cook in sweltering heat. Gathering water. Milking cows. Laboring in the fields. Building your own house. No medical care. No books, no mobile phones, no phones, no electronic entertainment, no lights, small houses, no bikes, no cars, no toilets, only the rich have horses, food shortages, etc etc etc. There are a handful of tree huggers that think that is a good idea and actually live it. The rest of the sheeple are simply clueless as to what they are talking about endangering or giving up. Freedom owes everything to the fact that slaves are not as efficient as electric powered machines.

Kevin Kilty
July 3, 2014 1:36 pm

In 2008 I gave a talk at a college about Gore’s claim of being able to switch to all renewable electricity in a decade. Just the wind turbines and nothing else, with no spare capacity at all, I figured as costing about $650 billion per year, which is to say all of national savings at that time. I pointed out that “all of national savings” meant no savings for investments, repair of infrastructure, and so forth. Their guy in charge of a very costly wind energy program at the college agreed with all I said, but still concluded his program was valuable and needed.
Renewable energy people derive great benefit from renewable subsidies, and rationalization being what it is, can convince themselves of the merit of renewables placed anywhere, not just where they make some economic sense; and also convince themselves that oil, gas, and coal are even more greatly subsidized still. Penetrating that shell of rationalization is the entire battle to tame the madness.

cynical scientst
July 3, 2014 1:38 pm

The answer is simple. Folling the principles revealed in this survey we can easily pay a billion dollars of subsidies for renewables via a billion dollars of taxes on renewables. OK – perhaps the subsidy might need to be a little bit higher to allow them to pay the billion dollars in taxes. No problem. Just make it 2 billion. Problem solved. We should thank the authors of this survey for their insightful analysis of economic matters.

Kevin Kilty
July 3, 2014 1:40 pm

Willis Eschenbach says:
July 3, 2014 at 1:18 pm
Gary Pearse says:
July 3, 2014 at 1:08 pm
Willis, you have touched on one part of the idiocy of such green analyses, but there is much more. Aren’t the so called “subsidies” for fossil fuel production the usual business deductions for capital costs, labour and consumables?
Thanks, Gary, but no, they’re discussing something entirely different. In Venezuela, for example, the price of gas is pennies per gallon, and that has nothing to do with “capital costs, labour and consumables”. It is a direct subsidy by the Venezuelan government.
w.

I can’t speak for subsidies around the world, but when anti-fossil fuels people point toward subsidies for fossil fuels in the U.S. they speak of “percentage depletion allowance”, which is a method of depreciation allowed to independent U.S. oil producers.

CaligulaJones
July 3, 2014 1:46 pm

Might seem OT but…
Just this week I had a discussion with a young’in about radio, and that of course I pay for it, because the cost of the ads which are sold to companies to advertise are passed on to me, the consumer.
His head almost exploded, he couldn’t get his head around that.
BTW, the discussion was about an alternative weekly here in Toronto that has gone belly up, due to declining ad revenue. My point was that his generation (20 something) was so used to getting stuff for “free” by downloading it, we’ll see more of this in the future. He still didn’t get it…

Chuck L
July 3, 2014 1:50 pm

The war on fossil fuels being waged by the Obama Administration and other governments is, in reality, a war on the (energy) poor. If energy prices, food prices, and other prices double as a result of subsidized renewable energy and the intentional destruction of the fossil fuel industry, those less fortunate will bear the brunt of it. The intellectual, moral, and ethical arrogance of Progressives is unspeakably despicable

July 3, 2014 1:50 pm

Gary Pease:

Aren’t the so called “subsidies” for fossil fuel production the usual business deductions for capital costs, labour and consumables?

Don’t know, because the news media aren’t too meticulous about how they use the term. But if experience is any guide, then some of that does enter into the post-tax components mentioned here:

Interestingly, on a “post-tax” (or indirect) basis – which also factors in tax breaks and the failure to account for negative externalities from energy consumption – the IMF’s estimate of global subsidies swells to $1900 billion. Advanced economies accounted for about 40% of this amount, with the U.S. taking the top spot at $502 billion. The second and third positions were occupied by China and Russia at $279 billion and $116 billion, respectively.

Alan McIntire
July 3, 2014 1:57 pm

“If I started a business in the year zero AD, and my business was so bad that I lost a million dollars a day, not a million a year but a million dollars a day, how many trillion dollars would I have lost by now?”
Off topic a little, but there was no year zero. In our calendar the day after December 31, 1 BC was January 1, 1 AD. That’s why the 20th century ended at midnight of
December 31, 2000/January 1, 2001.
Your about 735 billion loss was still correct.

johanna
July 3, 2014 2:15 pm

Interestingly, on a “post-tax” (or indirect) basis – which also factors in tax breaks and the failure to account for negative externalities from energy consumption – the IMF’s estimate of global subsidies swells to $1900 billion. Advanced economies accounted for about 40% of this amount, with the U.S. taking the top spot at $502 billion. The second and third positions were occupied by China and Russia at $279 billion and $116 billion, respectively.
————————————————–
Balderdash. The “tax breaks” in most Western countries are the same as those available to comparable businesses. Besides, since when did income belong to the government, except for the bits that they let us keep?
As for “negative externalities from energy consumption” – well, what about the positive externalities? Next time the author of that stupid statement finds him/herself in ICU, let’s hope that the “negative externalities” – whatever they may be – are front of mind. They should hobble off the trolley and die on a mountainside, to save the planet.
What bollocks.

Bryan A
July 3, 2014 2:17 pm

I already resolved that potential problem. I moved to a location that is 4000′ away from my workplace and 6000′ away from a grocery store. I haven’t even driven 3000 miles since March 2012

Bryan A
July 3, 2014 2:18 pm

Ralph says:
July 3, 2014 at 11:53 am
And just the other day, Gov. Mooonbeam was lamenting the fact that with all the higher mpg cars out there that the state had mandated, California isn’t taking in enough tax dollars to support the freeway maintenance. So now they’re talking of taxing how many miles we drive?
Yeeeaah, that’ll work…
My upper remark was to this post which I forgot to paste into the reply box

Bart
July 3, 2014 2:22 pm

No matter how you slice it, a tax deduction which merely reduces a tax, and still results in a payment to the government, is in no way, shape, or form a “subsidy”. Not anymore than breaking someone’s legs instead of killing him is a form of healthcare.

Admin
July 3, 2014 2:25 pm

Willis, the groups that put these “subsidy” estimates together also count the fact the US Federal Government does not charge itself Federal Taxes, as a subsidy. So the lack of fuel excises taxes the military is exempt from is somehow a subsidy.

