The recent IMF updated report on fossil fuel subsidies took on the appearance of the Mad Hatter’s tea party (Alice in Wonderland) when you look into what is claimed to be subidizing hydrocarbon energy.  Robert Lyman explains the tricks and dishonesty running through this ongoing narrative against conventional energy sources, while ignoring the massive taxpayer direct funding of wind and solar power.  His Financial Post article is Most fossil-fuel ‘subsidies’ aren’t actually subsidies.  Excerpts later on with my bolds and added images.  But my overview of the context for these remarks.

Context–Back to Basic Terms

Climate activists and renewables lobbyists are acting like Mad Hatters, twisting language and logic to pursue their agendas. Let there be some common sense injected here.

A subsidy would be when the government takes money that has been taxed, borrowed, or printed, and pays it to some company like Solyndra to do something that the market does not support. Often these subsidies subsidize technologies that do not exist and may never exist (and they say WE ignore the laws of physics.)

In contrast, a tax reduction is NOT a subsidy. A tax credit says an industry gets to keep more of its own money that it has produced selling a product people want and need in the free market.

There is a huge difference between a law that lets you keep more of your own money; and another law that actually gives you someone else’s money. The two are not the same thing. Actually, the oil industry pays higher taxation rates than other industries and subsidizes the government with the billions it pays in taxes, not the other way around.

There are also billions more in economic benefit to the nation from the jobs they create and the increased mobility and productivity people enjoy by using our transportation system based on hydrocarbon fuels.

The Big Lie:  IMF counts not charging companies the full costs of global warming
as a subsidy. Common sense says it isn’t

Economists are used to having their terminology misinterpreted, co-opted and misused, usually in the interests of politics. One of the most common words to suffer this fate is “subsidy.” The Gage Canadian dictionary defines a subsidy as “a grant or contribution of money, especially one made by a government.” Economists would agree with that definition. Governments, on the other hand, rarely acknowledge that they subsidize anything. They “invest” — though, curiously, they seldom refer to the rate of return on their investments.

I was reminded of all this by the news last week that the International Monetary Fund (IMF) has published an updated version of its 2015 Working Paper on global and country-level subsidies for fossil fuels. According to the paper, total global subsidies “surged to a record $7 trillion last year,” equivalent to 7.1 per cent of world GDP. The paper’s authors estimate that scrapping these subsidies would: prevent 1.6 million premature deaths annually, raise government revenues by $4.4 trillion and put emissions on track to reaching official global warming targets. An annex to the report indicates that in 2020 Canada’s subsidies to fossil fuels were US$64 billion, or 3.8 per cent of GDP.

The paper’s extraordinary findings are almost entirely the result of how it defines “subsidy.”
It divides subsidies to fossil fuels into “explicit” and “implicit” subsidies.

Subsidies Wordplay

Explicit subsidies are the kind economists and ordinary people would recognize as subsidies: grants to cover some portion of the costs of production, as well as tax incentives and deductions (e.g., capital cost allowances) to fossil fuel producers for such things as investing in exploration and development.

By contrast, “implicit” subsidies are defined as “under-charging” producers for the environmental costs they generate from their exploration and production activities and consumers for perceived environmental costs not adequately covered by various consumption taxes (e.g., sales taxes, value-added taxes and carbon taxes).

So when, for instance, a country fails to impose a consumption tax high enough
to cover the perceived costs to society of climate change, congestion or
local pollution, the paper would classify that as a subsidy.

The working paper indicates that explicit global subsidies were US$450 billion in 2020, or six per cent of the total. Most of these are actually so-called tax expenditures: tax credits or deductions for investments in high-risk exploration and development activities, similar to those provided to firms in other sectors of the economy.

94% of Hydrocarbon “Subsidies’ Actually “Externalties”

That leaves the 94 per cent of subsidies that were what the paper refers to as “externalities.” Let’s be clear. Externalities are not subsidies. They are a cost or benefit of an economic activity that affects a third party not directly related to that activity. The cost is not always evident, nor is it clear by what mechanisms such costs and benefits should be shared. While the paper does not break down the percentages attributed to externalities, its 2015 predecessor estimated that the costs of global warming were 37 per cent, local air pollution 13 per cent, congestion 32 per cent, vehicle accidents five per cent and road damage two per cent. In effect, the paper is arguing that not making the fossil fuel industry pay the full cost of global warming constitutes a subsidy to the industry. The same for its not paying the full cost of local air pollution or of traffic congestion or road deaths, and so on. Attribution of any of these costs to fossil fuels is highly questionable, but one obvious question is why fossil fuels are to blame for road congestion. If all vehicles were electric, would there be no congestion?

