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Author Topic: Fossil Fuel Subsidies - The Invisible Ones are Worse Than the Obvious Ones!  (Read 2463 times)

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AGelbert

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AGelbert

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Might I pose the question that if we peak oilers are correct about fracking being a ponzi scheme; that major cracks should start appearing soon in this house of leverage and constantly required drilling or fracking of costly wells.

Tight/shale oil and gas wells aren't expensive, the most recent range of numbers provided to the public by the Texas BEG are in the 3-10 million each range, drilling and completing, I confirmed this independently after I last spoke with Tinker and his group a month or two back.

These kinds of numbers are nearly insignificant when compared to conventional oil or gas production in places like the North Slope or GOM, North Sea, anywhere in the Arctic, and are less than half the cost of doing the SAME thing in Argentina, China, or Russia.

As far as hydraulic fracturing itself being a ponzi scheme, it has been going on for 60+ years, I don't think it has much to do with overall financial performance myself, but more with the relationship between price, cost and well performance.

For example, using financial reports on public companies allows interesting analysis of the aggregate, but not the distribution of profitability at the well level of resolution.

For example, lets take two oil companies in the Bakken. One of them is run by a bloviating amateur, he drills and completes a $10M well, pays $1500/month to have someone operate it for him, and requires a nice office building, a staff of sycophants to blow smoke up his ass, all of these things cost money, and the overhead for this company is $100K/month.

This company will probably lose money, and badly, trying to recoup not only the initial CapEx but the $101.5K month nut they have created.

Whereas another company, requiring only one person to achieve the same result, and wanting a modest income of $2k month from this well, will probably make money.

No difference in anything other than the overhead sitting on top of the well's performance.

Fortunately, when the first company goes bankrupt, the second will buy the discounted cash flow of the first companies wells (doesn't give a crap about the building, let the bank foreclose) and make their money off expected increases in price as peak oil takes hold and the price of oil increases as Malthusians expect.

The combination of these three things at the detail level, and aggregate, is important. Amateurs don't tend to know the difference, in part because they don't see how the performance of private companies works, and how they are just salivating right now, waiting for someone to fall, that their assets might be acquired at a discount.


Quote from: Golden Oxen
Shouldn't financing and borrowing problems be arising already?

They certainly might be.

My connections with Wall Street money says that they are still looking to get in, you can barely get them to bite on 1/4B deals, they really want 1B deals right now, and can easily come up with 10B for the right deal.

So the money does not seem to have dried up yet.
[/size]
 

To paraphrase Samuel Clemens in regard to some of his experiences with people that make holes in the ground to get stuff out of and sell to us for "profit", a FRACKING site is a hole the ground with a bunch of LIARS on top.

Here's an article MKing will disagree with and ridicule as "garden variety" or "irrelevant" or disdain with some other pejorative bit of puffery.

The only part of the article he will agree with is that the Oil and Gas industry ACTUALLY gave solar power technology development a boost back in the 70s because PV supplied power to very remote locations the fossil fuelers tend be located for new profit over planet piggery.  ;D

The FULL story of how we-the-people have supported these fossil fuel and nuclear welfare queens is there from the start until this day. The appearance of profitability ignores our tax money for research and continuous subsidy.

Fossil fuelers have an amazing ability to ignore, not just externalized costs, but the giveaways from we-the-people! They have the brass balls to compute those subsidies as part of the ROI. That's a blatant accounting falsehood. Without subsides they are not profitable, period. But MKing will continue with his fantasies, come hell or high water. So it goes.  :P


SNIPPPET 1:

Quote
The bias against renewable funding and support is clear. Recent analysis found that over the first fifteen years an industry receives a subsidy, nuclear energy received an average of $3.3 billion, oil and gas averaged $1.8 billion,Fto and renewables averaged less than $0.4 billion.

Renewables received less than one-quarter of the support of oil and gas and less than one-eighth of the support that nuclear received during the early years of development, when strong investment can make a big difference. Yet even with this disparity, more of our energy supply now comes from renewables than from nuclear, which indicates the strength of renewables as a potential energy source.

SNIPPET 2:
Quote

The momentum behind renewable development came to a rapid halt as soon as Ronald Reagan was elected president. Not only did he remove the solar panels atop the White House, he also gutted funding for solar development and poured billions into developing a dirty synthetic fuel that was never brought to market.

Unnatural Gas: How Government Made Fracking Profitable (and Left Renewables Behind)

http://www.dissentmagazine.org/online_articles/unnatural-gas-how-government-made-fracking-profitable-and-left-renewables-behind
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AGelbert

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Let’s Even the Playing Field for Renewable Energy  

 
Bill Ritter
Energy
Invest in Renewable Energy
Renewable Energy
Stock Market


BILL RITTER: What is the most cost-effective way to subsidize investment in renewable energy sources? The word “subsidy” is loaded with connotations that the government is “picking winners” when it provides support to certain energy industries and not to others. Instead, the question should be, “What is the most cost-effective way to level the playing field for renewable energy?”

It is important not to demonize well-designed energy subsidies when they are clearly in the national interest. There has been no time in modern history that the federal government has not provided tax breaks and other benefits to one energy industry or another, going back to land grants for timber and coal production in the 1800s. In principle, targeted subsidies are warranted when an important emerging energy technology cannot achieve commercialization without help.

