Arguments
2013 SkS Weekly News Roundup #29B
Posted on 20 July 2013 by John Hartz
- "A world that we have to avoid at all costs"
- Acid test: rising CO2 levels killing ocean life
- Democrats building support for new climate change action
- Divert $600-bln fossil fuel subsidy to climate aid
- Getting the U.S.-China climate partnership right
- Globally, June was second warmest on record per NASA
- Insurance industry, Republicans split on climate change
- Obama finds unlikely climate change partner
- Record heat in June extends globe’s streak to 340 months
- "Scientists are cajoled into developing...politically palatable messages"
- Stunning photos of glaciers in retreat
- Wretched week for a typical trio of climate contrarians
"A world that we have to avoid at all costs"
This is a guest post by Gabriel Levy and was originally published on the blog People and Nature. This post is Part 2 of a two-part interview with Kevin Anderson of the Tyndall Centre for Climate Change Research.
"A World That We Have to Avoid At All Costs" by Gabriel Levy, DeSmog Canada, July 17, 2013
Acid test: rising CO2 levels killing ocean life
The ocean absorbs approximately one-third of all human-caused carbon dioxide emissions at a rate of 300 tons per second, which helps slow global climate change. But, due to that carbon dioxide absorption, the ocean is now 30 percent more acidic than before the Industrial Revolution, and the rate of change in ocean pH, called ocean acidification, is likely unparalleled in Earth’s history.
With today’s levels of atmospheric carbon dioxide so high, the ocean’s help comes at a cost to marine life and the millions of people who depend on healthy oceans .
Acid Test: Rising CO2 Levels Killing Ocean Life, Op-ed by Matt Huelsenbeck, Oceana, LiveScience, July 16, 2013
Democrats building support for new climate change action
Democrats on Capitol Hill sought to move climate change back to the front of the congressional agenda Thursday morning, after a long period of inaction.
But the testy back-and-forth at a hearing of the Senate’s Environment and Public Works Committee, chaired by Sen.Barbara Boxer (D-Calif.), suggests that Congress is still paralyzed on global warming, even as many states aggressively enact their own policies.
Boxer and fellow Democrats are hoping to build momentum on President Obama’s release of a “Climate Action Plan” last month. The plan is a series of executive actions the administration is taking to nudge the country toward increased use of renewable energy.
Democrats looking to build support for new climate change action by Evan Halper, Los Angeles Times, July 18, 2013
Divert $600-bln fossil fuel subsidy to climate aid
Diverting cash used to subsidise fossil fuel production and consumption could raise up to $600 billion a year to fund cuts in greenhouse gas emissions and help poor countries adapt to the effect of a warmer planet, delegates at U.N. talks were told in the Philippines this week.
Industrialised nations plough $600 billion a year to subside coal, oil and gas activity.
Dr Mattia Romani, Deputy Director General at the Global Green Growth Institute said in a presentation at the talks that this instead could be used to fill the U.N.’s Green Climate Fund.
“Removing these subsidies could lead to a 13 percent decline in CO2 emissions,” he said.
Divert $600-bln fossil fuel subsidy to climate aid by Susanna Twidale, Reuters Point Carbon, July 18, 2013
Getting the U.S.-China climate partnership right
President Nixon once changed the world with a single handshake on a Beijing tarmac, beginning a new relationship with China.
Today, it’s not just our geopolitics that are changing — it’s the earth itself. And it requires a new partnership with China to meet the challenge.
Nothing less than a complete and collaborative transformation of the way we use and produce energy will be enough to tackle the urgent threat of climate change.
Getting The U.S.-China Climate Partnership Right by John Kerry, U.S. Secretary of State, Energy Education Foundation, July 20, 2013
Globally, June was second warmest on record per NASA
How hot was it in June? So hot that NASA reports the only warmer June in the global temperature record was 1998, a year juiced by both global warming and a super El Niño.
By contrast, 2013 has been hovering between a weak La Niña and ENSO-neutral conditions — which would normally mean below-average global average temperatures — if it weren’t for that pesky accumulation of heat-trapping greenhouse gases.
NASA: Globally, June Was Second Warmest On Record, Energy Education Foundation, July 19, 2013
Insurance industry, Republicans split on climate change
The U.S. insurance industry told Senators that a surge in weather-related catastrophes has forced billions of dollars in payouts, offering an assessment at odds with Republicans who have expressed doubt about global warming.
The Reinsurance Association of America, which represents companies such as Swiss Re Ltd. (SREN) and Munich Re, today urged Congress to have federal agencies consider climate risk in project reviews, and offer tax incentives to help homeowners prepare for severe hurricanes, floods, droughts and fires.
“The industry is at great financial peril if it does not understand global and regional climate impacts, variability and developing scientific assessment of a changing climate,” Franklin Nutter, president of the association, said in testimony to the Senate Environment and Public Works committee. “We are committed to work with you to address the exposure of citizens and their property to extreme weather risk.”
Insurance Industry, Republicans Split on Climate Change by Mark Drajem, Bloomberg. July 18, 2013
Obama finds unlikely climate change partner
President Barack Obama has stumbled on an unusual partner in his quest to combat climate change: China.
The world’s two biggest emitters of heat-trapping greenhouse gases are finding common cause in efforts to reduce global warming, cooperation the U.S. says could clear the way for other developing nations like India and Brazil to get on board, too.
Obama finds unlikely climate change partner in major polluter China, AP/Washington Post, July 18, 2013
Record heat in June extends globe’s streak to 340 months
June was one of the hottest such months on record globally, based on newly released data from NASA and the National Oceanic and Atmospheric Administration (NOAA). The month extended the unbroken string of warmer-than-average months to 340, or a stretch of more than 28 years. That means that no one under the age of 28 has ever experienced a month in which global average temperatures were cooler than average (based on the 20th century average).