The vast majority of what the paper calls “subsidies” thus relate to charges not imposed for the harmful external effects of consuming fossil fuels, especially in oil-producing countries that choose to impose lower excise and sales taxes on gasoline and other fuels. The paper finds that East Asia and the Pacific regions account for almost half of total global energy subsidies. In effect, the report concludes that the prices of energy should be substantially raised for the world’s poor. This, of course, was not noted in the media summaries of the paper.

The paper did not explain how it calculated Canada’s 2020 subsidies to fossil fuels but, given its general analysis, one can only assume it was based on the judgment that fossil fuel costs to consumers were not high enough. But in 2018, total taxes on gasoline alone were roughly $24 billion. One has to wonder how the IMF’s math figures that this, and the more recent increases in carbon taxes, still constitute under-charging for externalities.

A final difficulty with the IMF paper is that it excludes any consideration of the positive externalities from reliance on fossil fuels. They are the most secure, affordable, storable, and reliable energy sources we have, and the ones upon which the remarkable advances in the global economy over the last century have been based. That is well worth bearing in mind as we consider the meaning of “subsidy.”

Summary

The Mad Hatters turn things upside down. Society is subsidized and made wealthy by fossil fuels, not the other way around. Some of that wealth is being diverted to renewable energy companies who do not create enough value to be in business without direct payments of tax dollars. They prove it by declaring bankruptcy when their subsidies are reduced.  Worse, hooking up wind and solar intermittent power to electrical grids adds more cost and unreliability than the renewable power is worth.

Read More about Energy Subsidies Abuse

The Appalling Truth About Energy Subsidies at Euan Mearns

Renewable Energy Cost Explosion: €25,000 euros for each German family of four  Daniel Wetzel, Die Welt (translation by GWPF)

What’s an Oil Subsidy? Heritage Foundation

Net Subsidy Analysis: A Better Way to Assess Government Energy Policy MasterResource

Why the Best Path to a Low-Carbon Future is Not Wind or Solar Power Brookings Institution

Killing the Energy Goose Science Matters

At its prime, the Carrizo Plain (S. California) was by far the largest photovoltaic array in the world, with 100,000 1′x 4′ photovoltaic arrays generating 5.2 megawatts at its peak. The plant was originally constructed by ARCO in 1983 and was dismantled in the late 1990s. The used panels are still being resold throughout the world.

Amazon rain forest devastated to mount monstrous virtue signalling prayer wheels elsewhere. Stop the subsidies and the devastation from wind “farms.”

From The Defender Wind Energy’s Dirty Secret: Deforestation of the Amazon and Devastation of Indigenous Communities.  Excerpts in italics with my bolds.  H/T mohandeer

Booming demand for balsa wood, used to make turbine blades for wind energy,
is ravaging Amazon forests and indigenous communities —
in the name of “green power.”

Story at a glance:

• The rapid expansion of wind energy has led to increasing demand for windmills and balsa wood to build them.
• The tropical tree is facing exploitation and being cleared from Amazon forests, causing potentially more environmental problems than the windmills it creates can solve.
• Wind turbine blades can be up to 328 feet (100 meters) long; each blade requires 150 cubic meters of balsa wood, which is several tons.
• China is a major consumer of balsa wood, purchasing 85% of Ecuador’s exports in 2020.
• The Open Democracy video, “A Green Paradox,” documents how the rush for balsa wood to create “green” wind energy has destroyed local indigenous communities and decimated ecosystems.

Balsa, a tree that’s native to South America, is a coveted resource. Growing up to 98 feet (30 meters) and ready for harvesting in just three to four years from planting, balsa holds the promise for high profits for those who grow them.

Adding to its value, balsa wood is flexible and light yet very strong, making it an ideal material for manufacturing bridges, skis, boats and wind turbine propellers.

In an ironic tragedy, however, the rapid expansion of wind energy has led to
increasing demand for windmills and balsa wood to build them.

Now, the tropical tree is facing exploitation and being cleared from Amazon forests, causing potentially more environmental problems than the windmills it creates can solve.  

Logging Amazon rainforests to create massive wind turbine propellers is the opposite of sustainable. Meanwhile, birds and bats — many species of which are already endangered — are suffering. It’s estimated that 600,000 to 949,000 bats, and up to 679,000 birds, are killed annually by wind turbines in the U.S.