There is another way, however, that government can stimulate investments in a wide variety of energy resources. This type of fiscal policy provides tax incentives for private capital to flow into the energy resources that investors believe offer the highest returns or the greatest potential.

Two examples that have drawn attention recently are real-estate investment trusts (REITs) and master limited partnerships (MLPs). Both provide tax advantages and access to low-cost capital for fossil-energy investors. Until recently, neither extended the same benefits to renewable energy.

In May, the Obama administration used its executive authority to allow REITs for certain types of solar-generating equipment. That was a first step to what we might call “investment parity” in federal policy. The next logical step is to give renewable-energy investors the same access to MLPs as fossil-energy investors have.

Legislation to do this, the Master Limited Partnership Parity Act, has bipartisan support in Congress, but it reportedly has stalled.     Some members have conditioned their support on the elimination of the production tax credit (PTC) for wind energy and the investment tax credit (ITC) for solar energy. According to one report, these members argue it would be redundant to open MLPs to renewable-energy technologies while targeted solar and wind tax credits remain in place. 

Yet, fossil fuels enjoy a variety of targeted tax benefits as well as MLPs.  Denying the same mix to renewable energy investors perpetuates federal policies that have long picked fossil fuels as the winners. The PTC/ITC and MLPs should not be an either/or issue. Both belong in an intelligent mix of tax policies that create more robust market competition on a more level playing field. 

In addition, opening MLPs to renewable-energy investment is consistent with the “all of the above” energy strategy advocated both by President Obama and the Republican Party. I am confident that as various renewable energy technologies become ready for full-scale commercialization, they will compete very well.

In the absence of access to MLPs, private investors and state governments are creating other ways to capitalize emerging clean-energy technologies. Renewable-energy bonds, green-energy banks, crowdfunding and “yield cos” are among recent innovations.

Nevertheless, a great deal of private capital remains sidelined, waiting for stable and equitable federal energy policies. If we really believe in letting all market-ready energy options slug it out in robust competition, then we shouldn’t ask that federal policies fix the fight. But that is what happens when renewable-energy investors are barred from the tax incentives that investors in fossil fuels enjoy. 

Bill Ritter served as Colorado’s 41st governor. He is currently the director of the Center for the New Energy Economy at Colorado State University.

http://blogs.wsj.com/experts/2014/09/30/lets-even-the-playing-field-for-renewable-energy/


Serious Hangover for Fossil Fuelers coming soon. :icon_mrgreen:
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The Next Revolution: Discarding Dangerous Fossil Fuel Accounting Practices

Alex Nicolson, Contributor 
 October 23, 2014  |  10 Comments 



The green revolution and, in particular, renewable energy products such as solar power, wind turbines, geothermal and algae-based fuels are not waiting for viable technology — it already exists in many forms. What they are waiting for is a massive sea change in our antiquated financial accounting systems.

We keep hearing that green technology has too long a payback or too low an internal rate of return and just can’t compete with non-renewable coal, oil and natural gas, etc.

Now to be fair, renewables have two drawbacks that have to be considered in their use and integration into the power grid. The first is their low capacity factors. For example, wind farm turbines sit idle when the wind stops blowing, and solar power output drops sharply when the sun is not shining. On the other hand, non-renewable energy systems can operate 24 hours a day without interruption, so they will be used for some time to come as more dependable baseload power sources.

The second factor is evident when we compare installation and operating costs. Renewable installations spend 80 percent of their budget in the first year and 20 percent over their 20- or 30-year operating life. Non-renewables are the opposite; only 20 percent is spent on the initial installation and 80 percent on the next 20 or 30 years of operation. And so our antiquated and myopic accounting practices analyse these facts and then say that coal, oil and gas plants obviously have a better return on investment.

Of course as we run out of non-renewables, their power production will slowly dwindle. We should be prepared for that inevitable event by building up renewable energy options and developing technologies now. The book “Last hours of Ancient Sunlight” by Thom Hartman covers that inevitability very well.

The Costs of Oil

We complain about $4+ per gallon gasoline, but people do not realize that we would likely pay over $10 a gallon if we add on the currently ignored direct social and economic costs of oil.

Economists recognize the existence of these costs and call them “externalities.” Other than this recognition, externalities are still not assigned to their correct sources.

As just one example, consider the enormous U.S. military budget, (currently a staggering  $700 billion). A large portion of this cost is spent on the 800+ military stations maintained around the world that protect critical sea lanes for oil tankers and oil pipelines and act on a moment’s notice to attack any politically motivated disruptions to foreign oil field production or oil storage sites. A significant portion of that budget is a direct cost of oil.

And to that cost figure, we have to add the social costs of young soldiers being trained, deployed and killed, severely injured or handicapped for the rest of their lives. Then we must also consider the enormous stress this imposes on these soldier’s families and friends, both economically and emotionally. That is another direct cost of oil.

And on another front, consider the enormous costs of the oil spill in the Gulf and its effect on the ocean, wildlife and beach environments. Consider the effect on people’s health and livelihood and the stress they were under during hurricane seasons that threatened a resurgence of oil and toxic dispersant sludge to be thrown up on their shores. That is another cost of oil.

Consider poor mountain people in Afghanistan that are killed and injured due to drone attacks against Al Qaeda. Their injuries and deaths are simply written off as collateral damage, when the truth is that the U.S. is in that poor mountain region mainly due to the huge oil and gas fields located in southern Russia. These sources will eventually need a pipeline to transport the crude oil to a warm-water all-season coastal port where tankers can pick up and transport the oil to markets in the West.