Nemo
July 3, 2014 2:40 pm

I prefer not discussing things in terms of Carbon this or Carbon that. Carbon dioxide is twice as much oxygen as carbon. And thats just counting molecules, if you use weights its more than 2 and a half times as much oxygen as carbon right? Lets call it oxygen pollution instead and see how far this insanity continues.

mpcraig
July 3, 2014 2:56 pm

Peter Miller says:
July 3, 2014 at 11:49 am
In around 20 years from now, the world will look back at today’s climate science and ask just why did they impoverish so many people to try and solve a non- problem.
________________________________________________________
Ah, like the vilification of DDT?

Charles Perry
July 3, 2014 3:01 pm

My way of thinking about a trillion: The distance from the earth to the sun is ca. 491,040,000,000 feet, or less than half a trillion. So a little less than six trillion inches.

Steamboat McGoo
July 3, 2014 3:31 pm

Looks like they made use of the “Cognitive Dysfunction” ( C{duh?} ) operator in their calculations.
Its second only to the Eraser Property Of Variables* in usefulness in fuzzy math!
* If an equation or mathematical relationship is too complex or unwieldy, simply erase some of it!

John M
July 3, 2014 4:07 pm

The term ‘renewable energy’ is misleading. Whilst the energy source may be ongoing, the methods we use to harness that energy are not. Solar panels only last around 20 years, and wind turbines need constant maintenance on the moving parts and only last 10 years due to metal fatigue.
Ironically, fossil fuels are probably the purest form of renewable energy on the planet. After they are burnt and converted to CO2, the carbon is then sequestered back into the environment and after a few million years eventually turns back into fossil fuels again.
In a few million years the old discarded solar panels will still be worthless :-).

cnxtim
July 3, 2014 4:15 pm

“the political left need causes to justify their existence, and if there are no good causes to be had, then you just have to make them up” hear hear Peter Miller.
When i was a kid,in Australia or certainly my part of it, Sydney – was an environmental disaster.
Creeks, rivers, roads, air and the beautiful Port Jackson were treated with total disregard by all and sundry.
Not now, the environmental movement primarily through public awareness and concern and only when needed, legislation worked wonders – i know this to be an irrefutable fact.
But as human nature testifies,, many people joining the cause later, were far more involved with their own self-aggrandizement then simply making a difference in the way yachtsman ian Kirenan did with his “Clean up Australia” campaign.
.Politics is politics – these sycophantic,back-slapping activists are a long way from those, like me and my friends and colleagues who joined in and made the necessary difference – without spending a penny of the public purse, just a pittance of our own small change for gloves and garbage bags and the use of mates trucks and utes, and it WORKED.
Shame on the lot of you; muck-journos, pseudo-scientists, activists and politicians and your money grovelling CAGW lunacy.

Lark
July 3, 2014 4:18 pm

Windsong, re “war on carbon” as shorthand:
Try thinking of it as a war on on all carbon-based life forms, not just plant food.
Then it’s more accurate than what it replaces, right?

July 3, 2014 4:27 pm

Chuck Nolan said:
July 3, 2014 at 11:50 am
Thanks Willis.
Looks like they’re at it again…? some more…? still?
They use Progressive Math.
cn
————
Aye, the same they use when they claim that illegal aliens are good for US economy.

July 3, 2014 4:37 pm

Thanks Willis
“Sometimes, the idiocy of the savants is almost beyond belief.”
= = = = = = = = = = = =
Yes I can only agree, the idiocy of the savants is beyond belief.
Well, if I had one dollar for each day that has passed since the day that Jesus was born, I would still not be a millionaire.
So I haven’t really got a clue about billions or trillions of $, or where those sort of sums are going to come from, year after year?

jl
July 3, 2014 4:38 pm

“Fossil fuel subsidies..” Seems the word “subsidy” is still widely misused. I believe, but am not sure, that the majority of what the fossil fuel industry receives are tax breaks. Tax breaks are not subsidies, though I think the 2 are added together in the article to reach a total. A subsidy is money that is paid by a government to a business to allow it to continue to function. A tax break let’s one keep more of what is already theirs. Two different things. If the government allows you to keep more of what you earned they’re not giving you anything- a distinction the left seems unable to comprehend.

Catcracking
July 3, 2014 4:41 pm

While the leader of our troops does not have enough in his budget to properlytrain the troops, the Military is required to spend it’s shrinking budget on biofuels at outrageous prices up to $48.36/gallon. 450,000 were purchased from a subsidized biofuel plant at $26.75/gal. This just happens to be one of his bundlers.
This hides the huge subsidy for renewable s and endangers our defense by wasting defense dollars on sommething that has nothing to do with defense. See below:
http://instituteforenergyresearch.org/analysis/great-green-waste/
“In many instances, the DLA purchases biofuels dramatically above fair market value. Military biofuels purchases since 2009 have cost an average of $48.36 per gallon, even though the Department of Defense (DoD) can execute bulk contracts of conventional fuels for about $3.24 per gallon. The largest purchase was 450,000 gallons in 2011 at a cost of $26.75 per gallon for fuel used in a Navy demonstration of the so-called “Great Green Fleet.” During this event, the Navy used a mix of biofuel and petroleum to fuel a guided missile destroyer and two destroyers, as well as some aircraft. The worst deal for taxpayers on a per gallon basis was a 2012 purchase of 55 gallons of biofuels for $245,000—a cost of $4,454 per gallon. These purchases are clearly subsidies, as they amount to the federal government purchasing products above market value when cost-competitive alternatives exist. This serves to prop up the company supplying the subsidized product because in the absence of DOD’s purchases, no market would exist.”

4 eyes
July 3, 2014 4:56 pm

Thank you Willis for clarifying the issue of subsidies. I am now better armed to deal with all the trashy throw away lines peddled by greenies and lefties about the big subsidies that fossil fuel producers receive. They won’t want to hear it of course.

Lil Fella from OZ
July 3, 2014 5:06 pm

I have found in life that people like to spend other people’s money but it is a totally different matter when it comes to spending their own. Accountability!!!!

rogerthesurf
July 3, 2014 5:42 pm

There are only two ways to pay for one’s energy (or anything for that matter).
1. Pay for what you need.
2. Someone else pays for you.
No 2. is know today as a subsidy. The point being that the cost is still there, but the tax payer AKA everyone pays it. (even if they don’t actually use much energy). Businesses pay it and they have no choice but to pass the expense down to their customers.
So in the case of subsidized “renewables” the normal person in the street pays 1. The Price, 2. Pays more through his taxes, 3. Pays the rest through the cost all goods and services – including the price of food which has a farm and transport cost element in it.
I mean this is very basic economics.
How can energy subsidies be even considered by sane people? The notion that subsidies will help the economy through “green” jobs is absolutely insane!
I wish Milton Friedman was alive today to see this mess brewing!
Cheers
Roger
http://www.thedemiseofchristchurch.com

July 3, 2014 5:48 pm

For context see IEA’s World Energy Investment Outlook 2014 Factsheet Fossil Fuels

Annual capital expenditure on oil, gas and coal extraction, transportation and on oil refining has more than doubled in real terms since 2000 and surpassed $950 billion in 2013. . . .
Annual investment in upstream oil and gas rises in the New Policies Scenario by a quarter to
more than $850 billion by 2035, with gas accounting for most of the increase. More than 80% of the cumulative $17.5 trillion in upstream oil and gas spending is required to compensate for decline at existing oil and gas fields. Around one-quarter of the total goes to producing unconventional resources, e.g. oil sands, tight oil, shale gas.

