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Tag: renewable energy

Fossil Fuels and Subsidies in Australia

Anyone who claims that coal mining or other resource production is subsidised in Australia is trying to sell you something.. It isn’t. Claims it is are deliberately misleading.
There are no subsidies, just the same tax reductions for business costs that apply to all Australian businesses. “But that amounts to a subsidy!” No, it doesn’t. Subsidies are when money is taken from one group – taxpayers or businesses, and given to someone else to give the someone else an artificial advantage in the marketplace. Not taxing business input costs is not a subsidy.
Even then, some people are not happy. “But they get a huge discount on fuel!” No, they don’t. Like all primary producers, coal and other energy companies do not pay road tax on the fuel they use when on their own properties, and on roads they themselves have built and maintain.
The only incentive given by government to the mining industry is the Research and Development tax incentive, and this applies to all industries.
“The weekend release of the Productivity Commission’s (PC) latest industry assistance review again confirms that Australian mining receives ‘negligible’ government assistance.
The report states that the effective rate of combined assistance for the mining industry is just 0.2 per cent, having fallen by half a percentage point since 2010-11.
The effective rate of assistance is the ratio of total assistance to output.
The net tariff penalty on mining has increased since 2010-11 and 85 per cent of the budgetary assistance attributed to mining consists of the R&D tax incentive – a measure applicable to all industries.
The PC’s finding is consistent with the message successive Australian governments have reiterated to their G20 partners that Australia does not maintain fossil fuel subsidies.
The review shows that despite claims by the anti-mining lobby, the Fuel Tax Credit scheme, which refunds the tax paid on diesel fuel used off road, is not industry assistance or a subsidy.
Refunding the tax paid on diesel used in mining ensures that diesel – a critical input-cost – is not taxed. All businesses and industries in Australia do not pay tax on diesel fuel consistent with the basic tax principle to not tax business inputs.
Over recent years, the anti-mining lobby has sought to characterise the Fuel Tax Credit scheme as a subsidy for Australian mining. This is false and is confirmed by the Productivity Commission.
The Fuel Tax Credit scheme ensures that businesses in the manufacturing, mining, farming, construction, irrigation and commercial fishing industries do not pay road tax on fuel used in off-road activities.
Without the scheme, tens of thousands of Australian jobs, especially in rural Australia, would be at risk.”

Renewable Energy?

So called renewable energy is not renewable.

When you take into account the cost of construction, installation, maintenance, transmission, and the need to keep real energy sources running constantly to make up for fluctuations in supply caused by the unreliability of wind and sunlight, any wind or solar installation has a net cost in energy. No real contribution at all. Zero. Except to make governments and activist groups feel good about themselves. This is why, once the subsidies stop, wind and solar installations cease to function, and rust into the ground. The little they produce is not even enough to cover the cost of maintaining them.

Wind turbines produce less than one percent of the world’s energy, solar panels even less.

The cost of energy to consumers has to increase to cover the massive expense of these vanity projects. The more “renewable” energy in the mix, the higher the retail cost of electricity.

They are expensive and produce no net gain. Time to call it quits. Just stop taking tax-payer money to prop them up, and they will go away. And then private enterprise will have an incentive to invest in infrastructure that really works, and in researching new and efficient forms of energy production and distribution.

“Renewable energy” puts a brake on development in the West, and keeps millions of people in developing nations powerless and in abject poverty. Climate justice is exactly the opposite of justice.

Ignoring Reality

In a natural follow up to the story below, where a bunch of toddlers attempt to pretend something does not exist, the UK government and the BBC pretend something does exist – cheap renewable energy.

Christopher Booker writes in The Telegraph:

What is the maddest thing going on in Britain today? There may be many competitors for that title, but a front-runner must be what the Government has made the centrepiece of its energy policy, to ensure that our lights stay on and that our now largely computer-dependent economy remains functioning. Last week, the BBC ran a series of reports by its science correspondent, David Shukman, on the Government’s plan to ring our coasts with vast offshore wind farms.

The nearest thing allowed to criticism of this policy came in an interview with the Oxford academic Dieter Helm, who we were told had “done the sums”. What, Shukman asked, had he come up with? The only figures Helm gave were that the Government’s offshore wind farm plans would, by 2020, cost £100 billion – scarcely a state secret, since the Government itself announced this three years ago – plus £40 billion more to connect these windmills to the grid, a figure given us by the National Grid last year.

Helm did not tell us that this £140 billion equates to £5,600 for every household in the country. But he did admit that the plan was “staggeringly expensive”, and that, given the current extent of “fuel poverty” and the state of our economy, he doubted “if it can in fact be afforded”.

Even shorter on hard facts, however, was Shukman’s report on a monster new wind farm off the coast of Cumbria, where a Swedish firm, Vattenfall, has spent £500 million on building 30 five‑megawatt turbines with a total “capacity” of 150MW. What Shukman did not tell us, because the BBC never does, is that, thanks to the vagaries of the wind, these machines will only produce a fraction of their capacity (30 per cent was the offshore average in the past two years). So their actual output is only likely to average 45MW, or £11 million per MW.

Compare this with the figures for Britain’s newest gas-fired power station, recently opened in Plymouth. This is capable of generating 882MW at a capital cost of £400 million – just £500,000 for each megawatt. Thus the wind farm is 22 times more expensive, and could only be built because its owners will receive a 200 per cent subsidy: £40 million a year, on top of the £20 million they will get for the electricity itself. This we will all have to pay for through our electricity bills, whereas the unsubsidised cost of power from the gas plant, even including the price of the gas, will be a third as much.