The coal industry has similar externalized costs. Apart from carbon dioxide emissions, mercury and other heavy metals, coal-burning power plants emit over 100 times the radioactivity of nuclear plants producing the same amount of energy. These emissions cause inevitable negative health effects as it is exhausted into the atmosphere and carried to those people living downwind. In fact, annual deaths due to coal plant emissions are estimated at about 60,000 people in the U.S. alone, according to various concerned citizen groups.

Also the huge amounts of foreign aid paid to protect dictatorial regimes against the wishes of the people under their control are all direct costs of oil. Incidentally we see these regimes are starting to fail in the Middle East, due to their younger generation’s frustrations with a static society that has been kept backward and out of step with the modern world just to suit the oil interests.

And closer to home, a typical oil company’s income statement reveals enormous tax breaks, such as depletion allowances from taxes for using up a non-renewable resource, which make no economic or social sense.

And in more recent times, oil companies can drill in federal waters without paying any royalties. To date taxpayers currently subsidize the oil industry by as much as $4.8 billion a year — an industry that shows record profits for owners and shareholders.

And in the U.S., many states that are under the oil companies’ economic/political lobbying control do not charge them for exploitation of these non-renewable resources. These resources are state-owned assets, and the oil companies acquire them at a very low cost.

Renewables Make Sense

Solar, wind, tidal and geothermal energy do not need these massive hidden support costs. They cannot be stolen by any super-power and are unlikely to be the source of dragged out wars and intrigue between nations under the sham of spreading democracy, which happens now over oil.

The sun is boundless, and in most mid- and southern-latitude countries, a surprisingly small surface area of solar plants can deliver most of the electricity a country needs. This is particularly true here in the U.S.

Accounting Reform

So taking all these factors into account, accounting practices must enter the 21st century, adapt to a global economy and account for ALL of the real costs of each energy resource as they are incurred worldwide. These numbers will reveal the most viable energy resource technologies.

This will require a sea change in accounting. Accounting principles and practice are still stuck in the industrial revolution where we witnessed horrendous costs to the environment and to workers. All these enormous social costs were externalized and thrown onto the back of the society. Companies were measured on profitability within incredibly narrow accounting standards. Often the most polluting, child-exploiting companies were deemed the most efficient and profitable and given the most support.

Admittedly there has been many improvements over the past 150 years as we can see with child labor laws enforced and many companies in the US and other developed countries are being asked to clean up their dangerous emissions and remove toxins from their workplaces and are starting to do so.

However we need to further expand our accounting horizons to a world-view and take that same approach to a global scale, especially when comparing renewable energy technologies and demand that the comparison be based on their real costs.

If we can achieve that vision, then the correct decisions for support of green renewable energy will become abundantly clear — and the world will be a safer and cleaner place for us all.


 A. G. Gelbert   
 October 28, 2014 

Just wanted to jump in and also thank Ian Crawford, PJ Van Staden and Joe Richardson for telling it like it is.

And for the anonymous poster, I have good news. Canada just approved a hydro power dam project that will generate over one gigawatt. I don't know how it will affect the wildlife but it sure beats fossil fuel nonrenewable poisonous energy any time! I also agree that micro hydro has a great future since it does not disturb the flora or aquatic fauna. Hydro and micro hydro contribute to renewable energy in Vermont but we need a more serious commitment to passive geothermal using heat pump technology to get rid of all fossil fuel use for heating and air conditioning.

"Canada’s Multi-Billion Hydro-Dam Project Wins Environmental Approval

Canada’s $7 billion Site C hydroelectric dam on the Peace River won environmental approval, and is on-track for a final decision before the end of the year. The project would involve construction of a power station near Fort St. John and the flooding of about 5,400 hectares of land in British Columbia’s northeast. The dam would be the third on the Peace River. Once finished, the project will generate enough electricity to power 450,000 homes."

http://www.dailyenergyreport.com/canadas-multi-billion-hydro-dam-project-wins-environmental-approval/

 joe richardson   
 October 28, 2014 

Costs are costs. I think the science fiction writer Robert Heinlein said it first, "TANSTAAFL",
There Ain't No Such Thing As A Free Lunch.

joe richardson   
 October 28, 2014 

Great article, it illustrates a fundamental law of the universe. That costs are costs and it doesn't matter if you see them or not or if an accountant wants to put them aside in another column or not, they are there and they will be paid.
 And ill take the total costs of renewables, including the costs of building/planning around the site specific constant output (base load) issues over the TOTAL cost of fossil fuels anytime.

PJ van Staden   
 October 25, 2014 

Yes, real costs. Have you for example seen some of the real costs of fracking. Can you imagine if a cloth or something in the kitchen catches fire and you quickly hold it under the tap to extinguish it, but instead get your water lightning up like a blowtorch? Hey? Like in fighting fire with fire?

Google "Unearthed. The deeper the dig, the darker the secrets." And watch the trailer there so long.

The fossil industry is guilty of an unforgivable crime. And it all for the hunger of money. How shameful.

A. G. Gelbert   
 October 24, 2014 

What Brian Donovan said!