Mike T
July 3, 2014 6:25 pm

One small thing: there was no year zero AD.

Editor
July 3, 2014 6:42 pm

For those wondering about where the oil subsidy shows up, it is in places like Venezuela and related Socialist Paradises… where gasoline and kerosene can cost 50 Cents / gallon or less due to subsidy to the poor. NOT in London or New York City…
Willis: Nicely done. I’d thought of taking on that article, but was too busy with other stuff. You did a better job of it anyway 😉
One thing ignored in this is the fixed cost of existing capital stock. For ONE SMALL example. Cars. To convert to non-fossil fuel, we need “Fleet Change”. The existing car and truck (and train and boat and planes and…) stock needs to be changed to those that do not consume oil as fuel.
As a first approximation, there’s about one car per 2 people in the USA. Figure about 150,000,000 vehicles. Now a new car costs about $30,000. So that’s about $45 x 10^11 to replace the fleet. Call it $4.5 Trillion. Can’t put electrons into a 1999 Suburban…
Given that the average life of a car in the USA today is nearly a dozen years, if you want to have fleet change in less than that time, you need to pay extra. AND, we are not presently designing nor building that ‘new car’ for most all cars makers. Figure another 5 to 10 years for that. So, without excess force, we have about 17 to 22 years of ‘fleet change’ ahead of us. IFF we were started already, which we are not…
Now that’s just the USA.
And it ignores longer life span vehicles like airplanes, trains, ships at sea…
Just not going to happen in my lifetime.

pat
July 3, 2014 7:33 pm

the Australian Govt is presently trying to overturn the Renewable Energy Target (RET), which is partly responsible for the ever-increasing electricity bills that are particularly hurting low-income customers. there are vested interests who are not happy about this, and who have had to reveal what the public barely realises – their retirement funds have been invested in risky, ever-changing CAGW policies. everyone who doesn’t want their retirement funds invested in this way should be putting their objections in writing to their pension fund managers:
4 July: Australian Financial Review: Phillip Coorey: Lower RET target would hit superannuation funds
The federal government’s plan to circumvent Clive Palmer and water down the renewable energy target will have adverse effects for the retirement savings of millions of Australians, says the Investor Group on Climate Change.
In a letter to businessman Dick ­Warburton, the head of a government review of the RET, the investor group’s chief executive Nathan Fabian warns that plans by the government to drop mandated renewable energy production from 41,000 gigawatt hours to 26,000 gigawatt hours by 2020 would hurt those who had already invested in the sector.
These include industry superannuation funds which own renewable energy firm Pacific Hydro.
“Multiple IGCG members invested in renewable energy assets on behalf of their superannuation fund beneficiaries as a result of the current 2020 renewable energy target,’’ the letter says. “Some 5 million Australians are financially exposed to these assets via their Australian-based superannuation funds, which hold equity stakes in . . . the Australian energy company, Pacific Hydro.
“Many IGCG members also have public equity exposures to Infigen energy and private equity exposures to companies that operate in renewable energy markets. Additional exposures are held via infrastructure asset ­managers,” Mr Fabian said.
He warns any cut to the RET would result in lower revenue for exiting assets, greater difficulty in servicing debt, lower or no distributions to investors and “negative movements in ­periodic asset valuations, directly ­flowing through to investment and retirement account balances’’… http://www.afr.com/p/national/lower_ret_target_would_hit_superannuation_qWK3dxuaNyzUQGhLhwiJWP

Tsk Tsk
July 3, 2014 7:39 pm

These are important points to keep hammering home, because the econuts continue to lie by omission with their selective quoting of subsidies. They frequently (as in almost always) fail to point out that the developed world actually has very low subsidies for fossil fuels –just humor me and call the depletion allowances subsidies– and they ALWAYS ALWAYS ALWAYS fail to normalize the subsidies by the amount of energy produced. It really ruins the narrative.

mjc
July 3, 2014 7:40 pm

” E.M.Smith says:
July 3, 2014 at 6:42 pm
One thing ignored in this is the fixed cost of existing capital stock. For ONE SMALL example. Cars. To convert to non-fossil fuel, we need “Fleet Change”. The existing car and truck (and train and boat and planes and…) stock needs to be changed to those that do not consume oil as fuel. ”
Yes…and no. One of the prime ‘outcomes’ is to get rid of private ownership of vehicles. So, fleet replacement is purposefully not factored in. The ultimate ‘green’ idea…bicycles, if you are lucky.

pat
July 3, 2014 7:45 pm

subscription required for remainder of article:
29 April: Australian: Bjorn Lomborg: Renewables pave path to poverty
THE Australian government recently released an issues paper for the review of the renewable energy target. What everyone engaged in this debate should recognise is that policies such as the carbon tax and the RET have contributed to household electricity costs rising 110 per cent in the past five years, hitting the poor the hardest.
A Salvation Army report from last year found 58 per cent of low-income households were unable to pay their electricity bills on time. Lynne Chester of the University of Sydney estimated last year that 20 per cent of households are now energy poor: “Parents are going without food, families are sitting around the kitchen table using one light, putting extra clothes on and sleeping in one room to keep warm, and this is Australia 2013.”…
http://www.theaustralian.com.au/opinion/columnists/renewables-pave-path-to-poverty/story-fni1hfs5-1226898730123?nk=b87523c7b34d534d032de8d98da81d2c

George McFly......I'm your density
July 3, 2014 7:47 pm

excellent analysis Willis

pat
July 3, 2014 7:56 pm

somemore info on the Investor Group on Climate Change:
30 June: Herald Sun: Andrew Bolt: Clive Palmer and Al Gore become convenient allies
Gore is a co-founder and chairman of Generation Investment Management, which manages and advises on green investments of the kind Gore’s climate scaremongering helps whip up.
Among the businesses it “participates” in is Australia’s $1 trillion Investor Group on Climate Change, which comprises Goldman Sachs and many of our bigger super funds.
Those funds invest big in renewable energy and are scared the Government will soon slash or scrap the Renewable Energy Target, which forces electricity suppliers to use more expensive wind and solar power.
IGCC has protested that “changes to the RET scheme could undermine the value returns on investments made to date” and “we do not favour any changes”…
http://www.heraldsun.com.au/news/opinion/clive-palmer-and-al-gore-become-convenient-allies/story-fni0ffxg-1226971201707
Investor Group on Climate Change: Who are we?
Current members of IGCC, listed below, represent total funds under management of approximately $1 trillion…INCLUDES:
Australian Super
Cbus
Christian Super
Generation Investment Management LLP
Goldman Sachs
Guardians of New Zealand Superannuation
Merrill Lynch
Mirvac
Morgan Stanley
Local Government Super
The Association of Superannuation Funds of Australia Limited (ASFA)
UniSuper
VicSuper
http://www.igcc.org.au/who_are_we
[Might be worth a complete topic by itself here. Consider writing something up for consideration. .mod]