Record Heat in June Extends Globe’s Streak to 340 Months by Andrew Freedman, Climate Central, July 18, 2013
"Scientists are cajoled into developing...politically palatable messages"
This is a guest post by Gabriel Levy and was originally published on the blog People and Nature. This post is Part 1 of a two-part interview with Kevin Anderson of the Tyndall Centre.
"Scientists are Cajoled into Developing...Politically Palatable Messages" on Climate by Gabriel Levy, DeSmog Canada, July 17, 2013
Stunning photos of glaciers in retreat
Seventeen years.
That's about how long the glaciers that give Montana's Glacier National Park its name have before they disappear completely, scientists who study the park's snow and ice say.
By 2030 or even sooner -- perhaps even by the end of this decade -- most or all of the park's remaining 25 or so glaciers will be gone forever, according to Dan Fagre, a U.S. Geological Survey ecologist and glacial expert.
Stunning photos of glaciers in retreat by Terrell Johnson, The Weather Channel, July 19, 2013
Wretched week for a typical trio of climate contrarians
Last week was a rough one for climate contrarians Matt Ridley, Patrick Michaels, and Murry Salby.
Wretched week for a typical trio of climate contrarians by Dana Nuccitelli, Climate Consensus-97%, The Guardian, July 19, 2013
The biggest news (perhaps the biggest in the history of climate science denial so far) is DC court decision to proceed with Michael Mann vs National Review case which might have broken right after this summary.
Interestingly, I scanned carefully through the comments section looking for any denialati innuendo, otherwise always present under news or quote related to Mike Mann. This time a total silence. Someone made a joke that "deniers are now going to say this DC court is part of the 'global conspiracy'", but that would be self-killing move so it looks like they prefer to stay silent. A turning point? Let's hold our breath until the final decision comes...
Chris,
This is terrific news. Thank you for the link. It will be interesting to see how this turns out.
Once again Michael Mann is a trend setter!
I don't count the increase of natural gas development as the tradeoff for coal reduction in China as a win. Obama is dead set pushing natural gas because of the economic benefits. To include increased exploration that extends the global climate carbon available to the number McKibben puts here: http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719
"Industrialised nations plough $600 billion a year to subside coal, oil and gas activity."
This is not true! OECD countries 'plough' only about $45 to $75 billion of subsidies into fossil fuels per year, and they reap about $800 billion in tax revenues from the fossil fuel sector, of which about $400 billion directly from fuel taxes and another $400 billion from VAT and goods and services taxes.
http://www.oecd.org/site/tadffss/49006998.pdf
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JvD - I fear you are looking at only a subset of the numbers. OECD countries are hardly the only group involved, and much of the subsidies are consumption subsidies in exporting countries, such as Iran and Saudia Arabia.
[Source - Washington Post]
Duncan Clark in the Guardian has a good breakdown on a country-by-country basis, which is also worth looking at. Fossil fuel subsidies are not a myth. And phasing those subsidies out would have an impressive impact on emissions, estimated reductions (for example) on the order of 2.6 B tonnes by 2035, or ~70% of current EU emissions.
KR, consumption subsidies in oil producing countries are not really subsidies. Those countries are merely selling their own citizens fuel at the cost of production.
It makes no sense to lump such 'consumption subsidies' into the same category with actual production subsidies in OECD nations to solar and wind owners. These are completely different things!
It muddles the discussion. It decieves people into thinking that solar and wind energy are competitive wth fossil fuels. This doesn't help. True environmentalists should explain to the public that fossil fuels are incredibly cheap, while solar and wind are expensive. What that means is that people will have to *pay* to increase solar and wind energy. It is no use trying to trick people into thinking that some dumb misinformation like "600B fossil fuel subsidies" is what is holding solar and wind back. It's just nonsense and it should stop. Don't you think?
Huh? In my books, where a government pays money to a producer so that the consumer cost is less than market rate, that is a subsidy. They are not paying market rate and therefore it distorts comparison with other fuel sources. Now, for many places, unsubsidized fossil fuel may well be cheaper than unsubsized other sources (Not here in NZ), but while governments provide market-price distorting subsidies in various ways, you cannot know. Ask the question - if the government stopped paying those monies, would the consumer cost go up? If yes, then its a subsidy.
JvD - Consumption subsidies are indeed still subsidies; artificially reducing prices by diverting monies from elsewhere in a fashion which encourages consumption. Also note that there are probably another 300-400 B in 'hidden' subsidies such as tax structuring in developed and developing countries, rather more difficult to directly pull out but still there.
"Those countries are merely selling their own citizens fuel at the cost of production." - That would be incorrect; Saudi Arabia, for example, subsidizes fuels for its people out of foreign sales, to the extent of risking their own economy. This encourages massive over-consumption, they consume more per capita than the US and more total than the UK, despite having half the population.
Again, fossil fuel subsidies are not, as you claim, a myth. They are real, they encourage fossil fuel consumption by artificial price supression, and they distort economies.
Now hold on a minute. Let's say oil costs on average $15 to get out of the ground and into people's cars in Saudi Arabia. That's about right. Now, Saudi Arabia could sell that oil on the international market for $100, so that $85 dollar difference is now chalked up as a "subsidy"?!? That is how most of the "600 billion dollar" figure came about in the following text under the article above:
Surely. Surely you guys agree that this is incredibly misleading? It seems to obvious. If it is not clear, please read the joint IEA/OECD/OPEC/World Bank report I linked to above, because it explains it better.
Note that there is no 'cash' used for this subsidy. Countries like Saudi Arabia are merely selling one part of their oil on the international market, and another part of their oil to domestic consumers at cost. This is not a subsidy!