I have sometimes wondered at the term energy RESOURCE used by the media (and everybody else) to describe fossil fuels. It seems to me that they should be referred to as a SOURCE of energy, not a RE-source; you use fossil fuels once, period. They can't be re-used. All renewable energy is, on the other hand, a genuine energy REsource.

I believe our vocabulary is corrupted. Fossil fuels should be called energy sources, not energy resources. But then the cat would be really out of the bag for the fossil fuel polluters, wouldn't it?

When the math actually gets done to include costs to society and the biosphere. renewable energy is the obvious choice. In fact, when all is said and done , the issue is what works indefinitely. Just like running an internal combustion engine in your garage "works" if you don't care about living, burning fossil fuels on a planetary scale "works" if you don't care about life.

This is not hard. Either we have an equitable, do ALL the math. society that respects, not just fellow humans, but the biosphere we and hundreds of thousands of other species of earthlings require for life, or we perish.

See one minute clip on Natural Capitalism:

http://viewrz.com/video/real-money

Fossil fuel Government 2 minute Video Clip from "The Age of Stupid" Video:

http://viewrz.com/video/fossil-fuel-government

FDR two minute clip on Trickle Down "Economics"

http://viewrz.com/video/fdr-on-trickle-down-economics

Patrick O'Leary   
 October 24, 2014 

Of course it will. Of course that was always true. And it was always the case that doing so would impact the general public in a positive fashion. And it was always the case that doing so would negatively impact a small number of wealthy people.

ANONYMOUS 
 October 24, 2014 

Hey folks, please get with the program and include hydro - high capacity factor (60%), considered base load, been with us for over 100 years, can load follow in an emergency in a matter of minutes. Only 3% of existing dams are powered, plenty of potential there except for the onerous and expensive over-regulation, even more so for micro-hydro, from FERC. Why are so many renewable energy writers so afraid of including the pioneer of renewable energy?

sean o   
 October 23, 2014 

You forgot to mention, everything is figured and compared by BTU's which is a pretty antiquated way to compare production.

Brian Donovan   
 October 23, 2014 

Great article. End the wars for fossil fuels!

Renewable has the SAME grid integration needs as baseload: all those spinning reserve and peaking plants are needed for load following by baseload too. We have all seen Germany and Denmark exceed 50% from intermittent renewable with no problems. Yet the myth persists that RE needs "special" backup.

Fossils and nuclear have also gotten massive gov breaks for 100 and 50 years, still get 50 times solar and wind, and got more than solar and wind per MWH at similar stages in development.

Ian Crawford   
 October 23, 2014 

CORRECTION: ".....renewables have two drawbacks that have to be considered in their use and integration into the power grid. The first is their low capacity factors."  

The EIA rates new geothermal plants as having a 92% capacity factor  , higher than those of nuclear (90%), gas (87%), or coal (85%), and much higher than those of intermittent sources such as onshore wind (34%) or solar photovoltaic (25%).

Geothermal Energy is available 24 hours a day, 365 days a year.

http://www.renewableenergyworld.com/rea/news/article/2014/10/the-next-revolution-discarding-dangerous-fossil-fuel-accounting-practices#comment-136450
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Sen. Whitehouse Proposes Carbon Tax to Repay Citizens for Pollution Costs
 

Anastasia Pantsios | October 29, 2014 4:35 pm

Delivering a keynote address at the New York University Institute for Policy Integrity’s fall conference, in which he noted “The world has just set some dubious records. 2014 is on pace to tie or become the hottest year on record,” U.S. Sen. Sheldon Whitehouse announced that he plans to introduce legislation creating a carbon pollution fee next month. He said he will reveal details in the next few weeks.

Senator Sheldon Whitehouse gives one of his weekly addresses on climate change. Photo credit: Sheldon Whitehouse (at the link)

It was an appropriate announcement to make at the conference whose theme this year was “The Future of U.S. Climate Policy: Coal, Carbon Markets and the Clean Air Act.”

“Pollution-driven climate change hurts our economy, damages our infrastructure and harms public health,” he told his audience. “However, none of these costs are factored into the price of the coal or oil that’s burned to release this carbon. The big oil and coal companies have offloaded those costs onto society. Economics 101 tells us that’s a market failure; in the jargon, that negative externalities are inefficient. If a company participates in an activity that causes harm, it should have to compensate those harmed.”

“By making carbon pollution free, we subsidize fossil fuel companies to the tune of hundreds of billions of dollars annually,”
he continued. “By making carbon pollution free, we fix the game, favoring polluters over newer and cleaner technologies that harvest the wind, sun and waves. Corporate polluters, not bearing the costs of their products, are in effect cheating their competitors.”


See above Proud representative of the Fossil Fuel industry... ;D


The Rhode Island Democrat, chairman of the Senate Environment and Public Works Subcommittee on Clean Air and Nuclear Safety, has long been an advocate for climate change action. His official website features a page called “Climate Change: Time to Wake Up” and he has made more than 85 speeches in the Senate on the topic, giving one per week.


U.S. Sen. Bernie Sanders and U.S. Sen. Sheldon Whitehouse at the People’s Climate March in New York City last month. Photo credit: Stefanie Spear (at the link)

Whitehouse praised the Obama administration’s limit on carbon emissions from power plants, announced in June, saying “It will change the way polluters think.” But he’d like to take the next step of making polluters pay for their cost to society. He said that not only would it reduce carbon emissions and improve air quality, it would generate significant new revenue for the federal government, perhaps as much as a two trillion dollars in the first decade. He pointed to some of the positive uses that money could be applied to, including cutting taxes, relieving student debt, increasing Social Security benefits and providing transition assistance to workers in fossil fuel industries.