TRBixler
July 3, 2014 8:21 pm

Sorry Willis
“And at the end of the day, despite their vain efforts to minimize the cost, even these proponents of renewables say it will cost up to $70 trillion dollars to make the switch, with no guarantee that it will work.
Sigh …
My comment work to do what? Switch to renewables like going to the moon as a goal. Or spending $70 trillion dollars because it seemed like the thing to do at the time. It was your closing line Sigh…

Toto
July 3, 2014 8:26 pm

The word ‘subsidy’ only appears once in the document (and once in the list of references).
I can’t believe it is used correctly. What does “IMF (2013)” say?

Toto
July 3, 2014 8:29 pm

(the word ‘subsidies’ is more common)

pat
July 3, 2014 8:42 pm

Nafeez not attracting the usual army of CAGW zealots with this one — only six comments as i post this:
3 July: Guardian: Nafeez Ahmed : World Bank and UN carbon offset scheme ‘complicit’ in genocidal land grabs – NGOs
Plight of Kenya’s indigenous Sengwer shows carbon offsets are empowering corporate recolonisation of the South.
Between 2000 and 2010, a total of 500 million acres of land in Asia, Africa, Latin America and the Caribbean was acquired or negotiated under deals brokered on behalf of foreign governments or transnational corporations…
The World Bank’s Natural Resource Management Programme (NRMP) with the Kenyan government, launched in 2007, has involved funding for projects in the Cherangany Hills under the UN’s Reducing Emissions from Deforestation and Forest Degradation (REDD) programme, including “financing REDD+ readiness activities” some of which began in May 2013.
Under the REDD scheme companies in the developed world purchase carbon credits to invest in reducing emissions from forested lands. Those credits turn up on the companies’ balance sheets as carbon reductions. In practice, however, REDD schemes largely allow those companies to accelerate pollution while purchasing land and resources in the developing world at bargain prices.
A FPP background brief on the role of the World Bank claims that the implementation of NRMP – overseen by the very same KFS forces conducting a scorched earth campaign in Cherangany – violates the Bank’s own operational safeguard policies…
A letter to the Bank in March by No REDD in Africa network (Nran) – a group of African civil society organisations – signed by over 60 international NGOs accused the Bank with the above words of “both admitting its complicity in the forced relocation of the Sengwer People as well as offering to collude with the Kenyan government to cover-up cultural genocide.”…
As “carbon credit financier and broker”, the World Bank is “aiding and abetting the forced relocation of an entire Indigenous People through its Natural Resource Management Plan (NRMP) which includes REDD (Reducing Emissions from Deforestation and Forest Degradation), in the Cherangany Hills”, said the letter….
http://www.theguardian.com/environment/earth-insight/2014/jul/03/world-bank-un-redd-genocide-land-carbon-grab-sengwer-kenya
.pdf: (12 pages) Report: Status of Forest Carbon Rights and Implications for Communities, the Carbon Trade, and REDD+ Investments
http://www.rightsandresources.org/documents/files/doc_6594.pdf

pat
July 3, 2014 8:44 pm

2 July: Washington Times: Valerie Richardson: Obama grants wind industry permit to kill eagles, ruffling more than feathers
By sacrificing a few bald eagles, the Obama administration may have opened a can of worms.
In a bid to give alternative energy sources a boost, the U.S. Fish and Wildlife Service has quietly granted a California wind energy farm a permit to kill a limited number of endangered bald and golden eagles that get sliced up in its giant turbines. But last week’s free pass is sparking anger from wildlife advocates and from free market advocates who ask why they don’t qualify for the same dispensation…
The American Bird Conservancy filed a lawsuit last week against the 6-month-old federal rule expanding permits for killing bald and golden eagles from a maximum of five to 30 years, charging the Interior Department with “multiple violations of federal law.”
Conservancy spokesman Bob Johns said the organization is on board with green energy but the Obama administration has gone too far with incentives for the wind industry. The incentives include optional guidelines on environmental rules and production tax credits…
Last week, the Fish and Wildlife Service ruffled feathers by issuing what officials called a first-of-its-kind permit that allows a 50-turbine Northern California wind farm to kill up to five golden eagles over five years. In exchange, the developer agreed to retrofit 133 utility poles to reduce eagle deaths by electrocution…
Michael Sandoval, an energy analyst with the Independence Institute in Denver, said there is inevitably enormous outrage when sea gulls or ducks are coated with oil after a spill, but much less concern over wind turbines that chop eagles in half or cause bats to explode.
“Preferred energy policy favoring wind produces double standards…
Since the 1980s, wind turbines have killed an estimated 2,000 to 3,000 eagles, but the industry has paid only one fine, Mr. Johns said.
“If you or I get caught with an eagle feather, we’ve got some serious explaining to do. We’re going to pay a hefty fine,” said Mr. Johns (Conservancy spokesman Bob Johns). “There’s no exception noted in the law for the wind industry. The notion that somehow they’re entitled when the law doesn’t provide for it is ridiculous.”
http://www.washingtontimes.com/news/2014/jul/2/california-grants-wind-industry-permit-to-kills-ea/

Matthew R Marler
July 3, 2014 8:53 pm

Willis Eschenbach, good post. And thanks for the conversion: FUEL, SUBSIDY PER GALLON, SUBSIDY PER LITRE
Fossil fuels – $0.17 per gallon, $0.04 per litre
Renewables – $1.19 per gallon, $0.31 per litre.

And on up to totals.

