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.
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.”
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.
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.
johnmarshall says:
July 5, 2014 at 12:49 am
It appears that you missed the part above where I said:
A “space blanket” is made of multiple layers of aluminized mylar. Each of these layers absorbs thermal radiation. However, because each layer has two sides, it re-radiates half of the absorbed energy inwards, and half outwards, which radically slows heat transfer.
As to whether it “slows convection”, yes, it does … but did you ever think of why they’re called “space blankets”? It’s because they were developed to slow radiative heat transfer in outer space, where convection is nonexistent … so your claim about convection is obviously not the key to how they work.
They work in space for exactly the same reason that my “steel greenhouse” works in space. Each layer absorbs the radiated energy, and re-radiates half of it back inwards and half outwards.
In any case, John, you still haven’t provided either a single detail or a scrap of evidence for your vague claim that my “steel greenhouse” violates the laws of thermodynamics. Once you spell that out, we’ll have something to discuss.
Until then, you’re just waving your hands and flapping your lips.
w.
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:
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.
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.
David L. Hagen says:
July 5, 2014 at 7:34 am
David, you’ve been claiming for a while that the “current tight oil boom is temporary” … but so far it is still booming. Have you made a prediction yet on “peak tight oil”?
Next, your economist should go back to school. If I give you a hundred dollars, and you give me a hundred dollars worth of gasoline, what is the “cumulative wealth transfer” between us? …
…
The “cumulative wealth transfer” is zero. You get money, I get gasoline, there is no “wealth transfer” at all.
Finally, as to whether it’s true that if the US had “invested a small portion of those funds into making replacement fuels it would be far better off economically”, we started wasting money on renewables back in Jimmy Carter’s presidency, and we’ve increased the amount every year since then. At present the subsidies are $88 billion per year and still rising.
Nor are we the only ones. From 1975 to the present, following your brilliant advice, the OECD countries have flushed about a trillion dollars ($1,000,000,000,000) down the “replacement fuels” rathole, and we still do not have one single renewable energy source that is competitive with plain old coal.
And spending a trillion dollars for nothing? That, my friend, is a true “cumulative wealth transfer”.
Sorry, David … been there, tried your dumb plan for fifty years, it has cost the world a mint and given us bupkis.
w.
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.
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.
johnmarshall says:
July 7, 2014 at 12:59 am
Glad to, if you post the link. I’m not into guessing what someone is referring to.
Because it’s not transparent with the sun shining through it to the contents. Is it your contention that a transparent vacuum flask in the sun would NOT be warmer than ambient temperature?
Not sure why insulation is being mentioned. Last I looked there’s no insulation in a vacuum flask.
Regards,
w.
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 ….