Let's put it another way. Lets say my country produces a lot of potato's which it can sell at ten times the cost on the international market. However, the farmers don't pay that international price when they consume a potato themselves, but they only pay the cost to produce the potato's. Is that a subsidy? No, of course not! Surely, that is clear? (Please if anybody is reading this, help me out here, I don't know how to explain this better, but it is a very important issue.)
JvD @9, if a corporation sold part of its product to employees at cost, there would be no doubt that it was a financial benefit for the employees. In accounting for the cost of that financial benefit, the cost assessed would be the difference between the sale price to employees and the normal sale price, that being the loss in profits.
If you disagree, by all means recommend to GM that they sell cars to US citizens at the cost of manufacture. You can assure them with a straight face (which I couldn't) that that would not represent a subsidy and hence would cost them nothing.
@Tom, I think you are missing the point. I'll expand on your analogy of GM.
Let's say GM produces cars for $15 a piece, and sells them for $100. However, to it's own employees, it sells them for $15. Now, a competitor of GM - lets call it Tesla Motor - comes in to the market selling cars that cost$200 dollars to make, which it sells for $210.
Would it be right for Tesla Motors to say: "Hey, not fair! GM is subsidising its cars! GM should not do this, but it should instead use that cash which it is ploughing into subsidising its cars in order to help us sell our cars! If we would get this subsidy, then we would be able to compete with GM cars better!"
See what I mean? This is a utterly misleading. It is false. Is that clear now? Please tell me it is. It is not a difficult question, I think.
What Tesla motors should do, in the above analogy, is try to find ways to produce its cars for less. It should aim to reduce costs to less than $100 per car! *Or* it should apply for a subsidy from the state (and actual subsidy in the normal sense of the word!)
But for Tesla Motors to instead complain about the so-called 'subsidy' that GM is 'ploughing into' its program to sell cars at cost to its own employees is simply crazy! The one thing has *nothing* to do with the other? It is misinformation! It is incredible that people swallow this nonsense!
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JvD @11, as I understand it, the subsidies in Saudi Arabia are paid for by a reduction in the revenue paid to the government by the oil companies. That being the case, this is a distinction that makes it illegitimate to extend the metaphore as you have done. It is illigitmate because the cost of the subsidy in the GM case is either born by its other customers in terms of increased prices, or by the shareholders in terms of reduced profits (or some combination of the two). In the Saudi case, as I understand it, however, the costs are born by a third party.
Because the revenue is lost to the government, it would make perfect sense for a minister of the government to question whether it was an appropriate expenditure of public money. They might decide Saudi Arabia would be better of if its citizens paid the normal commerical price for oil, and the extra revenue was diverted to building hospitals (for example). Such a decision would be perfectly legitimate, and would be described as funding improved public health by eliminating a subsidy on private transport.
I know that is how it would be described, because that is exactly the sort of terms used by the Saudi Minister of Economy and Planning in the link KR provided:
If it is appropriate to describe it as a subsidy when discussing alternative used for the funds, such as building hospitals (my fictional example), of providing for more extensive low income welfare (an example actually proposed); then it does not cease to be rational to so describe it when we are talking about the impact on renewable energy.
It would certainly be reasonable for a company wanting to invest in solar power to approach the Saudi government on the basis that the subsidy makes solar power uneconomic in Saudi Arabia; but that if the subsidy was eliminated, solar power would be economic and provide a significant part of Saudi Arabia's energy needs, and preserving more of its oil for sale at commerical rates. They could even make the case that doing so would provide a net economic benefit for Saudi Arabia*.
If you want that in a metaphore, an external company could quite appropriately approach GM saying that its employee subsidy was a poor use of funds, and that eliminating it would allow investment in a new production process, greatly increasing GM's overall profitability. If faced with that proposal, a GM board member rejected it because "the employee discount is not a subsidee" their position on the board would be very tenuous on the grounds of incompetence.
*Given Saudi Arabia's low latitude location and desert climate, such a case would almost certainly be correct.
JvD, I will note that I am also dubious about the claims regarding fossil fuel subsidies. That, however, is because such claims rarely consider fossil fuel explicit taxes (ie, taxes in excess of those that apply for normal business activity or resource acquisition). Further, they sometimes count as subsidies tax exemptions of "fuel taxes" from fuel taxes. When a tax on fuel use is implemented, but some people are exempt, that represents a reduction of the net tax rate, not a subsidy.
However, the claiming that consumption subsidies are not subsidies is simply incorrect.
Chriskoz, on the Mann court case... am I understanding the (rejected) argument for dismissal correctly?
It seems like NRO and CEI were arguing that the case should be dismissed because they were only expressing their opinions with "rhetorical hyperbole" rather than meaning to suggest to anyone that Mann had actually committed "fraud" in a legal sense.
If so, that ridiculous lie, which ought to qualify as perjury IMO, seems like a bigger story than the dismissal itself. I'd love to see them explain to all their 'skeptic' followers how they were not saying that it was a fact that Mann committed a crime... the readers all just 'misinterpreted' them. This kind of 'treason to the cause' from 'heros' of a movement is often the only thing which can penetrate the sort of deep denial underlying climate change 'skepticism'.
CBDunkerson,
Yes, I had a bit of a laugh to myself when I realised that their defence was apparently that what they were saying was not meant to be taken as factually true. It's the other kind of "truth".
JvD
That would be incorrect. Saudi Arabia, the example I gave before, sells gasoline to their citizens below cost (heavily subsidized at $43 billion a year for domestic fuels), and also provides below cost water and power. And they are not alone. These are not cases of selling at cost, but rather of diverting monies to artificially reduce prices, in ways that encourage consumption.
I would suggest rather more careful fact-checking for your posts. Fuel subsidies are no myth.
It should be noted that even selling fossil fuel "at cost", or rather at production cost, is still a societal subsidy due to the lack of accounting for externalities from carbon emissions and pollution.