“It’s win-win-win,” he said. “We can use this revenue to do big things; repair a marketplace failure; and guide the economy toward lower emissions, enhanced productivity and a sustainable future.”

Whitehouse also drew a direct line between the Republican party’s increasingly stubborn climate denier stance and the U.S. Supreme Court’s Citizens United decision, which allowed a gusher of corporate money into campaigns.

“Not long ago, Republicans joined Democrats in pushing for action on climate,” Whitehouse said. “Leading Republican voices agreed that the dangers of climate change were real. Leading Republican voices agreed that carbon emissions were the culprit. And leading Republican voices agreed that Congress had the responsibility to act. Then the heartbeat flatlined. Republican calls for climate action fell silent. Something happened, right around 2010. It was the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission—one of the court’s most disgraceful decisions. Improper fact-finding by the five conservative activists on the Supreme Court concluded that corporate spending could not ever corrupt elections—just couldn’t do it. By some magic, it’s pure.”

He says that although his Republican colleagues represent many states ravaged by its effects, “Most won’t even utter the words ‘climate change’ on the floor of the Senate at all.  It’s not safe to, ever since Citizens United allowed the bullying, polluting special interests to bombard our elections with their attack ads and their threats.”

http://ecowatch.com/2014/10/29/senator-proposes-carbon-tax/
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Quote
joe richardson 
 November 9, 2014 


In regards to your comments about road costs. I think its worth noting how Texas and their illustrious Governor Perry decided to deal with that very problem, i.e. paved roads being ruined by fracking industry heavy truck useage in the Eagle Ford shale area.

Texas and Gov. Perry plan was to turn the paved roads back into gravel roads and the hell with the damaged pavement. . I actually believe part of their plan was to strip the pavement from paved roads and just let them go the way of the goat trails and the people that lived in the area, well to bad..

In all fairness Gov Perry's plan was put forth a year ago and I managed to escape not shortly thereafter and haven't paid attention to where the plan went.

Yet another example of the mentality of oil or nothing that will surely drive us all back to the goat trails days if we let it.  >:(

http://www.renewableenergyworld.com/rea/news/article/2014/10/the-next-revolution-discarding-dangerous-fossil-fuel-accounting-practices#comm136919
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http://www.youtube.com/watch?v=2AAa0gd7ClM&feature=player_embedded

How to Promote Solar — And Help Repeal Fossil Fuel Subsidies: Parody
 


 Tor 'Solar Fred' Valenza,  UnThink Solar
 November 12, 2014

Article at link:

http://www.renewableenergyworld.com/rea/blog/post/2014/11/how-to-market-solarand-help-repeal-fossil-fuel-subsidies-parody#comment-137011
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See how much you are getting RIPPED OFF by all the above at the link:   :o  >:(

http://foe-calc.herokuapp.com/peaceaction/
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01/30/2015 12:47 PM   
Fossil Fuel Subsidies Finally Trending Down, But Not In US  ???  >:(



SustainableBusiness.com News

Now that deep sea oil drilling projects are being cancelled across the world because of low petroleum prices, governments should use this opportunity to phase out fossil fuel subsidies, says the International Energy Agency (IEA).

 And at least 27 countries are doing so, they say. It started in 2013, when fossil subsidies declined by $27 billion to $548 billion, while renewable energy support rose $11 billion to $96.5 billion. The process is accelerating with low oil prices.

"In the absence of subsidies, all of the main renewable energy technologies would be competitive with oil-fired plants," says Faith Birol, Chief Economist at IEA.

IEA calculates that for every $1 that subsidizes renewable energy, $6 is spent to subsidize fossil fuels - precious funds that could be used for sustainable development.

Countries cutting subsides range from Mexico to Germany, from Morocco to Malaysia, mostly in the form of higher gas prices - everyone except the US, as usual! There's no need to subsidize fossil fuel consumption when prices are so low, saving governments lots of money and leveling the playing field for renewable energy.

India, for example, has been spending 2.2% of GDP on fossil subsidies to keep electric and fuel prices artificially low.

 
Fossil Fuel Subsidies US

Countries need to stop providing subsidies to stoke exploration and production - amounting to about $88 billion last year. The UK, for example, is considering incentives for drilling in the North Sea, and the US - the biggest subsidizer - has a new offshore oil leasing plan. 

IEA has been fervently calling for an end to fossil subsides - that alone, would reduce global emissions 13% - while making it much easier for renewable sources to compete. It would also reduce air and water pollution and free up funding for the Green Climate Fund. 

Efforts to cut emissions by using more renewable energy can't do the job if fossil fuel use keeps growing, says IEA. If the status quo continues, global energy demand will rise 37% and carbon emissions 20% by 2040. That would lead to a 3.6°C (6.5°F) temperature rise - making catastrophic sea level rise, polar ice cap melt, water shortages and other severe effects inevitable.