george e. smith
July 3, 2014 9:01 pm

The petroleum industries’ subsidies follow a fairly simple and fundamental business economics concept.
Suppose, you buy a brand new milling machine or a lathe from South Bend, Indiana; well these days, more like communist red China. Or alternatively maybe you put up a 150 metre 5 MW wind turbine; or even as I once did, you buy yourself a 4 million dollar Ion Implant PMOS/CMOS silicon wafer fab factory.
Well you are going to use these things to make useful products that you can sell for a profit, so you can employ people to earn a living.
Well your Chinese lathe is going to gradually wear out its bearings, and the bed will get curved. Your wind turbine is going to shake itself to pieces, due to the synchronous wind shear pulsed loading , and my PMOS wafer fab will soon be obsolete, and its products, unsalable.
So somewhere down the road, you will need a new lathe or perhaps it will have to be an NC milling machine to be competitive with the new gadgets. The wind turbine, after it blows itself up, will have to be replaced, by a 10 MW one, to be competitive, and I’m going to have to pay 10 million for a new silicon wafer fab.
No this is not a result of inflation, although some of that will occur. My 4 million dollar wafer fab made 3 micron geometry devices, and it will cost 10 million for me to go down to 1 micron, or I won’t be cost competitive.
MOS wafer fabs, now cost almost as much as aircraft carriers, and they are making devices with something like 25 nm critical dimensions, to power our teraflop ipad/ped/pid/pod/puds.
That 100 foot piece of pipe you banged into the ground 100 years ago for petroleum to come gushing up out of, now has to be drilled down 10,000 feet or more under 5,000 feet of water, in .order to get at the oil underneath the stuff that used to gush out..
It is technological obsolescence, that keeps on driving up the REAL cost of new plants and equipment.
So in order to stay in business, you have to stash away, a lot of profit money, in a piggy bank, to be able to pay for that new profitable facility, that will replace your slowly aging and semi obsolescent current profit maker.
The inevitable decrepidation of your present legal means of support, means your plant assets, slowly wither and die. It’s called DEPRECIATION in the tax business, and it is simply a periodic allowance for you to bank a portion of your profits, to build up a nest egg to replace your plant with a future competitive one, so you can continue to supply useful products.
So ALL businesses, are allowed to “depreciate” (aka “write off”) a portion of the value of their old machinery (capital equipment) to prepare for the inevitable replacement of it.
Did you catch that part where, the value of your existing toaster oven, is not nearly enough to pay for a brand new artificially intelligent toaster, that knows when to make breakfast.
So profit alone, is not sufficient to replace your plant on just depreciation. You also will need new investment of venture dollars from people who see your new widget, as more valuable, than the old way of doing things. Without profitability for your shareholders, nobody, is going to put new money into your gig.
The guy who gambled on drilling a hole in the ground for petroleum, knows that in time, it will run dry, just like the bearings in your old Chinese lathe, and he needs to depreciate the value of his hole in the ground, in order to be able to drill a new and much deeper one.
Fossil fuel “subsidies”, are nothing more than the ordinary capital equipment depreciation schedules, that ALL businesses need to practice, in order to continues to stay in business.
And there isn’t any sugar daddy somehow printing gold, to “subsidize” everything else.

george e. smith
July 3, 2014 9:23 pm

Giving free food or clothing or shelter to somebody (or some country) who does not have the means to pay for it, is NOT a subsidy. Whether it is “food stamps”, or these days disguised in the form of an EBT card (Everybody, But Taxpayers), it is not a subsidy; it is “welfare.”
That is not any moral or value judgment or criticism. It’s a simple fact. There always will be many who perhaps for no fault of their own, or maybe entirely their fault, won’t make it on their own.
It is part of being human, that we prefer to not let people fall through the cracks, even if it is their own fault. We can all make mistakes, and many do not; they simply got caught out in the rain.
So we prefer the charity of “welfare” of say a possible resort to criminal activity; because the will to survive is very powerful.
But it isn’t a subsidy. It’s a built in cost of being different from the animals, who operate entirely by the rule of survival of the fittest. Natures rule of survival is not just the best rule of survival, it is the only rule of survival. She doesn’t waste scarce resources on the unfit; that just risks the survival of all.
We aren’t like Mother Nature. We are willing to take the risk of investing in the less able, who may be able to contribute in other less obvious ways.
That sightless person, that Mother Gaia, would just let the lions eat, might just turn out to be able to play the most beautiful organ music; or write thoughtful poetry.
And besides; it could just as easily be me. Well in fact it was.

July 3, 2014 11:01 pm

OPEC can afford to subsidize their own countries oil consumption because they make huge profits selling to other countries. The so-called oil subsidy is just a reduction in profit. Can renewable energies sell at equal price to oil and make huge profit? It’s easy to give subsidies once you have huge profits to finance it. So the real issue is: are renewables cheaper? Make money first, decide later how to give it away.
BTW if climate sensitivity is < 1 C per doubling of CO2 as some studies indicate, we have to quadruple CO2 to 1,400 ppm to attain 2 C. We will ran out of oil.

F. Ross
July 3, 2014 11:13 pm

” … where do the authors think that money would come from? …”
Disingenuous answer: we could just print more? (as if that’s not happening already)

July 3, 2014 11:55 pm

Willis, Do you agree that the commenters here are mostly agreeing with you! And they are preaching to each other. Meanwhile, the original bad report is sailing freely through the mass media, the flack in WUWT is no more than a ripple in the seaway. Until someone you or some other good person actually takes the perpetrators to court and have them correct their report it will continue to be regarded as the “revealed truth”.

rogerthesurf
July 4, 2014 12:04 am

Dr. Strangelove,
Subsidies as touted by green “economists” definitely refers to the government using taxpayers money – in this case to make people use renewables. Wherever the government gets the cash from, it is still taxpayers money being spent, but in fact the vast majority comes from citizens pockets.
Of course we could have 100% taxation and have our government ration everything fairly and equally to every citizen. Oops I forgot, thats been tried before. Perhaps we need to study recent history seriously and with an open mind.
Actually “green economists” are the biggest clueless bunch I have ever heard “economic” ideas from.
Cheers
Roger
http://www.thedemiseofchristchurch.com

Berényi Péter
July 4, 2014 12:17 am

$70 trillion is an order of magnitude more than the money involved in the subprime mortgage crisis of 2008, starting a process which is not over yet.
And for this incredible amount of money we are supposed to buy what? A complete switchover from reliable baseload power generation to intermittent sources, which means frequent blackouts for the poor in spite of high rates, the need to install large battery packs with diesel generator backup for wealthy households and an impossible situation for industry. On top of that land use of the energy sector is to increase by two orders of magnitude, turning much of the countryside into an industrial zone.
Until we have cheap large scale energy storage facilities, still a future technology if attainable ever, don’t even think about it.

cnxtim
Reply to  Willis Eschenbach
July 4, 2014 2:36 am

What one sees in WU’WT is often a starting point – there are no walls around it.
Those that lurk and comment here have a far wider voice, That is what WOM is all about. If an idea or fact has flight, one person tells two, two people tell four etc etc. etc.
As for the USA’s favourite sport, “litigation”? Give it a break, lawyers be damned.

richard verney
July 4, 2014 12:56 am

Bloke down the pub says:
July 3, 2014 at 12:10 pm
//////////////////
This is essentially my understanding, but that is not a subsidy (at any rate, not in the classic sense since there is no god given right to tax anything; the decision to tax, eg., what should be taxed and what rate is a political construct).
Investment in business (whether research and development, new plant and machinery etc) is usually always seen as a ‘cost’ of doing business, and can thereby be written down against revenue earnings thereby off-setting the tax liability of the company. But that is not a subsidy, it is a reflection of reality, and encorages investment which is a good thing.
The reason for this is obvious. Investment in business is good encouraging growth leading eventually to higher, or at any rate contined, revenue streams. If buisiness does not invest in itself, eventually they contract, fade and go bust, leading to a loss of revenue streams.