While setting a price, by example with a carbon tax, is difficult and a point of significant disagreement, these external costs do exist - and accounting for and charging for them (rather than leaving them buried and unacknowledged, paid for by society) would help the move towards non-carbon alternatives.
KR: "That would be incorrect. Saudi Arabia, the example I gave before, sells gasoline to their citizens below cost (heavily subsidized at $43 billion a year for domestic fuels), and also provides below cost water and power."
You are wrong KR. Saudi oil costs about $5 to $15 to produce, and the Saudi people pay that price at the pump. They are not selling it below cost. This is the last time I will state this simple fact. I will not revisit it. Unless of course, you show actual proof that you are right, which you have not done.
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(-snip-)!
If Saudi Arabia does actually introduce such taxes (which would arguably be a good move, since it would mitigate the 'resource curse' that Saudi suffers from) then the proceeds are probably going to serve projects that benefit the Saudi's, and nobody else. Certainly, it would have to benifit poor Saudi's rather directly, or the whole country is liable to experience an 'arab spring' faster than you can say allah akbar. It is therefore complete nonsense to presume that such a move by Saudi Arabia has any international meaning for climate change mitigation and clean energy, as is being suggested in the article.
(-snip-)!
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KR, (-snip-)? Thanks.
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JvD - As of July 2013, the US cost per gallon of gasoline from international crude oil prices and refining was about $2.54 and $0.43 respectively, a total of $2.97 per gallon. Saudi Arabia prices domestic gasoline at $0.61 per gallon. That barely covers refining costs, let alone crude oil value, storage, distribution, etc.
That is the result of expensive subsidies, a huge cost to the Saudi government. Saudi Arabia prices its oil at ~$100/barrel, but uses it internally at much much lower (i.e. subsidized) prices. Oil, as with any limited natural resource, has a value dependent on supply and demand. Selling that resource far below value is a cost, a subsidy on the part of the resource owner.
Saudi Arabia’s Economy and Planning Minister Mohammed al-Jasser said regarding their internal fuel prices:
They certainly consider these to be subsidies - your definitions appear not to hold in terms of economic conversations. Enough said.
JvD - "...raising taxes on Saudi domestic fuel sales will do nothing to improve the fundamental cost comparison between fossils and alternative energy. The one thing quite simply has nothing to do with the other, clearly!"
Nonsense. Costs of energy drive development and adoption, and artificially suppressed prices distort those economics. Those suppressed prices, those subsidies, change the equations.
The constant repetition of the lies about gargantuan 'fossil fuel subsidies' is certainly meant to deceive the public into thinking that alternative energies would be competitive 'if only those nasty subsidies for fossil fuels would be stopped'.
About $600+ B in subsidies - as defined by the countries in question, including members of the G20 - are indeed applied to fossil fuels. You seem to disagree with that, but your definition is not the one in use by world economies, and is hence not relevant. Wind energy is already on a par per unit of energy with new coal and gas generators - any change in fossil fuel costs would affect decisions as to generation capability. Your statement is therefore demonstrably wrong.
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[ Side note; accusations of "lies" are quite over the top, as per the Comments Policy. ]
JvD - you are somehow confusing the cost of production with the price of a commodity. If demand for a commodity exceeds supply, then price rises till demand matches supply. If Saudi government removed that price support, then consumer cost would be higher and Saudi's would use less (and probably make better use of abundant solar). Therefore what they are doing is a subsidy and there would be less consumption if it were removed.
You seem to be insisting a special definition of subsidy. Lets not get hung up on definition. How about the claim then that goverments are providing $600B of various kinds of price support that, if removed, would increase consumer cost of fossil fuel, making other sources more competitive. Are you contesting this statement?
In your GM v Tesla analogy, I would argue that complaint would not be about price, but that GM's practices result in their employee buying more cars than they could otherwise afford. The complainent would not be Tesla but from makers of alternative forms of transport.
Not yet mentioned in this discussion of subsidies is the economic principle of opportunity cost.
Opportunity cost is a somewhat hidden cost, when a choice is made between alternatives. If the choice that is made provides less return than other choices, then the person/entity making the choice is further behind - i.e., the choice actually cost them money, compared to the more advantageous choice. The classic example is the cost of keeping your money in your sock drawer. In one sense it "costs nothing", since you pay nothing out to keep it there - but you do "pay" the (now lost) income you would get if you invested that money somewhere where it would grow.
In the case of the state-owned oil company that sells oil overseas for $100/barrel and sells it domestically for $30/b, there is an opportunity cost of $70/b for each domestic sale. The oil company's revenue is a source of income for the country, so each $70/b is lost, and to keep spending money at the same rate on other government functions, the money needs to come from somewhere else - perhaps taxes. If oil were sold at world rates locally, taxes could go down. This is a shift in the economics - the opportunity cost of selling domestically at lower rates is paid by other sources (perhaps taxes on alternative energy producers), who may or may not benefit from cheap gas.
Whether you call it a subsidy or not is irrelevant - it is part of the economics.
And it's "hidden" because you need to know where to look to see it.
The Saudis certainly consider opportunity costs when they run the economics on solar versus oil-generated electricity. No doubt-oil-generated electricity is competitve with solar energy at marginal oil production costs, but solar probably wins if world prices for oil are used.
It is true that the Saudis sell domestic gasoline at greatly below market prices to their own consumers and that could reasonably be construed as a wasteful subsidy. On the other hand, the consumers are also the owners of the oil, since Saudi Aramco is a state company, and Saudi citizens might think it only fair that they pay just for the production and refining costs of oil that they already own as a birthright.
It's perhaps worth noting that N Americans are enjoying cheap natural gas at well below world gas prices. There's no direct cash subsidy here, but government reluctance to approve LNG export projects is certainly helping to shield consumers from paying world commodity prices.