But the number of wind turbines has increased significantly since these estimates were calculated, which means many more are probably affected. Areas, where wind farms are built, are also in peril, as the giant structures have a significant socio-economic impact.

As it stands, wind energy is falling into the trap of many “green” initiatives before it,
claiming to offer a solution to save the planet
while instead helping to destroy it.

Irina Slav explains at Oil Price Europe’s Energy Troubles Continue: Hydro And Nuclear Output Declining.  Excerpts in italics with my bolds.

♦  Europe’s hydro and nuclear output is declining, leading to more energy troubles.
♦  Renewables are struggling to fill the gap as wind and solar output increase.
♦  The EU may require increased LNG imports from the US to meet energy demands.

Last year, Europe was on the brink of an energy breakdown as Russian gas flows dried up and most of Europe doubled down on renewable energy.

The renewable energy bet paid off, in a way. Solar and wind electricity generation in Europe hit a record in 2022. In fact, for the first time in history, wind and solar together produced more electricity than natural gas-fired power plants.

There was just one problem with that. Lower hydro and nuclear output
more than wiped out the significance of that record output.

Droughts were severe in Europe last year. They threatened major trade routes such as the Rhein in Germany and the Po in Italy. And they also caused severe declines in hydropower electricity output. For example, in Spain, hydropower output dropped by almost half because of the droughts. All this might repeat this year as well.

Meanwhile, nuclear wasn’t doing so swell, either. France suddenly found that years of underinvestment in maintenance would have consequences: emergency reactor shutdowns for repairs and maintenance.

The problems cost EDF a massive annual loss of $19 billion as half of its reactors had to be shut down for maintenance. Most blamed the pandemic, but nuclear experts such as Mark Nelson saw the roots of the problem much further into the past when France decided to bet on renewables over nuclear.

That might have been the case in 2022, but this year things are different. Wind and solar are still producing electricity at a record rate, it appears, but declines in hydropower and nuclear output are so severe they are more than offsetting those record output rates, Reuters’ Gavin Maguire reported in a recent column.

Maguire noted that Europe managed to boost its wind and solar power capacity by 9 percent last year to 57.29 GW, which was a record high. At the same time, however, the troubles of hydro and nuclear dragged total electricity generation down and are still doing it.

Over the first quarter, European power generation stood at 1,213 terrawatt-hours, which was 6.4 percent lower than output for the first quarter of 2023. That’s according to climate change advocacy Ember. According to Maguire, this is not necessarily alarming in itself. This time last year, Europe was coming out of pandemic lockdowns, and demand was soaring.

Where things could become problematic is later in the year as business activity across the continent begins to rebound after the energy crunch of last year, the Reuters columnist noted. And most of the Russian gas that was available last year is no longer an option.

French nuclear is a major source of hope, but it will be a while yet before output recovers. At the moment, French nuclear power plants are producing 17.5 percent less than the average output rate for 2020 and 2021. That’s down from 23 percent for last year, so there is some progress, and that’s a good sign.

Hydro is trickier because, although to a lesser extent than wind and solar, hydro is weather-dependent. With Europe’s mild winter that saw a lot less snow than usual, a repeat of last year’s drought is not out of the question. In fact, it is a distinct possibility.

What this means is that Europe may need to import a lot more LNG from its new top supplier, the United States. Some have worried that the EU is building too much LNG import infrastructure that would become stranded assets before too long, but right now, those assets appear to be vital for the bloc’s energy survival.

Solar farms in Southwest USA from Solar Energy Maps

D. Dowd. Muska reports in his National Review article A Bright Shining Disappointment.  Excerpts in italics with my bolds and added images.

Solar has failed in the Southwest.  In the ’70s, it all seemed so simple.

President Carter issued a proclamation declaring the sun “an inexhaustible source of clean energy.” A joint resolution of Congress predicted that “the development of solar technologies will provide an abundant, economical, safe, and environmentally compatible energy supply.” Robert Redford assured Americans that “the sun will always work” and “never increase its price on a heating bill.”

But nearly 50 years later, solar’s failure is blindingly clear. The Southwest Public Policy Institute, where I serve as a senior fellow, recently explored the contribution sunshine makes to utility-scale electricity generation in eight states: Oklahoma, Texas, New Mexico, Colorado, Utah, Arizona, Nevada, and California. What we discovered was jarring.

