ENERGY SOURCES: SUBSIDIES, EXTERNAL COSTS, PROS, and CONS

Between the traditional sources of energy and the increasingly popular renewable and ‘green’ sources of energy, the picture with regards to subsidies, external costs, pros, and cons has become ever more complex.

 

TRADITIONAL ENERGY SOURCES

traditional energy

Many of these energy sources are falling out of favor for environmental reasons and as fossil fuel resources come under strain. However, they are still heavily subsidized. According to Kate Gordon in Why Renewable Energy Still Needs Subsidies (2015) published by the Wall Street Journal, “the International Monetary Fund has found that the [US] government provides $700 billion a year in subsidies to fossil fuel companies”.

 

COAL

Subsidies:

  • USA [2010]: $37m (direct); $486m (indirect); 10% subsidy share
  • Europe [2013]: €3.2b to Germany, Hungary, Spain, Slovakia, and Poland

External costs:

  • USA: $575m (R&D); amount unknown (waste disposal)
  • Globally: 460 000 (deaths [for all fossil fuels]); 342 (accidents & related deaths)

The pros of using coal are limited but some are significant. Firstly, coal is inexpensive and also abundant. It can be converted to a gas or liquid and “Clean coal” has the same CO2 levels as natural gas. Finally and importantly, there is a well established and existing global infrastructure to use it.

The cons, however, can not be ignored. Like so many other fossil fuels coal is a limited resource; we will run out at some stage. Traditional coal produces massive amounts of CO2 and other pollutants which have numerous negative effects of the environment and health. The mining process and burning coal generates numerous toxic gasses and products. The mines also, according to Scientific America, produce more radiation than nuclear plants!

 

NATURAL GAS and OIL

Subsidies:

  • USA: $18m (direct); $662b (indirect); $10m (R&D); 5.5% subsidy share
  • Europe: €8.7b [2001]

External costs:

  • USA: $575m (R&D); amount unknown (waste disposal)
  • Globally: 460 000 (deaths [for all fossil fuels]); 85 (accidents & related deaths)

The pros of gas and oil include the established infrastructure, oil is abundant, has broader applications than many energy sources, and it is the cleanest of the fossil fuels as it produces 45% less CO2 than coal and the production process does not produce much waste or residue.

However, the cons are not to be ignored. Like coal, it is a finite and non-renewable fuel source. Gas and oil in their liquid forms are potentially dangerous as they are highly explosive. Both emit the greenhouse gasses CO2 and methane when they are burned. Pipeline transportation is costly. ‘Fracking’ presents an entire set of additional health and environmental dangers.

 

NUCLEAR

Subsidies:

  • USA: $65b over 56 years (direct and indirect); 21% subsidy share; 9 c/kWh (production tax credit for new-generation nuclear plants for the first 8 years)
  • Europe [2001]: €2.2b

Taxes: Sweden, Germany, Finland, and Belgium tax nuclear power.

External costs:

  • USA: $1,169m (R&D); own cost (waste disposal); 8 (accident related deaths)
  • Globally: unknown

The pros of nuclear power include the fact that it is a known and developed technology, it generates significant amounts of power at relatively low cost, better and safer ways to deal with waste have been developed, and it produces far fewer greenhouse gasses than other energy types.

There are of course cons associated with nuclear power. At the forefront of many people’s minds are the risks associated with nuclear energy and waste, especially in light of recent plant disasters and the terrorist threat. Building new plants is time and money intensive and materials that are required such as Uranium are limited and expensive. Currently nuclear waste poses huge immediate and very long-term environmental and health dangers.

 

RENEWABLE, GREEN ENERGY SOURCES

road-street-desert-industry

In 2007 the US Department of Energy figures stated that the R&D budget for renewables stood at $505m for the US. The Energy Information Administration (EIA) in their World Energy Outlook 2015 report estimates “that the total cost of subsidies for renewable energy were $135 billion in 2014 and are expected to rise to about $250 billion in 2030 ($112 billion in the power sector rising to $172 billion in 2040).”

They go on to state that, “Of total subsidies, about half go to solar PV and wind power, almost 30% to the other renewables-based power plants and around 20% to biofuels. However, several countries are cutting back support for renewables due both to the high cost impacting electricity prices and also the costs and difficulties of integrating them into the transmission networks. Germany and Spain are cutting about $2.5 billion and $3.5 billion per year respectively from subsidies for renewables.” The debate about the pros and cons of, and necessity for, subsidies is becoming more marked.

 

HYDROELECTRIC

Subsidies:

  • USA: $17m (direct); $17 (indirect); 1.8% subsidy share
  • Europe: Swedensubsidizes renewables, mainly large-scale hydro, by taxing nuclear capacity

External costs:

  • USA: $51m (R&D); 883 (accident related deaths)
  • Globally: unknown

The pros of hydroelectric power include that it is renewable and does not require any fuel. It also does not produce any emissions and is a very reliable, efficient, and usually predictable energy source. While there is environmental impact it is only local.

Although the environmental impact of a hydro plant depends on both its size and type and is only local, there is a range of additional cons. These plants are very costly to construct and can only be located in locations providing all the necessary features; these locations can also be remote. They rely on a strong, regular flow of water and given the threat to water resources that can’t be guaranteed.