I agree with JvD that the original article was misleading on the level of fossil fuel subsidies in industrialized nations. However, "lie" implies an intent to mislead and I'm not sure there is any evidence of that here, it was possibly just a mistake on the part of the journalist.
When people discuss "subsidised public housing", does anybody stop to check whether the housing is being sold/rented below construction cost, or is it just a reflection of the fact that the cost is below market value and therefore represents a cost to the taxpayer?
BTW, I suspect that it's actually a lot harder to work out the "true cost" of Saudi oil than is being suggested here, even if all cards were on the table. Even within my own business it's hard to work out the "true cost" of some things.
Andy Skuce - I would consider price supports, tax incentives, and the like all as various kinds of subsidies: artificially manipulated prices representing a cost to the government or someone else, which change the economic landscape in one direction or another.
I would agree with you and with JvD that "industrialized" only is the wrong grouping, considering that the majority (not all) of these subsidies are in the exporting nations - although I would note that tax policies and import/export barriers are additions in both industrial and undeveloped countries, likely not accounted for in the figures above. I cannot, however, consider a refusal to consider artificial commodity pricing as a subsidy anything other than absurd. Every analysis I have ever seen describes these as subsidies. Accusations claiming that discussions of these subsidies are "lies" are unreasonable.
scaddenp - Yes, commodities is the correct word, which for some reason I spaced on in my previous post. Commodities have a value established by supply and demand, artificially lowering those values is a subsidy, a cost. At the very least, the Saudi Economy and Planning Minister thinks so... and I will have to say I consider his take on the situation more supportable than (re)definitions discussed in this thread.
CBDunkerson@15,
You're absolutely correct. If you recall this fragment of the court decision:
you can be confident that NRO and CEI defence as if their accusations of fraud were simply "opinions with rhetorical hyperbole" has already been rejected by the court. A "misstament of fact" simply means a "lie".
Whether this legaly proven lie is a perjury depends on its context (i.e. if accompanied by statement of oath) which is unknown to me. Like you, I hope MM's lawyers don't overlook this opportunity and add the possible perjury to their case if there is a good stance for it.
Yes I am. The only sensible way to determine the competitiveness of different energy options is to compare the cost of production of those sources. If the Saudi's were to raise the domestic price of oil to the international level, that would tilt the playing field domestically to other sources, but it would not change the basic fact that oil is far more cost effective than those other sources.
Certainly, it would change nothing in the cost effectiveness of oil versus alternatives in countries outside Saudi Arabia. In anything, reducing oil demand in Saudi Arabia by raising domestic prices by 600% (which is what it would take to achieve international prices level domstically) could increase the amount of oil available to the international market, which could reduce the international price of oil, thereby reducing the competitiveness of alternatives globally. Even if the international price of oil would not change, then there is no reason to assume renewables would really take off in Saudi (although efficiency of oil use would likely improve). If the domestic price of crude were to be raised, then international coal would be the next-best economic choice for Saudi, increasing the co2 emissions of the country rather than reduce them. We now know of course that Saudi is investing heavily in nuclear energy, which alleviates the risk of Saudi turning to coal. Solar energy might seem a no-brainer in sunny Saudi, but it turns out that desert environments are not especially favourable for solar, due to the increased burden of dust and high operating temperatures.
In order to maintain clarity in comparing the economics of different energy sources, I believe it is necessary to judge them based on cost of production only, including all indirect costs, but excluding as much as possible any subsidies and taxes. (-snip-).
(-snip-). In my own experience, I chastised my local chapter of Greenpeace (of which I am still a donating member) from bringing this very same lie several years, and they have backed-off from it (grudgingly, though not completely). (-snip-).
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As another egregious example of camparing apples to oranges as a result of wrongly accounting for energy taxes and subsidies, consider the level of discussion in my country - the Netherlands - concerning the so-called 'grid-parity' of rooftop solar versus conventional generation. All of the so-called 'green' groups in my country are lobbying hard for promotion of rooftop solar. They are doing this by claiming that rooftop solar is "already cheeper than conventional electricity". They are claiming that since rooftop solar costs about €20 ct/kWh, and retail electricity prices are a few €ct/kWh greater than this, that rooftop solar is 'competitive without subsidies'.
What they ( -snip-) neglect is that the conventional retail electricity price contains not only the cost of generation (which is about €5 ct/kWh), but also the cost of transmission and distribution. Moreover, it contains the high taxes on electricity that are applied in my country. So when these taxes and costs are included, it is obvious that rooftop solar is 400% as expensive as conventional electricity. Yet these 'green' groups are claiming continuously that if my countrymen would switch wholesale to rooftop solar that this would result in significant financial savings for the country! (-snip-)! Since we use about 100 TWh of electricity per year in my country, if we would switch to rooftop solar it would cost at least €15 billion per year extra, even ignoring the very high cost of additional transmission, backup and storage needed to run completely on intermittent renewables such as solar power.
The green groups are ignoring this. Shockingly, they are even turning around and saying that the retail price of €20 ct/kWh is going completely to the 'big bad'energy companies. Now, I know that these green groups realise that of this €20 ct/kWh only about €5 ct actually goes to the energy companies, and that the rest is taxes and gridcosts. (-snip-).
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JvD,
What they (deliberately!) neglect is that the conventional retail electricity price contains not only the cost of generation (which is about €5 ct/kWh), but also the cost of transmission and distribution.
How is that a problem? One minute you're saying that "the cost of production" should be the only measure, the next you're saying that it's unfair to compare the "cost of getting electricity into my house" between two technologies because one manages to bypass the cost of transmission and distribution by virtue of the fact that it's already at my house!