It is on the basis of such utterly crazy sums – which neither the Government nor the BBC ever mention – that our politicians intend us to pay for dozens of huge offshore wind farms. In a sane world, no one would dream of building power sources whose cost is 22 times greater than that of vastly more efficient competitors. But the Government feels compelled to do just this because it sees it as the only way to meet our commitment to the EU that within nine years Britain must generate nearly a third of its electricity from “renewable” sources, six times more than we do at present.

The insanity does not end here. The Government talks of building 10,000 windmills capable of generating up to 25,000MW of the electricity we need. But when it does so, it – like the BBC – invariably uses that same trick of referring to “capacity”, without explaining that their actual output would be well below 30 per cent. (Last year, onshore turbines generated just 21 per cent of their capacity.) In other words, for all that colossal expenditure – and even if there was the remotest chance that two new giant turbines could be built every day between now and 2020 – we could only hope to generate some 6,000MW. This is not only way below our EU target, it is only a tenth of our peak demand during those cold, windless weeks last winter, when wind power was often providing barely 1 per cent of the power we needed.

That ‘renewable’ energy (in fact it is no such thing) needs such enormous subsidies is a sure sign that it is a rampant waste of taxpayer money.

If you can’t produce something without subsidies, this means you cannot produce it it at a price people are willing to pay. If you can’t produce something at a price people are willing to pay, you shouldn’t be producing it.

Subsidies hide the real price of a product. They discourage investment and inventiveness.

For example, the cost of the NBN to each household in Australia is about $6,000, whether they connect to it or not.

There is no business case for the NBN. If there were, business would be doing it. The NBN can only survive at huge cost to the taxpayer, and by sabotaging competition from existing copper wire networks and developing high speed wireless technologies.

The NBN will discourage research and investment into alternative internet technologies – just as massive subsidies for currently popular green energy schemes will discourage investment in other energy research. Who can compete when the government is throwing billions of dollars at your less efficient competitors?

That the government choice of technologies is less efficient and more costly, whether in power generation or internet transmission, means our costs are higher and consequently our industries are less efficient. So inevitably we are less competitive, we make less profit, and wages, employment and tax income all suffer.

Which means more people are unemployed, and there is less company profit going into superannuation funds, which means even greater burdens on social services, and less money available to support them.

Which means lots of misery.

But that’s what you get when ideology trumps reality.

Unwarranted Assumptions

It turns out unwarranted assumptions are the largest single source of renewable energy.

Take for example the Zero Carbon Australia, 2020 report which claimed that all of Australian energy could com from renewable energy sources by 2020. Ted (F.E.) Trainer, a well known Australian energy theorist pointed to some of the plans flaws,

To summarise, my back of the envelope impression is that when the foregoing points are added the ZCA conclusion is out by the following factors:

i. The efficiency gain assumed for electric vehicles should be perhaps halved.
ii. The assumed proportion of travel that can be transferred to electric vehicles is too high, in view of how well people and freight can be got to intended destinations by light vehicles and public transport, and in view of what people will accept.
iii. The embodied energy costs of plant might be much more than 10 times as high as has been assumed.
iv. Far more storage for solar thermal needs to be assumed, perhaps 96 hours, as distinct from 17.
v. The amount of solar thermal capacity might need to be trebled I am right about the peak vs average issue.
vi. Very optimistic assumptions and estimates have been made throughout, including regarding costs.

Trainer was not the only critic of the ZCA plan to point out its unrealistic optimism.

Dave Burraston has offered fact based critiques of the ZCA plans assumptions about wind implementation time, and solar facility construction times Martin Nicholson and Peter Lang, offered a long and detailed critique of the ZCA plan. They note, BZE make a number of assumptions in assessing the electricity demand used to calculate the generating capacity needed by 2020. In summary these are:

1. 2008 is used as the benchmark year for the analysis. BZE defend this by saying “ZCA2020 intends to decouple energy use from GDP growth. Energy use per capitais used as a reference, taking into account medium-range population growth.”.
2. Various industrial energy demands in 2020 are reduced including gas used in the export of LNG, energy used in coal mining, parasitic electricity losses, off-grid electricity and coal for smelting.
3. Nearly all transport is electrified and a substantial proportion of the travel kmsare moved from road to electrified rail including 50% of urban passenger and truckkms and all bus kms. All domestic air and shipping is also moved to electric rail.
4. All fossil fuels energy, both domestic and industrial, is replaced with electricity.
5. Demand is reduced through energy efficiency and the use of onsite solar energy.

Thus the net effect of these assumptions is to reduce the 2020 total energy by 58% below the 2008 benchmark and 63% below the ABARE estimate for 2020. The plan thus assumes that over 50% of energy demand will simply disappear by 2020 because of efficiency improvements.

The Nuclear Green Revolution site from which that comes is a left-wing climate alarmist site. But their analysis of the costs and practicality of so called renewable power is spot on.

If the whole disastrous anthropogenic global warming scary monster thing were true, and if reducing CO2 production by 20% would really do something to stop it (it isn’t and it wouldn’t), it would be possible to do so. But not with ‘renewable’ engery.

Reducing CO2 and other greenhouse emissions by 20% could be done if the pointless NBN was cancelled, and the $45 billion planned to be wasted on that was instead spent on nuclear power and the introduction of fuel cell technology for most land transport.

And that wouldn’t be a bad idea anyway.

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