Doomed Planet

Subsidies are Blowing in the Wind

Victoria Bitter, Bunnings and miner South32 have joined the banks in being the latest to proclaim their carbon free emissions, signalling a certainty, at least from firms’ PR departments, that the future belongs to renewables.  Nations around the world – the latest being South Korea – are committing to carbon neutrality thirty years hence.

One of the few pure wind plays is Hepburn Wind. In 2020 the business earned $111.5 per MWh in energy revenue, 37 per cent of which came from the subsidy from generation certificates.  This level of subsidy is seen elsewhere – the US subsidy for wind and solar is estimated at 50 per cent.

CSIRO and the Paris based International Energy Agency (IEA) are declaring solar/wind to be the cheapest source of power.  Yet, lobbyists are estimating a €50 per tonne 2030 carbon price (at over $A80 per MWh nearly double the total cost of supply from coal generators) when, if renewables were competitive, no such subsidy would be earned. How can this be?

The answer is that there are very limited circumstances in which wind and solar could be close to coal in terms of cheapness.  Those circumstances rely on customers making use of the wind and solar when it is available not when they need it.  Even then, at least in Australia, a coal-based system like that which governments have spent the past two decades undermining, would still produce electricity cheaper than wind/solar.

This sets the framework for the new faultline of politics.

Led by Craig Kelly, large numbers of Coalition MPs plus minor parties are aware of the economic demise renewable subsidies bring, most Coalition members support a subsidy to carbon emission reductions and technology assistance for low cost emission-light energy sources.  The “Turnbull Liberals” support NSW Energy Minister Matt Kean, who this week launched a report by the left wing Australia Institute calling for more renewables subsidies, which would supposedly promote growth and stop bushfires.

At the same time, a minority of Labor politicians, representing coal constituencies, are seeking to dilute the preferential treatment for wind/solar that the party supports. These MPs are supported by Australian unions representing coal and gas workers, in calling for Labor to support those industries.

The outcome will depend on the US Presidential election.  A victory for Biden will resurrect the Obama Paris Agreement on climate change and bring even greater pressures on all nations to curtail emissions.  A Trump victory will bring the dismantling of the Paris Agreement as a US fossil fuel powered economy progressively outcompetes others in the developed world and gives licence to China, India and other third world countries to adopt the cheapest forms of power.

3 thoughts on “Subsidies are Blowing in the Wind

  • T B LYNCH says:

    Verdict comes before sentence.
    Diagnosis comes before treatment.
    Earth is suffering from a low pressure of carbon dioxide = 40 pascals [400 ppm/0.04%].
    Sugar cane and Maize figured this out 40 million years ago.
    Discovered by Marshall Hatch at Colonial Sugar Refineries in 1966 [C4 plants].
    Sugar cane and Maize didn’t wait around for humans to pump CO2 back up to normal = 300 pascals.
    They decided to harvest low pressure CO2, join it to pyruvic acid, and transfer the carrier to CO2 generators.
    CO2 generators are rubber coated, just like the tyres on your car.
    They generate high pressure CO2 [300 pascals] and feed RUBISCO at its design pressure.
    Here RUBISCO works five times faster at turning CO2 into sugar.
    Dumb plants – rice and wheat – struggle on having to manufacture five times more RUBISCO.
    Since Earth began, RUBISCO has reduced 10,000,000 pascals of CO2 down to 40 pascals.
    Discovered by Melvin Calvin in 1950 at University of California.
    Thus saving Earth from the fate of Venus.
    So, stop worrying, and leave all your CO2 troubles to RUBISCO and its 3 billion years experience.
    Right now Australia [not China/India] needs saving from super dumb Greenies.

  • DG says:

    If something needs subsidies, it clearly is uneconomic on its own terms and needs to be junked to staunch the economic waste that subsidies constitute. It’s just building a pile of money and burning it.

  • Tricone says:

    Subsidies are not only a waste and a brake on public health and prosperity, but worse, by suffocating and distorting the market, they prevent viable new technologies from emerging.
    The cost is not just in the money given to wind and solar (forget the rest – let’s not pretend that “renewables” is a broad church), but in the impositions nobbling competing sources of power generation.

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