The fact that rooftop PV doesn't have transmission and distribution costs is an actual benefit that means it gets to compete with end-user retail prices rather than wholesale electricity prices.
Anyway, back to your cost of production bugbear:
Yes I am. The only sensible way to determine the competitiveness of different energy options is to compare the cost of production of those sources. If the Saudi's were to raise the domestic price of oil to the international level, that would tilt the playing field domestically to other sources, but it would not change the basic fact that oil is far more cost effective than those other sources.
The cost of production is irrelevant. Yes, Saudi Arabia has the world's lowest oil production costs, but taking advantage of that to sell oil cheaply domestically instead of selling that same oil at the going market rate is not only a real cost, it enourages inefficient resource allocation!
Scenario A: Saudi Arabia produces a barrel of oil for $6, and sells it domestically for $6. Citizens benefit from cheap oil, with those more able to consume oil benefitting the most. (Note that I'm actually taking your word for it that they really are selling it at "production cost", since I haven't actually seen any evidence of the "true production cost" vs domestic retail price, and I have doubts that the "true production cost" is even publicly known; it would also depend heavily on how it is accounted.)
Scenario B: Saudi Arabia produces a barrel of oil for $6, and sells it at the going market rate of $100. The extra $94 is used to give tax breaks, education, health services, welfare, etc. Citizens pay more for their oil, but avoid paying $94 through tax or reduced services that they would have had to pay somehow otherwise. The benefits of that $94 can be targetted to achieve desired outcomes. The higher cost of oil encourages more efficient use (e.g. not burning it for electricity!) and encourages the use of alternatives that will allow the oil reserve to last longer and ultimately derive more revenue.
As has been pointed out to you repeatedly, the Saudi government calls it a subsidy; I do not think it is appropriate to accuse others of deliberate lies to misinform the public just because they don't adhere to your personal definition of the word. You're also picking the country in the world with the cheapest production cost and the best chance of retailing their oil above that production cost to dispute all subsidies.
To me, an apples-to-apples comparison is between true market values of each commodity before any taxes or subsidies have been added. This means, for example, that when comparing wind to fossil fuels, then any tax breaks or special benefits that wind receives should be removed and any excise taxes on fossil fuels should be removed and then the two compared so that the true cost can be ascertained. But how does it help to compare the retail price of wind power in my country with the retail price of domestically-sold oil in Saudi Arabia? Can I buy that oil at that price? No? Then it's irrelevant. If the Saudi's want to forgo the extra revenue that they would get if they sold all their oil at market rates then that's their problem; it makes no difference to me.
Likewise, if I put solar PV on my roof, I don't care that the electricity generator is generating power at half the price — I can't buy it for that price! It needs to get to my house, which makes it twice as expensive. What it costs me is what counts.
And, of course, once we start adding in externalities to get the true costs of burning those fossil fuels, the point becomes moot anyway...
JvD,
When you use strong words like "deliberate lies" you are much less convincing. It makes you look especially bad when you accuse others of deliberate lies and then it is pointed out that your statements are contradicted by the Saudi gevernment. Who is the deliberate liar here? It appears to me that you are the deliberate liar, and not the environmentalists. If you want to convince others to listen to your position you need to change your tune. You may have a point, but I will not read your posts as long as you make wild accusations about others that can easily be pointed back at you.
JasonB, while I generally agree with you, there is a transmission cost issue to be considered with rooftop solar PV if there is something like a 'feed-in-tariff' scheme in place.
That is, if the solar generated electricity is used by the house which generated it then comparing solar generation cost to grid generation and transmission costs is an apples to apples comparison for that house... in both cases we are looking at the total cost of getting the electricity for that house.
However, if solar power generated by the house in excess of what the house is currently using is then distributed to neighboring houses through the grid an argument can be made that the cost of solar power to those houses is the solar generation cost plus transmission costs.
Granted, transmission distance is generally going to be much less for rooftop solar than traditional centralized grid power and the transmission infrastructure is already in place so there isn't really any significant additional cost to transmit rooftop solar power over it. However, the more rooftop solar power is generated the less money the power companies make. At a certain point this would impact their ability to maintain the power grid and thus impact costs to people receiving transmitted solar generated power. You can't go 100% solar (or even 50%) without adding in some cost for distribution and/or storage.
That said, I am very surprised by the claim that grid maintenance costs three times as much as grid power generation. I'd think it was closer to the other way around. If transmission infrastructure is really that massively expensive why haven't we switched to a system where we generate twice as much power and lose half of it through wireless transmission? That would come out to half the total price. Indeed, microwave transmission efficiency is usually over 80%, so the 50% assumption I used provides plenty of wiggle room in that estimate.
Looking at it another way... if 75% of the cost of grid power is transmission infrastructure then increases in fuel costs should have very little impact on total power cost. Yet that isn't the case. Electricity costs rise when fuel costs do and utility profits rise when fuel costs fall. For example, the fracking boom in the US caused a steep drop in natural gas costs and record profits for utility companies (since they didn't lower electricity costs). If generation is only 25% of total cost, and fuel therefor only some fraction of that, the impact should have been minimal.
In short, it doesn't seem to add up.
The city of Palo Alto California recently went to a 0% carbon emissions policy. Most of the time they generate 100% of their electricity from renewable sources, but if they have to pull in 'dirty electricity' from the grid they will purchase carbon offset credits.
Total added cost to residents of the city? About $3 per year.
So yes... some transmission infrastructure costs come into play as the amount of renewable energy used increases. However, they are nowhere near the massive prohibitive barrier portrayed.
JvD - cost of production for puposes of supplying energy need is frankly pretty much irrelevant. What matters in terms of consumer choice is price that they are able to buy power.
You are avoiding the main question here. I assume that you do in fact agree that removing price support will result in energy cost of FF fuel go up? And that this will make renewables cheaper? And that higher cost of FF will result in less consumption? If you agree with this, then removing these forms of price support will be an effective means of reducing CO2 emissions.