Streetcred
July 4, 2014 1:00 am

July 3, 2014 at 2:22 pm | Bart says:

No matter how you slice it, a tax deduction which merely reduces a tax, and still results in a payment to the government, is in no way, shape, or form a “subsidy”. Not anymore than breaking someone’s legs instead of killing him is a form of healthcare.

You have an excellent way with words, Bart 😉

Streetcred
July 4, 2014 1:06 am

July 3, 2014 at 6:25 pm | Mike T says:

One small thing: there was no year zero AD.

“In the Beginning … ” <|;-))

Streetcred
July 4, 2014 1:10 am

July 3, 2014 at 7:33 pm | pat says
————
Now that is a subsidy of rent seekers superannuation … why should I and others be responsible for their irresponsible investment strategies ?

johnmarshall
July 4, 2014 1:26 am

A good assessment Willis, thanks. (Certainly better than the steel greenhouse)
To say that FFs are subsidised is a bit of a red herring as it is part of the legal profit gained within the competition of commerce. The subsidies paid for renewables are loaded onto the base cost to encourage the producers to do it. Without it none would bother because of crap efficiency problems.

richard verney
July 4, 2014 1:26 am

The subsidies in the renewable sector are something different. They are essentially a distortion of the free market.
In essence, they elevate a particular provider of a product (say the windfarm) to the status of a preferential provider and provide that preferential provider with a fixed minimum selling price for his product (the unit price of electricity), and they compell the puchaser (the national grid who is essentially a state controlled monopoly) to buy a certain percentage of his raw energy requirements not on the open market (ie, the price at which he could buy energy from coal or gas powered stations) but rather from the preferential producer (the windfarm) at not less than the minimum unit price which the government has fixed.
I have no problem with windfarms being entitled to write down the costs of errecting a windfarm, from their profits. My gripe is that they are given preferential status enabling them to sell their product at uncompetitive price which I the consumer have to pay for. This is rendered even worse by the fact that the windfarm is producing a product that no one really ones given its unstable nature and the strains that it places on the grid and the rebalancing thereby required.
It is rendered even more silly that in order to support a windfarm, a conventially powered generator is required (windfarms only produce electricity for about 22% to 25% of the time, and therefor convential back up is required for about 75% of the time), and the conventionally pwered generator finds itself in a loss making scenario since it is only able to sell its product for about 75% of the time (since when the wind blows preference is given to wind). the conventional powered generator, like most businesses does not make its profit on the first 78% of sales (ie., on the amount sales that the government has restricted it to), but rather in the last 10 or 15% of sales 9which it cannot sell because of government restriction). Accordingly no one wants to invest in new conventionally powered generators (which are needed due to the vagrancies of wind) unless they too are given a specific subsidy.
The government is piling subsidy on subsidy, only to get a more fragile energy network, and one that does not result in the meaningfull reduction of CO2, given the need for conventionally powered back up and the inefficiencies of start/stop/ramp up/ramp down energy production that the conventionally powered generators are required to supply. It is like town driving, a car’s fuel consumption is worse in town with the cionstant stop start than it is on the freeway.
In effect nothing meaningfull is achieved at great cost.
PS. I am not convinced of the need to reduce CO2, but windfarms and their ilk, do not reduce CO2 emissions so there is no point in them

July 4, 2014 1:36 am

Roger
The green economists are unimaginative. They should advise governments to just print more money to give away as subsidy to renewable energy. It will lead to currency devaluation and inflation. Everybody ends up paying for it. Unlike people and corporations, governments do not become bankrupt because they can always print money to pay creditors and make everybody poorer.

July 4, 2014 2:42 am

I had never heard that fossil fuels were subsidized (except for Venezuelan consumers) !
But rather heavily taxed, yes I know this.
In which “subsidy” form ? Renouncing a higher market price (sic), reducing too high tax collection in already too rich producing countries ?
Just accepting the claim that fossil fuels are subsidized is accepting entering in a bogus debate.

cnxtim
Reply to  Michel
July 4, 2014 3:02 pm

Venezuela does not subsidize oil, its export customers do – for sure it makes petrol available to its people at prices a lot closer to the cost of production (as do other big and oil/gas exporters) than the deceitful tax hungry governments in most other countries.
If the petrol and gas consumers of these countries had a clear indication of “who gets what” when they are at the pump, there would be mayhem, and who knows, even the sycophantic press might see THAT as a story.

johnmarshall
July 4, 2014 2:47 am

What Saudi Arabia does to help its citizens is a social payment not a subsidy paid for the oil to start with.
Max Planck would not like your steel greenhouse since it violates Plancks Law as well as the laws of thermodynamics. But if you are wedded to the GHE and the ability to find energy out of nothing then go ahead.
Go ahead and design a generator that works within your ideas. If it works (?) you will make a fortune and become world famous. ( I expect the same reply as received from Anthony Watts)

July 4, 2014 4:33 am

Thanks Willis for your ever watchful eye…I have suspected as much for years, but not had the where-with-all to check it out – now I can see clearly in detail what is obvious from first principles, that more expensive energy supplies (renewables) will require much higher levels of subsidy – not just to get them off the drawing board, but to make them acceptable to the populace. What I did not realise was the nature of global subsidies – that most occur in developing nations and producer states, for the reasons articulated in Ukraine: ‘Subsidies endure because, as Ukraine’s politicians know, getting rid of one means immediate pain for citizens, a drop in popular support, and sometimes even civil unrest.’
There is only one thing I quarrel with in your analyses – or rather your comments upon….which is your assumption that ‘greens’ are at war with development and progress. The Green movement, which I helped to create in the 1970s, has metamorphosed from people who cared passionately about development and progress (but defined more in terms of healthy communities, ecologically sustainable agriculture and forests, protected biodiversity as much as any changes in income or access to modern lifestyles). Since that time, modern development policies have improved from the naked post-imperial resource hungry exploitation decades – though even now, less than 5% of global development aid goes to the basics of soil, water, sanitation and community.
During this time the ‘greens’ have lost track of the original ethos – they have become campaign professionals in the corridors of power – seeking those ready levers, targets and goals that play to their galleries. The scary-climate story of Hansen & Co was perfect for their narrow purposes. They don’t folow their own guidelines any more – no environmental impact studies of the policies they advocate, and they end up supporting ineffectual mitigation strategies rather than necessary adaptation and resilience. One ex-Greenpeace director from the old days when they stopped commercial whaling, nuclear and toxic dumping, acid rain and other crimes…now heads up a global wind energy company. Like any politician, Greens have their fingers in the pie.
It is too simplistic to say they make war on progress or development – they occupy all the corridors of the powers and economies that drive the modern concept of progress and development (for example the IMF, World Bank and EU). They would be happy to have ‘the poor’ pay for biofuels, barrages, wind turbines and even nuclear reactors – and they do not investigate the costs and impacts thoroughly, until the time comes for a new campaign against the monsters they helped unleash.
I feel you need to take a close look at ‘development’ and ‘progress’ – as with many commentators on WUWT, there is this belief that somehow gas and oil will go on for ever as cheap fuels and the Greens want to deny access for the poor. If we put aside the mirage of climate change – there is still an issue over the development model, 2 billion people without adequate sanitation, exhausted soils, broken communities and rampant global agrichemical businesses looking to grab land.
If you are interested in these issues, mail me peter.taylor(at)ethos-uk.com and I will send you a pdf of a study I did a few years back on global development aid and ‘resilience’.
Thanks again for all your work.

