Wind & Solar Subsidies: High Time To End The Never-Ending Story of Wasted $Billions

Death and taxes are certainties, so too the wind and solar industry’s critical dependence on massive and endless subsidies.

Those pushing wind and solar keep telling us that the power they produce is ‘free’ and getting cheaper all the time.

Every so often, rent seekers and their political enablers are faced with the retort that, if wind and solar really are so cheap and, therefore, truly competitive with coal, gas and nuclear, then it’s surely time to do away with the $billions in subsidies directed at the unreliables?

Shortly after the stuttering and spluttering stops, wind and solar scammers then start waffling about subsidies to fossil fuels. For sport, try pressing them on the precise nature those subsidies and their total value, and they’ll flounder some more.

The producers of oil, coal and gas all pay royalties to governments based on the volumes extracted, as well as taxes on the profits they earn; likewise, those in the supply chain – freight companies, refiners and the like, also pay tax on profits; and the users of fossil fuels are generally hit with a variety of sales and/or consumption taxes for power and petrol.

Stripped away, the State Revenue enjoys a whole lot more upside from the constant and steady production and use of fossil fuels than it does from the chaotic delivery of wind and solar.

On the other side of the coin, there are the direct taxpayer-funded subsidies to wind and solar, in addition to the subsidies incorporated in the cost of electricity (paid for by all electricity users) in the form of renewable energy certificates or production tax credits or equivalent.

Alan Moran takes a look at the colossal cost of the subsidies directed to wind and solar in Australia, and tackles the myth that the production and use of fossil fuels can only occur with government subsidies.

Renewables subsidies: $22 billion by 2030
Spectator Australia
Alan Moran
5 April 2022

Energy Minister Angus Taylor noted that the Commonwealth Budget added $1.3 billion to assist uneconomic renewable energy, bringing the total support to $22 billion by 2030. Added to direct budget support are the regulatory subsidies that force consumers to pay for otherwise unviable wind and solar energy as well as the networks that have to be built to bring their energy to market.

Green energy enthusiasts and vested interests fraudulently claim wind and solar are cheaper than coal-generated electricity. Some also concoct data purporting to prove that fossil fuels benefit from enormous subsidies.

One such compilation is published by the Australia Institute which claims $11.6 billion of subsidies go to Australia’s fossil industry. Some $8 billion of this is the Fuel Tax Credits Scheme, the diesel fuel rebate for off-road vehicle use.

By no stretch of the imagination can this be deemed a subsidy to the oil industry. The rebate is simply a recognition that excise on fuels in Australia, and the world over, were introduced as a means of paying for roads by charging the users rather than the general public; farm, mining, and other such vehicles do not use public roads and taxing their fuel would contravene the cardinal taxation rule of avoiding taxing inputs into production.

As the OECD points out, ‘Most OECD countries have excise-tax exemptions for fossil fuels used in the production process in coal mining, oil extraction, refineries, etc.’ This is true of the USJapanIsrael, and others.

Other than the diesel fuel rebate, the Australia Institute includes within its compilation of spurious subsidies, the Grid Reliability Fund to support energy security, the Carbon Capture Use and Storage Development Fund, payments to refineries to increase liquid fuel stocks and up to $2 billion for the Fuel Security Services Payment. It even includes $79 million from the Victorian Government used to support a carbon capture and storage project, and a brown-coal-to-hydrogen project.

The fact is that fossil fuel production and use in Australia face heavy taxes, their production is impeded by punitive regulatory regimes, and massive subsidies on renewable energy wreck their market competitiveness. Government documents nowadays avoid identifying and publicising the full extent of renewables subsidies. But, in an estimate that was not contested, I put them at $7 billion a year for 2019.

Though Australia continues to tax commercial energy sources and subsidise the unreliable renewables, the Ukraine War has ignited a new policy agenda to that which favours renewables supposedly to prevent climate change.

Some politicians, like Germany’s governing Rainbow Coalition, see the dependence on Russian energy that the war has revealed as a justification to intensify subsidies to rid the world of carbon emissions. They have learned nothing from escalating power prices resulting from current policies aiding renewables. Ukraine’s President Zelenskyy shares their views but not to the extent of stipulating that the equipment and energy used to help in his nation’s defence be carbon-free!

The more sober-minded recognise the war’s message as dictating a reversion to cheaper more reliable energy sources. The UK is inching its way to re-embracing domestic oil and gas resources. France has reversed course on its former plans to shift from nuclear to renewables. The EU itself has now pronounced gas as a ‘sustainable’ fuel and has sanctioned temporary increases in coal use. Even the Biden Administration is walking back on its previous hostility to oil and gas drilling.

