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Author Topic: Fossil Fuel Subsidies - The Invisible Ones are Worse Than the Obvious Ones!  (Read 8365 times)

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AGelbert

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    • Renwable Revolution


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
He that loveth father or mother more than me is not worthy of me: and he that loveth son or daughter more than me is not worthy of me. Matt 10:37

 

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