July 4, 2014 6:47 am

humans plus their indentured servants (farm animals)
===========
my indentured servants are machines. they are powered in large degree by fossil fuels. one advantage of these servants is that unlike animals, the machines only burn fuel when they are working.

July 4, 2014 6:51 am

rampant global agrichemical businesses looking to grab land
===========
REDD. Stealing land from the poorest or the poor in the name of saving the planet, and giving the profits to the riches people on the planet.
Hear REDD, see Red.

Matthew R Marler
July 4, 2014 8:47 am

Willis Eschenbach: However, regarding “correcting their report” and taking them to court … you might not have noticed, but I didn’t find a single error in their report. In fact, I’ve used their figures throughout my analysis. So exactly what were you planning to charge them with in court? Being right?
That comment surprised me. Your post certainly reads as a corrective. So I went to the document and reread sections of it more carefully. Nowhere (that I found) do they advocate redirecting the subsidies from fossil fuels to renewables, nor do they hint that it would be possible to do so. They repeat the comparison of the magnitudes of the investments/subsidies, but omit any inference about redirecting the subsidy.

NoFixedAddress
July 4, 2014 9:40 am

pat says:
July 3, 2014 at 7:33 pm
the Australian Govt is presently trying to overturn the Renewable Energy Target (RET), which is partly responsible for the ever-increasing electricity bills that are particularly hurting low-income customers. there are vested interests who are not happy about this, and who have had to reveal what the public barely realises – their retirement funds have been invested in risky, ever-changing CAGW policies.

I am a very small voice that has been pointing out for years that Australian superannuation funds have exposed their members to direct losses to the point where retirement income will be materially affected.
A whole generation of so called investment advisers, directors and fund trustees should be summarily dismissed for recommending, endorsing and signing the money over to investments in projects that are basically intangible and dependent on crony government largesse to manipulate laws to transfer taxation revenue and impose hidden costs on prices to end consumers to the benefit of companies that do not produce a material benefit to the individual nor the economy.

Toto
July 4, 2014 9:48 am

Energy fuels the economy. Oil subsidizes us, not the other way around.

JohnM
July 4, 2014 10:14 am

“In around 20 years from now, the world will look back at today’s climate science and ask just why did they impoverish so many people to try and solve a non- problem”
If, as seems likely, the whole climate house-of-cards falls down….around 20 years from now I would:
1. Not like to be a scientist, of any science.
and:
2. Reckon the reverential attitude of most people to science, and scientists, will be damaged irretrievably.

richard verney
July 4, 2014 11:35 am

JohnM says:
July 4, 2014 at 10:14 am
///////////////
This is a problem when you have consensus.
There must be numerous scientist out there who could have made it clear that science is never settled, far from the debate being over, the debate has never taken place, the factors that govern climate are far from fully known and clearly all the relevants factors are not fully understood, the claims as to certainty are exaggerated. Unfortunately, these scientists, for whatever reason, and we all know about pressure, did not have the courage to stand up and be counted.
It is inevitable that all will end paying the price, some would say that is deserved, they brought it upon themselves. That is what happens when honest men turn a blind eye.

george e. smith
July 4, 2014 11:39 am

“””””…..richard verney says:
July 4, 2014 at 1:26 am
The subsidies in the renewable sector are something different. They are essentially a distortion of the free market. …..”””””
They are much worse than that. Subsidies hide the simple fact that those schemes are not in fact, sources of energy; they are energy wasting schemes.
Any true source of real energy availability, can lift itself by its own shoe laces, and expand without being subsidized by energy systems that really are sources of real energy availability.
The problems of free clean green renewable energy schemes is NOT an economic problem; it’s a science and technology problem. They don’t work, to provide new energy; they waste existing sources of energy.
Your whizz bang Einsteinium / Californium nuclear power station can be rendered economic, with the stroke of a pen.
You simply put a tax of $1M per barrel, or barrel equivalent , on all petroleum; oil and natural gas, and use that tax money to subsidize your E / C reactor ; or for that matter, your neighbor’s PV solar panels.
Problem solved !
Well there is one hitch. The solar cells that were maybe $4 per peak Watt capability last week, will now cost you perhaps $150,000 per peak Watt this week, due to the price of oil going up. You can still only make the same amount of solar cells out of one barrel of oil’s energy. this week, as you could last week.
That “windfall profits” tax, on oil, really killed your solar farm plans.
And your Einsteinium / Californium reactor design, won’t fly either.

richardscourtney
July 4, 2014 11:49 am

JohnM and richard verney:
Long ago at an IPCC Conference there was a side meeting organised by Fred Singer. I was a speaker at the side meeting which had an audience of mostly IPCC Delegates and members of Greenpeace who filled the room.
I then said,
“When the chickens come home to roost – as they surely will with efluxion of time – the politicians and journalists won’t say, “It was our fault”. They will say, “It was the scientists’ fault”. And that’s me, and I OBJECT!”
I still see no reason to change my view, and I still object.
Richard

richard verney
July 4, 2014 12:00 pm

Willis Eschenbach says:
July 4, 2014 at 1:43 am
////////////
Thought experiments are all well and good, but they are no substitute for hard empirical data obtained from observation.
It may well be the case that for the next 20 or so years, there is some cooling. Heck even the UK Met Office, last year, said that there may be no return to warming before 2030. In this scenario, what we might have seen throughout the 20th century, and the first third of the 21st century is simply multi-decadel variation. Heck, even the Team, approximately a decade ago, were alive to that possibility.
if that is the position, we may (a century later) find ourselves at about the same temps as were seen in the 1930s (before the endless adjustments to these past temperatures) and during this period, nearly all manmade CO2 emissions will have taken place but with no rise in temps.
What will that say about the GHG theory? I suspect that in these circumstances, one will find a lot of scientist questioning the very foundations of the theory. Some will cling to the theory, but argue that there are negative feedbacks, but others will suggest that the fundamentals of the theory are unsound.
i am not predicting the future. I do not know whether it will begin to warm, or the ‘pause’ continue, or temperatures begin to fall. But I do consider that, in the evnet of their being future cooling, there is a strong likelihood that many scientists will question the fundamentals of the theory. At that stage, it may be necessary to re-evaluate your steel greenhouse since observation evidence will point to issues with it.
PS, Sorry that this is slightly off topic. It is unfortunate that Mr Marshall chose to make a throwaway observation in parenthesis.
.