CBDunkerson wrote:
You are almost correct. What is missing here is the understanding that switching to 100% intermittent renewables will always add very strongly to transmission and distribution cost. We can look at Germany and Denmark for a real-life example. Both countries are about 20% switchted to intermittent renewables, and already they are forced to invest billions in additional transmission and distribution infrastructure that would not be needed if they maintained baseload power generation. As these countries move further to achieve the required 95% reduction in co2 intensity of power generation, the additional cost of transmission and distribution will balloon exponentially.
Why? It has to do with the much hyped 'feature' of intermittent energy sources that their intermittency is said (by their proponents) to "even-out" as they are spread geographically. In other words: if there is a lot of wind in the north of Europe while there is little wind in the south of Europe, the excess wind generation in the north can be transmitted to the south, and vice versa. Obviously, in order to benefit from this geographical spread, you need many GW's of additional grid infrastructure that would otherwise not be necessary. This cost is not paid for by the wind farm owners.
(-snip-).
(-snip-).
(-snip-).
http://www.poyry.com/sites/default/files/imce/files/intermittency_-_march_2011_-_energy.pdf
For example, poyry concludes difinitively (page 4):
(-snip-).
[DB] Inflammatory snipped.
scaddenp wrote
There is no 'price support' in Saudi Arabia, or other oil producting countries. Since the oil age began, they have been supplying their populations with energy at the cost of production. Should they now choose to add 600% domestic taxes to that energy, - in order to equal the international market price of energy - this will reduce co2 emissions only to the degree that their citizens become unable to obtain energy. Whatever the percieved benefits of this for the Saudi population or the world, such a move will do nothing to improve the competitiveness of intermittent renewables across the wider space of UN member countries. Absolutely nothing. (-snip-).
Now, you are free to call it a 'mistake' on the part of Dr. Romani if you would choose to do so. But I know better, since the issue of countries like Saudi Arabia supplying their own citizens with energy priced at cost is not a new phenomenon. In fact, the most important study on this issue - the joint OECD/World Bank,OPEC,IEA report I linked to above - clear lays out this situation. (-snip-).
(-snip-). Whether Saudi Arabia raises taxes on domestic energy will have no impact at all on the competitiveness of intermittent renewables within UN member nations. It is a purely a domestic tax issue for Saudi Arabia. It has no wider international significance.
[DB] Multiple inflammatory snipped.
JvD @38, one engineering solution to the problem of intermittency requires massive increases in transmission infrastructure. Others do not. In particular solar thermal plants solve the intermittency problem for solar with no requirement of extra transmission infrastructure at all. Other means of storing energy for later use (eg, pumped hydro) also restrict the need for increased infrastructure. Further, simple changes of social habits or building designs can exploit energy at the time of its production rather than later, again obviating the need for increased expenditure of transmission. In Qld and the moment, for example, there is a special rate for power in appliances that only use them in off peak (ie, night) time. This is used primarilly for heating water. Switching that to a special rate for power to heat water that is only provided when there is excess capacity from intermittent sources would significantly reduce the need for expanded tranmission infrastructure in Qld. If electrical cars become common, use of the same tarrif structure to encourage recharging from intermittent power would almost eliminate the need for substantially increased levels of renewable supply. Altering feed in tarifs so the gave a greater financial reward for using power in site at time of production rather than minimizing daytime usage (as the current feed-in tarif does) would also reduce the costs.
It is your tendency to portray engineering issues as IRRESOLVIBLE PROBLEMS (in capital letters) that makes it hard for me to take you seriously.
For your benefit, here is the important, Greenpeace-commissioned, study by EnergyNautics, which explains very clearly that most of the claims put forward by pro-intermittent renewables proponents are pure bunkum:
www.energynautics.com/downloads/competences/energynautics_EUROPEAN-GRID-STUDY-2030-2050.pdf
Here are the important conclusions. Note that these conclusions will not be found anywhere on SkS. In the past, I have urged SkS administrators to do justice to these crucial conclusions, but to date nothing has happened on this front. Here are the main points:
On the need for dramatic increase in spending on electricity transmission (spending which is totally ignored by all pro-intermittent renewables proponents):
On the usefullness of Demand Side Management and EV batteries for improving the performance of an intermittent renewables energy system (which is an utterly false claim put forward by all intermittent renewables proponents):
Intermittent renewables proponents frequently claim that distribution infrastructure does not need to be upgraded in order to accommodate intermittent renewables, and therefore, distribution costs - let alone new investments - should not be calculated or included in the cost of intermittent energy generation. EnergyNautics makes mincemeat of this egregious nonsense:
On the cost of grid upgrades in Europe, required to meet 97% of electricity with renewables, Energynautics shows that these cost are not 'negligeable' as all pro-intermittent renewables would maintain:
So even excluding the severe costs of building the PV and wind generating stations themselves, europe will need to spend hundreds of billions of euro's on grid upgrades alone.
Anyway, I urge everyone to read and understand this report. It wasa commissioned by Greenpeace itself, so it is not possible to dismiss this report as non-Greenpeace propaganda. It is a serious matter. These costs will arrive out of the blue for european citizens, since no proponent of intermittent renewables is warning them in advance. To the contrary. In my work, when I present these results, I frequently get told that we can pay for these costs by reducing the 'subsidies' on fossil fuels! And thusly, the story comes full circle! By (falsely) thinking that there are billions of dollars of 'fossil fuel subsidies' in Europe, decision-makers in europe think that there is billions of dollars of cash waiting to be 're-allocated away' from fossil fuels to renewables! This is nothing but excruciating nonsense, and it pervades thinking about sustainability on all levels. We have a lot of work to do to dispell such nonsense. I hope some who read this will join in and help remove it.
