Staggering Waste: Counting The Obscene Cost of Wind & Solar Subsidies

There would not be wind or solar industries in the absence of massive and endless subsidies. Those subsidies are either tacked on top of rocketing power bills and paid for by households and businesses; or they are provided in the form of tax credits or rebates to the owners and operators of wind turbines and solar panels; or they are provided to them by direct payment from governments for which all taxpayers are ultimately liable.

Governments and renewable energy rent-seekers have gone to considerable efforts to conceal how much subsidies are costing us; for obvious political reasons.

In Australia, as Alan Moran details below, the cost to date has been staggering and, if Scott Morrison signs up to a net-zero carbon dioxide gas emissions target, the cost born by households and businesses will be truly colossal.

Australia’s Obscene Green Subsidy Machine
Quadrant Online
Alan Moran
6 October 2021

When an ALP government introduced a “carbon price” on electricity in 2012 it was sold as a neutral tax. It was, of course, nothing of the sort. The tax was on the carbon content of fossil fuels, but a neutral tax would have had the new tax replace other imposts. In fact, mandatory levels of renewable energy required of every retailer, which were the major Commonwealth subsidies to wind/solar, were left in place, as were other support mechanisms. In addition, there were state schemes, though at the time these were still modest in scope.

At its 2014 rate of $24 per tonne, Labor’s carbon tax, if applied to all fossil fuel inputs into electricity, would have raised $3.7 billion in 2020 (or, if the recommended 4 per cent a year escalator was applied, $5.6 billion). There were, however, “transitional” arrangements for energy intensive industries that reduced the tax impost by more than a half in its earlier years — concessions that were supposed to phase down.

Compare the carbon tax impost to the $6.9 billion that is the current actual level of support to renewables through regulatory requirements, grants and soft loans. Subsidies in the form of grants and soft loans received a major boost when Tony Abbott abolished Labor’s carbon tax. Present subsidies to renewables and for schemes like carbon-capture-and-storage are as follows:

Australia’s toxic politics has railroaded the nation into renewable energy subsidies that prejudice the natural advantages of a large, sparsely occupied continent and very low cost and low sulphur coal.

The measures taken two decades and more ago set the trend. These included preventing land clearances, effectively an expropriation of landowners, which enabled Australia to comfortably meet the emission targets it set itself under the 2002 Kyoto Protocol. At the same time the Coalition initiated subsidising wind and solar through the Mandatory Renewable Energy Requirement, measures that have been considerably amplified over the years, notwithstanding some pushback by the Abbott government.

Those subsidies have resulted in a massive uptake in wind and solar, in the case of rooftop installations, more than anywhere else in the world.

Share of solar rooftop installations in total dwellings

Without the subsidies, wind and solar installations would have been negligible.

BUT these are only one part of the crippling cost that government actions on climate change are imposing on the economy. In support of renewables, governments are massively reinforcing transmission lines and building pumped storage to allow the dispersed and irregular wind and solar to operate. At least $3 billion a year is being spent on this. Then there is the private sector money attracted to renewables developments as a result of the subsidies extended to them – that is some $9 billion a year.

In addition, we now have state governments’ purchasing arrangements for renewables. Even excluding these, we have an annual $19 billion a year in spending and subsidies which basically undermine the low-cost, reliable energy we had before the descent into madness. And the ramifications of that descent can also be quantified. One measure of this is the higher prices we are paying for wholesale electricity.

In 2020/21 average wholesale electricity prices were around $60 per MWh. For a coal-oriented system with gas and hydro performing balancing functions, prices would be around $55 per year (On average, prior to 2012, before renewables started cutting into efficiency, prices were under $50 per MWh). Even at $5 per MWh, the cost to the economy is over $1 billion a year. Once prices rise to the level that renewables can operate profitably – about $90 per MWh – the annual cost becomes around $10 billion.

The costs of $19 billion a year we impose upon ourselves for on-power generation, once the higher wholesale costs of the renewables cut in, approach $30 billion a year. This – equivalent to almost one quarter of private investment – represents a serious drain on the means that enhance national productivity.

Propelling us to even greater action is Chinese belligerence, presenting Australia with a military threat for the first time in 75 years. This is pressing us to become closer to the US and seeking independent control of defensive US or UK nuclear powered submarines. And the Biden Administration’s vociferous support for climate change action – in spite of this having no possible effect in retarding climate damage (even allowing this is taking place) – is pushing us towards even more damaging measures.

On top of this we have a greener political colouring with the elevation of renewable enthusiast Matt Kean to the key position of NSW Treasurer. Moreover, in addition to Angus Taylor’s forlorn faith in state-financed new tech to place a lid on emissions, he now has a new deputy, born-again climate worrier Tim Wilson, who says a zero-emissions future is filled with opportunity for rural and regional communities — presumably by being paid not to produce goods wanted in the commercial market.
Quadrant Online

3 thoughts on “Staggering Waste: Counting The Obscene Cost of Wind & Solar Subsidies

  1. Please consider the extent of Malthusian philosophy; STT has posted on the subject previously.
    You may also consider the admitted lack of understanding of geoclimatoligist and physicists in their understanding of how universes work, eg., what happens when the ice on Greenland and Antarctica finally melt at the end of the current Ice Age. Let alone what causes them and polar reveal to occur. What this means is ordinary ignorant voters are easily misled in the name of selected private profit. Look at what appears to be the recent idiocy of dope smoking Elon Musk.
    None of the countries you mention are healthy or wealthy in a societal sense; an overriding unidentified private financial consortium backed by their political control makes idiots of believers in democracy.

  2. “‘Only’ captured taxpayers are ultimately liable.” Let’s be accurate. When was the last time anyone saw a steamroller? Some words are just convenient.
    AU is no longer the egalitarian society, many residents for financial or hi-rise reasons can’t ‘invest’ in ‘free’ solar energy.

    China, as the leader in fusion energy, will use it and helium 3 as its main power source once reliably operational. The military threat since USA & allies began the arms race at the end of WWII, has been nothing other than a military-industrial money-sucking distraction to add to stopping public interest in political allegiance to private finance.

  3. Only healthy and wealthy countries like the USA, Germany, Australia, and the UK, that represent about 7 percent of the world’s population (505 million vs 7.8 billion), can subsidize electricity generation from breezes and sunshine, and then, its only intermittent electricity at best. Meanwhile, 80 percent of the 8 billion on earth living on less than $10 a day cannot subsidize themselves out of a paper bag.

    The push to go Green at any cost by these wealthy countries will leave them dependent on breezes and sunshine for weather-dependent intermittent electricity. This winter may be an electricity and humanity disaster.

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