Hostility to conventional and nuclear fuels on the part of governments, activists, and the investment community has led to a lack of investment and closures of mines and power stations. The upshot is energy shortages. These have been compounded by actions against Russia, one nation that has not shared the dream of a carbonless future. The resulting shortage of usable energy has resulted in soaring prices.

Analysts at Thunder Said Energy estimate that this year world energy costs will compromise 13 per cent of global GDP. That compares to the traditional level of under 4 per cent and surpasses the level it reached in 1980 at the height of the OPEC oil crisis. A new cycle of investment in reliable fuel sources is necessary. But among the barriers to this is the Environmental Social and Governance (ESG) ideology that targets coal, oil, and gas and has infected the commercial finance industry and its regulators. The EU’s bizarre redefinition of gas as ‘sustainable’ is designed to circumvent this.

Australia has been perhaps the most aggressive nation in subsidising renewables and disadvantaging their more efficient alternatives. We need to reverse course.

Some are calling for an ending of the unique embargo Australia has on nuclear power. While the embargo should be removed, realistically, given the morass of regulatory and political impediments, it would be a decade before a plant was in operation. And in any event, for Australia, coal, and gas are almost certainly cheaper sources of reliable power.

As the world’s best-endowed energy resource nation, Australia could reclaim its position as having the world’s cheapest gas and electricity.

But this means navigating the political and bureaucratic impediments, supplemented by the powerful vested interests of those who have invested in renewables on the basis of never-ending subsidies. Those interests have the support of a heavily indoctrinated coterie of activists and have proved willing to marshal considerable financial resources to support political outcomes that, notwithstanding costs to the community in general, continue to provide them benefits.
Spectator Australia

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. My apologies in mis-quoting you. Maybe we could hash out the difference between gutless and corrupt. And I don’t subscribe to Twitter or Facebook. But I do work with politicians on issues I care about. A reluctant but ethiccal politician is that way because they don’t see support, only opposition. The hard work of advocacy is to educate and inform their constituents, as you inform the politicians. Stop These Things is a great advocacy community and tool. But you’ve got to sell people a positive vision, that something can be done, that they do make a difference. Let’s give some backbone to those 90 percent and get the gutless number down to 49 percent. I think the idea of advocating for the elimination of all energy subsidies is a good way to do this. Strip out the subsidies, and there is no other case for wind, for example. Also show how dense fuel like natural gas is a good fuel right now. Compare the new Small Modular Reactors to reuseable rockets, and leap frog peoples’ imaginations with the possible. I do not like most politicians, and hate the red tape, and misinformation, and the high level of corruption. But when talking with someone interested about the issue of energy I suggest we paint what a positive vision is if we make the changes we’re advocating for. Saying things like 90 percent of poiticians are gutless, although arguably true provides no information the person didn’t already know, and the chips are used up visualizing an obstacle. Show them the possibilities of comon sense.

    • The trouble with common sense is it is already scarce, and becoming more so, over time. This site aims to assist by allowing people to meet reality. But it is easier to dupe people than convince them they’ve been duped. We will continue, despite that truism.

  2. 99% of politicians are gutless when it comes to the facts about the unreliables. They inevitably raise costs to the end users and can not guarantee any reliability to supply.
    Yet how many will state the bleeding obvious?

    • I am in the US. Energy subsidies are so ingrained in our political culture it seems that suggesting to eliminate them would be like trying to privatize social security. At first thought, it seems a non-starter. The way subsidies work doesn’t seem so different from our Electrical Trusts Corporations of the 1920s and 1930s. They were monopolies that made electricity a very expensive commodity, and it wasn’t available where population density was light. Our farm women, the poor, and the children living in rural US were the victims of those early structures. Trusts were eventually broken up by the Roosevelt Administration ushering in a progressive political agenda where government controls more of the economy. But now energy subsidies originating from government commit the same sin of makiing electricity rare, expensive, and unreliable. The corruption and cronyism caused by subsidies today seem very similar to those ancient Trusts. Energy subsidies are immoral. But I don’t think 99 percent of politicans are bad. There are many good politicians, maybe a minority but they’re out there. We have to identify them, help them, get them re-elected or elected to higher office, keep them infomred, and show your neighbors you support their positions. It starts locally, I think. But to say 99 percent of all politicans are corrupt is givng the opposition too much credit. It’s defeatist. People will come to see common sense, help educate them. Fight back, and take the world on as it is. Nothing is really a non-starter.

      • Hi Shawn.
        Please note that I didn’t say that 99% of politicians are corrupt, although there is and always will be some who are.
        I said 99% of politicians are GUTLESS when it comes to stating the facts about renewable energy.
        I may have overstated that claim but I am pretty sure that the figure would be over 90% anyway.
        That means that they are not doing their job. It’s easy to go along with the mob. Twitter is the prime example of that mentality.

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