Tom O
July 4, 2014 9:51 pm

” Peter Miller says:
July 3, 2014 at 11:49 am
In around 20 years from now, the world will look back at today’s climate science and ask just why did they impoverish so many people to try and solve a non- problem. ”
If it goes the way the AGW people want, they will be looking at a couple billion graves and saying, “yep, it was worth it.” The program being pushed, in a cooling world, can only be for the purpose of getting rid of all those “useless eaters” that Kissinger famously talked about. Besides, all those relatively poor people live in those areas that will be basically unaffected by any form of ice age, don’t you know?

Neil Jordan
July 4, 2014 11:51 pm

Re Willis Eschenbach says: July 4, 2014 at 1:34 pm
Thank you for putting a good summary on this. Let me add another group of people who could benefit from low-cost energy.
http://www.latimes.com/world/asia/la-fg-india-sewers-20140704-story.html
“Dharamani Kale emerged from the manhole, sewage clinging to his body. Next to him, Sona Bai gathered filth in a small round basket and carried it on her head to the end of the street. The unpleasant process had started at dawn and would continue for at least 12 hours.
“This is how sewers are cleaned in most Indian cities, including Mumbai, the nation’s booming financial capital: Workers use metal scrapers, brooms or their bare hands to clear drainage and sanitation lines twice a year, before and after the annual monsoon rains.
“In gutters, workers who earn about $5 a day stand in the waste, which reaches chest high, and use long wooden sticks to clear jams. In some areas, workers crawl through the sewage, wearing no protective gear.”

Toto
July 5, 2014 12:10 am

AP is reporting that Egypt has amended its budget to reduce its energy subsidy by $6 billion.
Fuel prices for Egyptians will go up by 78% (80 octane), 64% (diesel), and 40% (92 octane).
That brings the prices in cents per litre to 22, 25, and 37, respectively.
Half of their 85 million live below the poverty line of $2 per day.

johnmarshall
July 5, 2014 12:49 am

No Willis, a Space blanket is just a method of preventing convection while the body metabolism recovers enough to get warm.It might reflect heat but if you are hypothermic then there is no heat to reflect because your body heat has been diverted to vital organs. By generator I obviously meant a power production system based on the GHE. Your ”sphere” is the starting point.
And I suggest you brush up on your human biology.

July 5, 2014 7:34 am

Bankrupt Egypt dropping fuel subsidies
When Egypt was flush with oil export earnings, it could subsidize fuel for the poor.
Now Egypt’s production has declined and its consumption risen so much that it now has to start importing oil. Its fuel subsidies consume a quarter of its national budget.
Egypt does not have a rich economy to continue its fuel subsidies. So now it is forced to drop the subsidies, though its poor live on less than $2/day.
See: 2/3 of Egypt’s oil is gone 20 years after its peak 2013
& articles on Egypt Fuel Subsidies
$10 trillion US Oil Imports
Economist James Hamilton calculated:

That calculation leads to a cumulative wealth transfer since 1973 from the U.S. to oil-producing countries of some $10.3 trillion when valued in 2011 dollars. That comes to almost $33,000 from every person in America or $131,000 for a family of four. And much of that transfer has gone to support causes and regimes that are in fundamental opposition to America’s goals and values.

Had the US invested a small portion of those funds into making replacement fuels it would be far better off economically.
Beware, the current tight oil boom is temporary.

Matthew R Marler
July 5, 2014 9:40 am

David L. Hagen quoting James Hamilton: That calculation leads to a cumulative wealth transfer since 1973 from the U.S. to oil-producing countries of some $10.3 trillion when valued in 2011 dollars. That comes to almost $33,000 from every person in America or $131,000 for a family of four. And much of that transfer has gone to support causes and regimes that are in fundamental opposition to America’s goals and values.
Though I preferred Pres Reagan to Pres Carter, I did think that Reagan’s cancellation of the synfuels program was a mistake. For less than the increase in the subsequent bill for imported oil, the US could have built 25 synfuels plants, at a rate corresponding to starting one per year, and they’d be producing fuel at less than the market price today. That need not have precluded any other energy development, public or private sector. They could have been located in the closed military bases close to coal and water. That program preceded the current CO2-avoiding bandwagon.
The Great Plains Synfuels Plant is a money-loser, but productive: http://www.netl.doe.gov/research/coal/energy-systems/gasification/gasifipedia/great-plains
A plant under construction in Colorado that would have produced liquid fuel was halted, so we don’t know for sure that it would have operated profitably, but fuel prices have remained above its projected cost of < $40/barrel.
How exactly that illuminates our current situation can be debated. All those poor people who benefitted from the US importation of oil would not be as well off, but the US would be better off. Had enriching the rest of the world's rich governments and poor people been the stated goal of closing the synfuels program, the synfuels projects might have been expanded. Had the production of synfuels driven down the marginal price of oil, it would look as though the plants were a waste of money, even though the net would have been increased wealth for fuel purchasers.

phlogiston
July 5, 2014 3:40 pm

With the scientific case for AGW cratering, the hacks all the way up to Obama are making a desperate power-snatch fuelled by rage and denial at the unfavourable winds of reality blowing down their house of straw. In doing so they will show too much of their true faces, and eventually be kicked into oblivion by a disgusted electorate.

johnmarshall
July 7, 2014 12:59 am

Your ”steel greenhouse” idea was investigated and pulled apart by Joe Postma in one of his blogs. Read that for the objections to your hypothesis.
( have you ever wondered why liquids in a vacuum flask still get cold and not get warmer).
Insulation does not double heat content it only delays heat loss.

Editor
July 7, 2014 7:23 pm

Willis: Adding to the subsidy battle of “true cost” of fuel. This from Egypt on their REMOVAL of fuel subsidies by the new Egyptian government ….

Egypt to raise fuel prices by up to 78 percent from midnight
Reuters ^ | 04 July 2014
Posted on 7/7/2014, 10:05:48 PM by Lorianne
Egypt was set to raise mainstream fuel prices by up to 78 percent from midnight on Friday, an Oil Ministry source told Reuters, in a long-awaited step to cut energy subsidies to ease the burden on its swelling budget deficit.
Food and energy subsidies traditionally eat up a quarter of state spending. The government is cutting subsidies in hopes of reviving an economy battered by more than three years of political turmoil.
Successive governments have failed to curb energy product subsidies, fearing backlash from a public used to cheap fuel.
“The increase will start being implemented by midnight,” the source said.
The source said the price of 92 octane gasoline would be 2.60 Egyptian pounds (36 cents) per liter, up 40 percent from its current price of 1.85 pounds, while 80 octane gasoline would rise to 1.60 pounds per liter, up 78 percent.

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