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The Real Problem of Subsidies

wjrobinson | Posted in Energy Efficiency and Durability on

This is a clip from the following site;

http://theenergygame.blogspot.com/2011/11/we-need-to-feel-pain.html

The Real Problem of Subsidies

“So here is the real problem with the subsidies. Subsidies make solar appear viable today, so where is the motivation for an entrepreneur to risk money, or even focus on developing real energy alternatives when solar is “almost” there? How can an inventor justify striving with the effort it takes to really develop something great when he is competing against a straw man technology which can provide power at almost the same cost of traditional power sources today? But of course it really doesn’t.

The answer is he can’t justify the effort, so the next great thing is not developing, at least not with the sense of urgency it should be. Why enter a contest when you are competing against someone with an unfair advantage? You may be the faster swimmer, but your competitor is using flippers.

Solar subsidies are a placebo which is giving the general public a sense of security about our energy future and is robbing the motivation of those entrepreneurs that could actually address our energy problems. Subsidies are much worse that just wasteful, they’re diabolical. They lull us into thinking we have almost solved the problem and they hinder us from seeking the real solutions.”

Interesting…. to me at least.

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Replies

  1. user-946029 | | #1

    Couldn't the same be said about oil & gas subsidies?

  2. wjrobinson | | #2

    Yes Mike, I agree, so does the title. Subsidies have downsides.

  3. user-1033221 | | #3

    While I'm generally not in favour of subsidies there is an argument that they are of most effective in assist ing an industry to become economic or gain economy of scale. Surely that industry scale might then encourage further investment and entrepreneurship? I don't agree with the Blog's basic tenant that solar power will never be viable outside of a subsidised system especially in a parallel environment of low power devices and energy efficient buildings.

  4. user-757117 | | #4

    In fact, according to the IEA, in 2010 fossil fuel subsidies were more than six times subsidies for renewables.

  5. wjrobinson | | #5

    Interesting post in the blogs by Ted Clifton in;

    The First National Green Code — or Communism https://www.greenbuildingadvisor.com/blogs/dept/guest-blogs/first-national-green-code-or-communism#post_comments

    Part of it.... "When something is voluntary and market-driven, it inspires a race to the top:"

    Not about subsidies but it is about messing with "the market" via building code mandates.

  6. wjrobinson | | #6

    I like the posts coming in.... So many ways to look at subsidies. Also... somewhere on the site I was on they really rip apart the word sustainable. We are consumers at least the way we are living and populating the third rock from our sun IMO and we are messing with the natural ecosystem pretty fast of late with all the man sorting of all into higher concentrations of compounds not found before we came along. Life is use to a wee bit of uranium everywhere, but not too compatible with a pile of it ready to be made into a bomb or whatever.

    More of what Lucas' post is about;

    http://www.dailykos.com/story/2011/02/18/945489/-The-war-over-fossil-fuels-subsidies#comments

  7. user-869687 | | #7

    Strange the way people describe fossil fuels as a "traditional" source of energy. A thousand generations of firewood, then five of natural gas, and natural gas is "traditional". Meanwhile, biomass has become an "alternative energy".

    I also tend to doubt that clever people who try to develop energy producing technology are especially motivated or demotivated by federal subsidies. No doubt it influences how the local electric utility generates its power, and which types of heating systems people install, but ingenuity is its own motivation.

  8. user-1023211 | | #8

    AJ, From reading your excerpt and the linked article "We Need To Feel Pain", it sounds like this is an academic exercise, possibly tied to a political agenda.

    But why would the author pick on Solar? It actually does work when the sun is shining. Do you envision a future where the sun doesn't shine? It doesn't shine at night, but I think we can predict it will shine with various intensities most days. It also eliminates the need for long distance transmission when mounted onsite (another huge expense that governments usually are involved with subsidizing).

    Why not pick on dirty subsidies like credits for automakers who produce cars that can run on dual fuels, even though they never will run on alternative fuels (to gasoline). Or synfuel tax credits that have been around since the 1970's for spraying coal with who-knows-what and calling it a cleaner burning alternative to imported energy:
    http://en.wikipedia.org/wiki/Synthetic_fuel#Non-transportation_.22synfuel.22

    It cost our government (tax payers) so much money that even Marriott Hotel chain was in the coal business to make extra money by loosing money (yes, the government subsidized the losses taken by producing this fake stuff - AND - the credits carried forward if you couldn't use them all in a single year). When the credit was fazed out in 2007 they sold off their coal businesses:
    http://www.usatoday.com/money/economy/2008-02-14-2796884462_x.htm

    I had to read the Energy Policy Act of 2005 for an MBA policy course (taken in 2006) and present the findings with my team. It was interesting in so many ways, including opening offshore drilling and adding incentives for drilling in the Gulf of Mexico. How'd that work out for BP?

    But most interesting was that about half (~$50 billion = $5,100,000,000/yr) of the money (~$100 billion - and that was when $100 billion seemed like a lot - thanks Bank Bailout!) in there was for heating assistance for low income families (LIHEAP).

    Seeing those numbers brings you back to why we care about energy conservation in buildings, and why I'm constantly reading this site for ideas and applying what makes sense for me at my home.

  9. user-757117 | | #9

    Interesting post in the blogs by Ted Clifton in;

    The First National Green Code — or Communism

    AJ,
    I agree to disagree that this comment was interesting.
    Mr. Clifton's belief is quite ordinary.

    We need more than free market fundamentalism to "solve" our problems.

    The consumer whims of the diminishing percentage of the population wealthy enough to buy a new home will not drive the "green building movement" to where it needs to get.

    There is some well founded speculation that price volatility (oil for instance) will confuse the "price signals" required to spur investment in alternatives.

    Waiting for a "price signal" from a volatile index is like waiting for the bus in rural Thailand...
    When it does show up, it may not slow down enough to get on board - which just leaves you waiting for the next bus.

  10. wjrobinson | | #10

    Subsidies

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