In the Southwest, solar generates a mere 6.4 percent of utility-scale power (power from facilities where total generation capacity is one megawatt or greater), despite the region enjoying the sunniest skies in America. While California (16.7 percent) and Nevada (14.4 percent) had the heaviest solar shares, the drop-off in the other states we studied was profound: Utah (8.1 percent), Arizona (5.5 percent), New Mexico (5.0 percent), Texas (3.1 percent), and Colorado (3.0 percent). Coming in last — and by a country mile — was the Sooner State, at a miniscule 0.1 percent.

These disappointing figures are all the more perplexing when one considers the massive level of government succor that has flowed the solar industry’s way since the late 1970s, the era of Annie Hall, the Bee Gees, and the Star Wars Holiday Special. In 2012, an audit by the Government Accountability Office found that federal agencies have overseen hundreds of “initiatives that support solar energy across the four key federal roles”: R&D; “fleets and facilities,” “commercialization and deployment,” and “regulation, permitting, and compliance.” For decades, wildly generous tax credits have been offered at the federal and state levels. And in the late 1990s, lawmakers began to adopt renewable portfolio standards, which required power suppliers to generate or purchase “green” electricity. In Arizona, 15 percent of power must satisfy these standards by 2025. In Nevada, the rule is 50 percent by 2030. And in New Mexico, all electricity is mandated to be “zero carbon” by 2045.

Enjoying both free fuel and government-conferred advantages, solar power should play a leading role in the Southwest. Yet it doesn’t.

This indicates that solar’s problems are fundamental. As the Institute for Energy Research recently noted, sunlight is “relatively weak because it must first pass through the atmosphere, which protects the Earth from the sun’s intensity.” In 2015, a study by the Massachusetts Institute of Technology described the solar radiation that reaches us as suffering from “low energy density.” In addition, even the most-efficient photovoltaic panels in common use today convert far more solar irradiance to heat than electricity.

Intermittency, in energy journalist Robert Bryce’s opinion, is another “killer drawback” for solar: “Lower power output on cloudy days and during the winter — and zero output at night — means that solar power facilities must be paired with expensive batteries or conventional power plants in order to prevent blackouts or brownouts.”

“Free” fuel, it turns out, isn’t so free. As the Manhattan Institute’s Mark P. Mills explained:

Claims that wind, solar, and EVs have reached cost parity with traditional energy sources or modes of transportation are not based on evidence. Even before the latest period of rising energy prices, Germany and Britain — both further down the grid transition path than the U.S. — have seen average electricity rates rise 60%-110% over the past two decades. The same pattern is visible in Australia and Canada. It’s also apparent in U.S. states and regions where mandates have resulted in grids with a higher share of wind/solar energy. In general, overall U.S. residential electricity costs rose over the past 20 years.

But those rates should have declined because of the collapse in the cost of natural gas and coal — the two energy sources that, together, supplied nearly 70% of electricity in that period. Instead, rates have been pushed higher thanks to elevated spending on the otherwise unneeded infrastructure required to transmit wind/solar-generated electricity, as well as the increased costs to keep lights on during “droughts” of wind and sun that come from also keeping conventional power plants available (like having an extra, fully fueled car parked and ready to go) in effect by spending on two grids.

Then there’s the NIMBYs. Utility-scale solar, in community after community,
faces resistance from locals.

In November, the Roswell Daily Record reported that a New Mexico regulatory agency “voted against three proposed [solar] projects after hearing objections from county residents.” Issues raised included fencing that “will deter from scenic views and hurt property values” and “concerns that the panels contain hazardous substances.” According to The Durango Herald, residents near Hesperus, Colo., have banded together to fight a photovoltaic project, citing concerns about “water runoff” and “direct loss of 1,900 acres of elk habitat.”

In short, solar has not been shining very bright since it came on the scene in the ’70s. Indeed, even in the sun-drenched Southwest, solar has proven inefficient, unreliable, and — when all costs are considered — expensive. That should be a warning:

If it struggles here, in ideal conditions, how well
can it be expected to perform in the rest of the country?

D. Dowd. Muska is a senior fellow at the Southwest Public Policy Institute, a research institute dedicated to improving the quality of life in the American Southwest by formulating, promoting and defending sound public policy solutions.

When it opened in 2014, the Ivanpah Solar Power Facility was the world’s largest solar thermal power station, covering 4000 acres in the Mohave desert. While Ivanpah was supposed to be the future of clean energy, it seems that the rate at which it burns fossil fuel might actually outweigh any environmental benefits of solar power production.