 

SOLAR

Subsidies:

  • USA: $409m (direct); $99m (indirect); $287m (R&D); 8.2% subsidy share
  • Europe: Francereduced subsidies for input to the grid to $0.61 c/kWh; Italy no longer subsidizes plants as of January 2015; Switzerland had a subsidy demand of CHF 415.6 million; Spain uses a feed-in tariff 31-34 c/kWh
  • China: increased subsidies to CNY13b.

External costs:

  • USA: $287m (R&D)
  • Global [2014]: $270.2b (R&D)

The pros that come with solar are numerous. It is: renewable, sustainable, does not produce any pollutants, low maintenance, quiet, negligible operating costs, increasingly efficient and inexpensive technology, it offers a good return on investment, and it can be easily installed. Organizations such Solar Action Alliance provide excellent, balanced information on solar power.

No power source is perfect and solar has cons too. It is still more expensive that other energy sources. Also, it is only suitable in locations where there is enough sun and the power produced needs to be stored. While the panels are green once installed the production process does generate pollutants. Some critics feel solar produces low grade energy.

 

WIND

Subsidies:

  • USA: $3,556b (direct); $1,178b (indirect); 42% subsidy share
  • Europe: Denmarkoffers buy-back rates for privately-generated wind electricity, Norway  subsidizes wind energy with a 25% investment grant and production support, Spain has a feed-in tariff of €7.32 c/kWh

External costs:

  • USA: $166m (R&D)
  • Europe [2007]: $160m (R&D)

Wind offers a number of pros: it is clean as it produces not pollutants, abundant, has a very low carbon footprint, the turbines etc. can be located anywhere in the world where the wind blows, it is sustainable and renewable, and costs are dropping with the help of R&D efforts.

The first con when it comes to this type of energy is that wind is not a steady, predictable, and constant force. Secondly, costs remain high (building and maintenance) so the industry still requires financial assistance, usually from governments, to operate. In terms of environmental factors, turbines kill birds and bats and there are reports of affects on local weather and night-time temperatures. Finally, ome find the turbines noisy and unattractive.

 

BIOMASS

Subsidies:

  • USA [2013]: $332m (direct); $46m (indirect)

External costs:

  • USA: $251m (R&D)

As with many other non-fossil fuel energies, biomass is renewable. It is also abundant and widely available. It is low carbon and very clean, low cost in terms of inputs, contributes to dealing with bio waste, and can be produced domestically. This adds up to important pros.

It should be noted that “woody biomass” has cons other types lack and not all of the pros. For example, woody biomass is contributing significantly to deforestation in Europe. Other disadvantages are that biomass cultivation competes for land with food crops, utilizes a lot of land, is energy and water intensive, methane and CO2 are production byproducts, and the process can be financially unfeasible.

 

GEOTHERMAL

Subsidies:

  • USA: $115m (direct); $1m (indirect)

External costs:

  • USA [2010]: $3.7b (R&D)

The pros include the fact that no mining is needed, it has a very small land carbon footprint, produces zero CO2 and virtually no emissions, and it is steady, almost limitless, and cost effective.

In terms of cons, geothermal energy is heavily reliant on water and produces Silica and Sulfur Dioxide emissions. In addition, sites are often remote and are location specific. This in turn contributes to high construction and energy transport costs with some energy loss in the process. The very high temperatures also have to be very carefully controlled. Please visit Earth Comfort for more info on geothermal energy.

 

HYDROKINETIC / OCEAN or TIDAL ENERGY

Subsidies:

  • USA: $115m (direct); $1m (indirect); 1.7% subsidy share

External costs:

  • USA: $87m (R&D) with $1.5 for further impact assessments

The pros attached to hydrokinetic power are that the output can be predicted, it is renewable, reliable, and efficient. In addition, plants have very long lives and any environmental impact is extremely localized.

The cons include the fact that this energy source, like solar, requires a power storage system or grid backup, these plants are very costly to construct and put in place, there is impact on the surrounding marine life including birds, tidal levels and access to open water may be affected, and even tides and natural kinetic energy in the water may be disrupted.

 

LIST OF ARTICLES AND STUDIES CONSULTED:

While many of the reports are dated 2014 or 2015, some of the figures and percentages cited in them are drawn from 2010 statistics: 

http://www.world-nuclear.org/information-library/economic-aspects/energy-subsidies-and-external-costs.aspx

http://www.imf.org/external/pubs/ft/survey/so/2015/NEW070215A.htm

http://www.unep.org.pdf/pressreleases/reforming_energy_subsidies.pdf

https://www.iisd.org/gsi/sites/default/files/ffs_rens_impacts.pdf

https://ec.europa.eu/energy/sites/ener/files/documents/ECOFYS%202014%20Subsidies%20and%20costs%20of%20EU%20energy_11_Nov.pdf

http://siteresources.worldbank.org/EXTESC/Resources/Subsidy_background_paper.pdf

http://www.eia.gov/analysis/requests/subsidy/

https://www.usaspending.gov/Pages/Default.aspx