Specifically, I hope SkS will devote some space to addressing these important questions, whereas today it does nothing. To the contrary, the pages on SkS that address 100% renewable scenario development gloss over and marginalise these serious issues. In the past, I have tried unsuccessfully to correct this. I notice some of the same commentators in this thread were active at that time, also to deny my evidence and conclusions then. I hope this will stop someday, so we can work together to stop fossil fuel hegemony and climate change once and for all. Thank you.
Tom Curtis wrote:
Please study the Poyry and EnergyNautics studies linked to above, which lay waste to your claims.
JvD @42, no they don't. (See, you're not the only one who can argue by mere assertion.)
If you want to actually argue the case, however, start by explaining why we should accept the assumption of EnergyNautics that demand shifting is limited to 10% of power. Continue on by showing why you are using a study on the infrastructure costs of interconnecting Europe for renewables arising from peak energy demand in the middle latitudes (Germany, France) with peak energy production at the limits of the system (Norway for wind, Spain for solar) when your initial argument was renewables require unrealistic grid costs due to intermittency (a different issue entirely).
"There is no 'price support' in Saudi Arabia, or other oil producting countries. Since the oil age began, they have been supplying their populations with energy at the cost of production."
Sigh, as pointed out you in 26, this is price support by lost opportunity cost. The Saudi oil company could have made more money by exporting that oil. However, this is still simply arguing about definitions. The substantive point, is whether having Saudi citizens (and all other countries doing consumption subsidies) pay market price would reduce their use of FF. You seem to be saying no - "this will reduce co2 emissions only to the degree that their citizens become unable to obtain energy. "
Huh? Energy demand is basically unlimited. I can only use so many plasma TVs but if you had flights to moon for $100, how popular do you think they would be? Instead what limits our energy use, is our ability to pay for it. Furthermore, the Saudis (and many other oil producers) have abundant solar resources. I assert from basic economics that if everyone in world pays market price for energy, then consumption would drop.
Care to explain where you think the economics is wrong?
As for "The purpose of this deliberate lie is to mislead people into thinking that intermittent renewables would be more competitive in industrialised countries if only these pesky subsidies for fossil fuels would be removed."
For someone screaming that someone else is lying, (meaning they use a convention economic understanding of the word subsidy rather your own special meaning), this is extremely rich. I do not believe that anyone has asserted this. How you about you present some evidence to back that smear? What I believe the actual assertion is:
1/ price support (by any means including opportunity cost) is artifically lowering prices to consumer and thus encouraging more consumption (and emissions) than would otherwise happen.
2/ price support artifically increases price gap between non-carbon energy sources (eg nuclear and renewables) and FF. In SOME cases, removal of those subsidies would make other forms of energy generation cheaper to consumers than FF.
Removal of all forms of subsidy is merely the first step in reducing CO2 emissions. Having carbon tax at same times as subsidies makes no sense at all.
JvD,
Your claim here that proponents of renewables claim that upgrading the grid is not needed to implement renewable energy is completely false. Everyone knows that major grid investments will be required. These upgrades will be different in different locations. For example, in New England (the northeast USA) the paper I cited to you previously, described using primarily wind to power that grid area with only minor grid upgrades. Where I live in Florida, it is not very windy and wind will not be pratical. Solar obviously only supplies power during the day so Florida will require upgraded connections to the grid to obtain its wind energy from somewhere else. Maybe they will use nuclear.
You persist in insisting vehemently that others are being misleading and then you make obviously false statements. This is not a convincing way to argue. If you do not change your tune no-one will listen to you.
The purpose of SkS is to provide support of climate science. While occasional articles about solutions are published, that is a side issue. No attempt is made to be comprehensive in the coverage of solutions. Your insistance that your beliefs about solutions must be promoted at SkS derails the primary purpose here. Why don't you take your arguments to a more appropriate forum?
scaddenp wrote:
What are you talking about? The assertions at issue can simply be read from the article in the headline. Please stick to the topic.
If there is something unclear about what assertions we are talking about, please refer to the above text for reference (or the article behind the ling), otherwise we are going to keep running in circles.
Tom Curtis wrote:
This is not a controversial assumption so you need to provide evidence that it is wrong, I think.
Michael Sweet wrote:
We are not even talking about solutions, yet. I am merely taking issue with the fact that SkS is persisting in publishing fundamentally flawed articles about the economics of renewables and subsidies. I want to know why. It saddens me. I am passionate about promoting science and preventing global warming, environmental degradation and poverty. SkS is a wonderful resource that is (still) being fatally undermined by lending itself to the propagation of complete nonsense about energy and economics, which is the very reason we have a problem with the climate in the first place! Why does SkS lower itself to this level?
But you have a point. Why should I even care about this? Why should anyone, right? I can't answer that question. It is for each person to do that for him/herself. Perhaps I should just give up. I should have given up long ago.
JvD wrote "I am passionate about promoting science" - this doesn't come across very well when you refuse to provide justification for your statements. If you think that the discussion of the economics here is flawed, then you really do need to be willing explain your point of view in as much detail as it takes to answer peoples concerns.
JvD - okay, I dont think what I wrote is in conflict at all. Diverting those subsidies could indeed be used for those purposes though I would expect instead that consumption would drop - an even more effective way of helping of dealing with climate change,
I am asking you to justify this assertion: (ie provide evidence for its truth)
"The purpose of this deliberate lie is to mislead people into thinking that intermittent renewables would be more competitive in industrialised countries if only these pesky subsidies for fossil fuels would be removed".
You have also repeatedly refused the answer whether you think removal of price support (eg paying the market rate) will reduce CO2 emissions. Why is that?
Do you also accept that there is a $630B gap between what some people pay for FF and the market rate or is that also a lie?