To get fossil subsidies down faster, the Center for American Progress is promoting "SPARC Bonds," which would be repaid with savings from reduced subsidies. Read more:

 
Website: www.americanprogress.org/issues/green/report/2014/06/25/90277/subsidy-phase-out-and-reform-catalyst-bonds-2/

http://www.sustainablebusiness.com/index.cfm/go/news.display/id/26127
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https://www.youtube.com/watch?v=HTwhHTVBDjY&feature=player_embedded

How much does the world spend to subsidize fossil fuels? The IMF wants to know   

By Heather Smith  on 15 Jun 2015 4:03 am

http://grist.org/climate-energy/how-much-does-the-world-spend-to-subsidize-fossil-fuels-the-imf-wants-to-know/

The Fossil Fuelers   DID THE Climate Trashing CRIME,   but since they have ALWAYS BEEN liars and conscience free crooks, they are trying to AVOID   DOING THE TIME or     PAYING THE FINE!     Don't let them get away with it! Pass it on!
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A Closer Look at Fossil and Renewable Energy Subsidies


The same permanent subsidies that made fossil fuels cheap are simply not available to the re-newable energy industry. Why not?

June 10, 2015

By Susan Kraemer, Contributor

A new study by the International Monetary Fund puts the total cost of fossil fuel subsidies at approximately $10 million a minute globally, when health costs and environmental degradation are included, never mind the effects of a destabilized climate in future centuries.

The most perverse of these subsidies are aimed at finding new reserves of oil, gas and coal, even though it is generally understood that these must be left in the ground if we are to avoid catastrophic irreversible climate change.

When drilling for oil was a start-up industry in the 1890s, it cost today's equivalent of $500 a barrel to get it out of the ground, according to UC San Diego's James Hamilton in his study Oil Prices, Exhaustible Resources, and Economic Growth.

The first federal tax break for the oil and gas industry came within its very first years. The Intangible Drilling Costs (IDC) still allows the industry to write off most drilling costs, like the tertiary injectants deduction, in full, immediately, rather than at normal business depreciation rates.

Enacted in 1926, the Percentage Depletion Tax Credit actually increases when prices go up, as it allows companies to deduct a flat percentage of income received from oil or gas wells, frequently resulting in tax deductions in excess of investment.

The Independent Petroleum Association of America describes the tax credit this way
Quote
: "This deduction is a standard part of the American tax code that supports the development of U.S. oil and natural gas that would otherwise be uneconomic to produce.”

When coal was a start-up industry (in the U.S.) in the late 1700s, it was given tax-free status, smelting was given incentives, and competing old world coal imports were taxed at 10 percent. Four centuries later, coal is still receiving $5 billion in incentives a year. The result is coal-fired electricity at about US $0.04 per kilowatt-hour (when burned in power plants that are already built, the costs of which have already been passed along to ratepayers).

"There are dozens and dozens of tax credits for conventional energy," said SolarReserve CEO Kevin Smith, based on the knowledge he gained in 30 years of building natural gas plants. "For example, if the Keystone pipeline goes ahead; the refineries who refine that type of alternative fuel get a 50 percent ITC. There are depreciation allowances for wells as they start to degrade, there are just a long list of tax advantages. And all of them are a permanent part of the tax codes.”

These and other oil and gas subsidies total about $7 billion a year in the U.S., according to Taxpayers for Common Sense Understanding Oil and Gas Tax Subsidies.
For centuries, the U.S. Congress has made these sorts of federal investments in each new form of fossil energy.

Permitting, Leasing Inequities, Too

State-level policies increase expenses for renewable energy project developers by making permitting onerous for new projects. In California for example, permitting has historically been almost nonexistent for fossil fuels, but has set a much higher bar for renewable energy.
Permitting solar farms in California can be a three-year multi-million-dollar process. Fossil fuel companies can simply declare on a one page form their intentions to drill next Friday. Further, land leasing costs are higher for solar and wind than for fossil fuels. Land leases for oil and gas were still at 1920s prices in 2009, when the BLM was setting market rates for the renewable industry.

The coal industry pays land rents for natural resource extraction on land that has been undervalued since the 1800s. In the last 30 years, the treasury has lost nearly $30 billion in revenue by undervaluing public lands in Wyoming and Montana where Powder River coal is mined, according to Tom Sanzillo, Finance Director at the Institute for Energy Economics and Financial Analysis (IEEFA).

Make Renewable Subsidies Permanent


It is almost impossible to reverse permanent subsidies in the tax code. It has never happened in the U.S., so some advocates believe that a more practical solution would be: if you can't beat them, join them.

The coal industry's PTC for producing refined coal is $6.71 a ton — in 2015. The wind industry’s $0.023 per kWh PTC keeps flickering out every few years. Renewables have been stymied by stop/start subsidies that almost seem designed to scare off investors, because none are permanently in the tax code the way fossil fuel subsidies are.

Uncertainty alone makes subsidies less effective. If the ITC and PTC were permanent, renewable investment would be more predictable, so supplying equipment for projects and capital cost would be less, bringing generation costs down. While some investors are able to stomach the risk of buying into renewables projects without knowing whether the tax credits will still be there when their projects reach fruition, most cannot.

Because subsidies for fossil fuels are permanent, the effect is much greater, because permanence provides a stable and predictable investment environment not given to renewables.

One way to create a level playing field with fossil fuels would be make the subsidies for wind and solar just as permanent as those for fossil fuels. Either that, or remove all subsidies for all forms of fuel, something very unlikely to happen.

