Saturday, November 20, 2010

Economist needs lesson in energy economics

Over on the Economist, there is an account of the $312 billion global subsidy (mostly in Russia, Saudi Arabia and Iran) given to fossil fuels, as compared to the $57 billion subsidy to renewables. They choose to compare the subsidy on the amount of power provided by each form.

Some reports suggest that cutting these fossil subsidies  would produce a 6% decrease in global annual CO2 emissions.

My 2p of comment:

In dismissing the comparison between subsidies to renewables and fossil fuels, you ignore the obvious point that new technologies need pump-priming. I should not have to remind the Economist that all new ventures need capitalisation to cover start-up costs.

You also ignore the historic subsidies over the years that have accrued to fossil fuels.

Renewables are a form of energy income, whereas with fossils, as    E F Schumacher pointed out many years ago, burning fossil fuel is equivalent to using capital as a form of revenue. He proposed a tax on all capital fuels to subsidise the transition to renewables. Again, it is remarkable that an non-economist should be having to point this out to economists.

Also, with renewables, the fuel itself comes free of cost.

Not only do renewables fight climate change, they also mitigate Peak Oil and Peak Gas, and increase our energy security and independence.

They are also diverse and decentralised, leaving us less open to blackmail by groups who can shut down large sections of our energy supply.

To anticipate commentators who will raise the intermittency problem, this will be met with HVDC supergrids and emergent storage solutions.

The case for renewables is overwhelmingly strong. The fact that this is not universally recognised, and that fossils are still receiving subsidies, can only be ascribed to the lobbying power of the fossil lobby.



It's fine and dandy for you to comment on renewables over fossil fuels and I agree with your arguments but do you think the Saudis give a rats arse about anyone other than the Saudis?

DocRichard said...

Well, every prime minister will say that he is fighting for his country's interests when engaging in the international dialogue. However, the international dialogue itself contains an undercurrent of global interest, and to some extent, crowd thinking will affect everyone. People used to say that China would never change, but it is installing renewables big time now. The Saudis were quick to pick up on the Climategate fluff, but as that little excursion sinks into history, the pressure will be back on to the Saudis, and will become more so as they realise that their oil is finite, but the sunlight on their desert sands is not so.

Saudi Arabia, like all totalitarian regimes has a limited shelf life, and democracy will come there eventually. The Global Index of Human Rights will help to speed this process.

Indefatiguably optimistic,