Quote
Comment by Jan Freed

The Harvard School of Medicine study concludes that coal alone has enormous hidden costs from over 70 harmful side effects, aside from tax breaks.

http://www.nexteraenergycanada.com/pdf/durham/PIC_2_Handouts_P1.pdf

We pay $300-$500 billion per year in these hidden costs, costs that double or triple the sticker price of coal energy.

Perspective?  800 "Solyndras" of taxpayer harms per year for the privilege of burning coal.   

http://www.renewableenergyworld.com/articles/2015/06/a-closer-look-at-fossil-and-renewable-energy-subsidies.html

The Fossil Fuelers   DID THE Climate Trashing CRIME,   but since they have ALWAYS BEEN liars and conscience free crooks, they are trying to AVOID   DOING THE TIME or     PAYING THE FINE!     Don't let them get away with it! Pass it on!
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AGelbert

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‘Renewables Are Cheapest Energy Option’ When Fossil Fuel Subsidies Are Removed, Says REN21 
Alex Kirby, Climate News Network | June 27, 2015 12:34 pm

A significant threshold has been crossed by renewable energy as analysts report that the sectorʼs size last year reached double the level it was at just 10 years earlier.

 
Removing fossil fuel and hidden nuclear subsidies globally would make it evident that renewables are the cheapest energy option. Photo credit: Shutterstock

This expansion happened in a year when the global economy and energy use both grew, but without a matching rise in emissions of carbon dioxide  —the main greenhouse gas targeted in efforts to restrain global warming.

The report by REN21, a global renewable energy policy network, says the result is an example of sustainable development. Despite the worldʼs annual 1.5 percent increase in energy consumption in recent years and 3 percent GDP growth last year, 2014ʼs CO2 emissions were unchanged from 2013ʼs total of 32.3 billion tonnes.

The reportʼs authors say this decoupling of economic and CO2 growth is due to Chinaʼs increased use of renewables and to efforts by OECD countries to promote more sustainable growth, including by increased energy efficiency and use of renewable energy.
 
“Renewable energy and improved energy efficiency are key to limiting global warming to 2°C and avoiding dangerous climate change,” says Arthouros Zervos, who chairs REN21.


 

Distorting subsidies

Solar, wind and other technologies, including large hydro-electric schemes, used in 164 countries added another 135 Gigawatts last year to bring the worldʼs total installed renewable energy power capacity to 1,712 GW. This was 8.5 percent up on 2013, and more than double the 800 GW of capacity recorded in 2004. One GW can power between 750,000 and one million typical U.S. homes.

The authors say the sectorʼs growth could be even greater were it not for more than US$550 bn paid out in annual subsidies for fossil fuels and nuclear energy. They say the subsidies keep the prices for energy from these fuels artificially low, encouraging wasteful use and hindering competition.

Christine Lins, executive secretary of REN21, says: “Creating a level playing field would strengthen the development and use of energy efficiency and renewable energy technologies. Removing fossil fuel and hidden nuclear subsidies globally would make it evident that renewables are the cheapest energy option.”

 

By the end of 2014, renewables comprised an estimated 27.7 percent of the worldʼs power generating capacity—enough to supply an estimated 22.8 percent of global electricity demand.

The amount of electricity available from renewables worldwide is now greater than that produced by all coal-burning plants in the U.S. Coal supplied about 38 percent of U.S. electricity in 2013, compared with around 50 percent in the early 2000s.

Solar photovoltaic capacity has had a rapid 68-fold growth, from 2.6 GW in 2004 to 177 GW in 2014, while wind power capacity has increased eightfold, from 48 GW in 2004 to 370 GW in 2014. Employment in the sector is also growing fast, with an estimated 7.7m people worldwide working directly or indirectly on renewable energy last year.


 

Outpacing fossil fuels

New investment globally in renewable power capacity was more than twice that of investment in net fossil fuel power capacity, continuing the trend of renewables outpacing fossil fuels in net investment for the fifth year running.

Investment in developing countries was up 36 percentsu from the previous year, to $131.3 bn. It came closer than ever to overtaking the investment total for developed economies, which reached $138.9 bn in 2014—up only 3 percent from 2013.


 

China accounted for 63 percent of developing country investment, with Chile, Indonesia, Kenya, Mexico, South Africa and Turkey each investing more than $1bn. By dollars spent, the leading countries for investment were China, the U.S., Japan, the UK and Germany. Leading countries for investments relative to per capita GDP were Burundi, Kenya, Honduras, Jordan and Uruguay.

But REN21 points out that more than a billion people—15 percent of humanity—still lack access to electricity, and the entire African continent has less power generation capacity than Germany.

The report says that off-grid solar PV has “a significant and growing market presence,” and other distributed renewable energy technologies are improving life in remote off-grid areas.

However, it stresses that this growth rate is still not enough to achieve the Sustainable Energy for All (SE4ALL) goals of doubling renewable energy and energy efficiency, and providing universal access for all by 2030.

http://ecowatch.com/2015/06/27/renewables-are-cheapest/2/


Agelbert NOTE:
The math done above is accurate as far as it goes. However, it does not even begin to explain how REALLY EXPENSIVE fossil fuels ALWAYS HAVE BEEN!

WHY? Because the invisible "subsidies" (health care costs, pollution costs, wars for oil costs, ETC.) were not included. There is NO SUCH THING as an "externality" in thermodynamic processes. EVERYTHING that happens has a MEASURABLE effect. The Empathy Deficit Disordered ASS HOLES in the dirty energy industry have tried to make their biosphere math challenged fairy tale view of reality the "accepted wisdom". Only fools continue to believe them.

Hope for a Viable Biosphere of Renewables: Why They Work and Fossil & Nuclear Fuels Never Did

Quote
The quagmire that faces industrialised civilisation is much of it was built using cheap fossil fuels which were not only subsidised directly but in nearly all cases the externalities were never factored in so the damage and costs associated with fossil fuel were lugged to the general population/wildlife/environment.  - Monsta666

Monsta is right. But he ignores the DELIBERATE malice and aforethought that gave dirty energy the "subsidies" in the first place AND continues to be used as a hammer to hamper cost effective energy (i.e. RENEWABLE ENERGY) development due to MASSIVE big oil corporate corruption of government.  >:(

MKing's mendacity and double talk (see defense of fracking    below) about energy costs is a textbook example of the mens rea modus operandi of externality ignoring fossil fuelers everywhere. 
 
Might I pose the question that if we peak oilers are correct about fracking being a ponzi scheme; that major cracks should start appearing soon in this house of leverage and constantly required drilling or fracking of costly wells.

Tight/shale oil and gas wells aren't expensive, the most recent range of numbers provided to the public by the Texas BEG are in the 3-10 million each range, drilling and completing, I confirmed this independently after I last spoke with Tinker and his group a month or two back.

These kinds of numbers are nearly insignificant when compared to conventional oil or gas production in places like the North Slope or GOM, North Sea, anywhere in the Arctic, and are less than half the cost of doing the SAME thing in Argentina, China, or Russia.

As far as hydraulic fracturing itself being a ponzi scheme, it has been going on for 60+ years, I don't think it has much to do with overall financial performance myself, but more with the relationship between price, cost and well performance.

For example, using financial reports on public companies allows interesting analysis of the aggregate, but not the distribution of profitability at the well level of resolution.

For example, lets take two oil companies in the Bakken. One of them is run by a bloviating amateur, he drills and completes a $10M well, pays $1500/month to have someone operate it for him, and requires a nice office building, a staff of sycophants to blow smoke up his ass, all of these things cost money, and the overhead for this company is $100K/month.

This company will probably lose money, and badly, trying to recoup not only the initial CapEx but the $101.5K month nut they have created.

Whereas another company, requiring only one person to achieve the same result, and wanting a modest income of $2k month from this well, will probably make money.

No difference in anything other than the overhead sitting on top of the well's performance.

Fortunately, when the first company goes bankrupt, the second will buy the discounted cash flow of the first companies wells (doesn't give a crap about the building, let the bank foreclose) and make their money off expected increases in price as peak oil takes hold and the price of oil increases as Malthusians expect.

The combination of these three things at the detail level, and aggregate, is important. Amateurs don't tend to know the difference, in part because they don't see how the performance of private companies works, and how they are just salivating right now, waiting for someone to fall, that their assets might be acquired at a discount.


Quote from: Golden Oxen
Shouldn't financing and borrowing problems be arising already?

They certainly might be.

My connections with Wall Street money says that they are still looking to get in, you can barely get them to bite on 1/4B deals, they really want 1B deals right now, and can easily come up with 10B for the right deal.

So the money does not seem to have dried up yet.
[/size]
 

To paraphrase Samuel Clemens in regard to some of his experiences with people that make holes in the ground to get stuff out of and sell to us for "profit", a FRACKING site is a hole the ground with a bunch of LIARS on top.

Here's an article MKing will disagree with and ridicule as "garden variety" or "irrelevant" or disdain with some other pejorative bit of puffery.

The only part of the article he will agree with is that the Oil and Gas industry ACTUALLY gave solar power technology development a boost back in the 70s because PV supplied power to very remote locations the fossil fuelers tend be located for new profit over planet piggery.  ;D

The FULL story of how we-the-people have supported these fossil fuel and nuclear welfare queens is there from the start until this day. The appearance of profitability ignores our tax money for research and continuous subsidy.

Fossil fuelers have an amazing ability to ignore, not just externalized costs, but the giveaways from we-the-people! They have the brass balls to compute those subsidies as part of the ROI. That's a blatant accounting falsehood. Without subsides they are not profitable, period. But MKing will continue with his fantasies, come hell or high water. So it goes.  :P


SNIPPPET 1:

Quote
The bias against renewable funding and support is clear. Recent analysis found that over the first fifteen years an industry receives a subsidy, nuclear energy received an average of $3.3 billion, oil and gas averaged $1.8 billion,Fto and renewables averaged less than $0.4 billion.

Renewables received less than one-quarter of the support of oil and gas and less than one-eighth of the support that nuclear received during the early years of development, when strong investment can make a big difference. Yet even with this disparity, more of our energy supply now comes from renewables than from nuclear, which indicates the strength of renewables as a potential energy source.

SNIPPET 2:
Quote

The momentum behind renewable development came to a rapid halt as soon as Ronald Reagan was elected president. Not only did he remove the solar panels atop the White House, he also gutted funding for solar development and poured billions into developing a dirty synthetic fuel that was never brought to market.

Unnatural Gas: How Government Made Fracking Profitable (and Left Renewables Behind)

http://www.dissentmagazine.org/online_articles/unnatural-gas-how-government-made-fracking-profitable-and-left-renewables-behind
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