Are Fossil Fuel Subsidies Really the Problem for Renewables?

With current events dominating the news cycle, and particularly with the scandals in my own province's electricity sector, it's easy to miss the important ongoing works from the best economists in the energy sector.  

I'm a fan of Severin Borenstein, who recently posted a short blog entry explaining how fossil fuel subsidies aren't to blame in renewables failing to be perceived as competitively priced.

Energy Economics Exchange | Research that Informs Business and Public Policy:

I had a great time last Friday at Berkeley’s Annual Energy Symposium put on by the Berkeley Energy & Resources Collaborative.  Interesting people, interesting talks, and great to catch up with former students who are now working in all parts of the energy industry and government agencies.  I particularly enjoyed the session I got to chair on subsidies/support/incentives (everyone has a different word) for renewable energy.
But a number of times during the day I heard the common wisdom that the subsidies to the fossil fuel industries are a major barrier (some said THE major barrier) to the success of renewable energy.
If only it were that simple.  Unfortunately, the common wisdom isn’t correct.  Subsidies to fossil fuel companies are bad public policy and should be ended, but they have no meaningful impact on the competitive position of renewables.

Continue Reading at the Energy Institute at Haas (at Berkeley) and/or
Read Severin Borenstein's "The Private and Public Economics of Renewable Electricity Generation" paper, referenced in the blog post, at the American Economic Association. (.pdf here)

Hitachi confirms £700m Horizon nuclear deal

Multiple articles on the purchase of nuclear project sites in the UK by what is being cited as Hitachi - the offer included a number of partners, and GE is/was a co-owner of the nuclear business.

Hitachi confirms £700m Horizon nuclear deal - 30 Oct 2012 - News from BusinessGreen:

From GE Hitachi Fact Sheet

Hitachi has this morning confirmed it will buy the Horizon nuclear venture from E.ON and RWE in a £696m deal that could see the Japanese conglomerate build between four and six new reactors in the UK.
The widely trailed purchase is a much-needed shot in the arm for the government's plans to build 16GW of new nuclear capacity by the mid-2020s, which had looked in jeopardy after the two German utilities put Horizon up for sale earlier in the year.
Hitachi said it intends to progress with plans to build between two and three new nuclear plants at Wylfa on Anglesey and the same number at Oldbury in Gloucestershire, which could generate enough clean power to supply up to 14 million homes over 60 years.
The first plant could be up and running in the first half of the 2020s, the Department of Energy and Climate Change (DECC) said in a statement this morning...

Hurricane Could Prompt Review of New York's Preparedness

Prior to last night's massive flooding, the NY Times had an article on steps that could be taken to prevent flooding.  I recall Dutch experts commenting after Hurricane Katrina that design should be for the 1000 year event - not the 100 year event often planned for.  

Hurricane Could Prompt Review of New York's Preparedness - NYTimes.com:

One proposal, from the Storm Surge Research Group at Stony Brook University, recommends installing movable barriers at the upper end of the East River near the Throgs Neck Bridge, under the Verrazano-Narrows Bridge and at the mouth of the Arthur Kill between Staten Island and New Jersey.
According to this thinking, the barriers would prevent a huge tide from flooding Manhattan and parts of the Bronx, Brooklyn, Queens, Staten Island and New Jersey.But such barriers could cost nearly $10 billion.
Other experts are calling for less expensive land-based measures like increasing pumping capacity at subway stations and designing floodgates to
block water from entering both the stations and highway tunnels.

Read the Entire article at NYTimes.com:

Japan’s Tepco to tap more coal suppliers to cut costs

Europe is not the only region burning a lot more coal, with Japan more starkly illustrating a big reason for the increase that somehow today's Guardian article omitted.

Big plans for coal in Japan - including coal to run as baseload supply.  Some quotes from Japan’s Tepco to tap more coal suppliers to cut costs | GulfNews.com:

“We’ll do anything we can to cut fuel costs,” Susumu Kose, a senior manager of Tepco’s coal group, told Reuters in an interview, adding that the company would step up purchases of the sub-bituminous coal...

... will boost the ratio of its coal-power generation to around 17 per cent by 2021, compared to 8 per cent in 2011.

More coal, less oil
For Tepco, increasing low-cost coal power generation will help offset a fall in nuclear power generation and cut ballooning fuel costs of 2.29 trillion yen ($28.57 billion) that eat up nearly half its revenue.
Japan’s new energy policy, announced in September, aims to boost use of coal-fired plants for baseload power generation to reduce reliance on nuclear power after the Fukushima disaster.

Coal resurgence threatens climate change targets

An unsatisfactory overview of the increasing consumption of coal from the Guardian; interviewing the nouveau Luddites at Greenpeace is not helpful.

If you make other forms of electricity expensive (which Greenpeace attempts to do every day), the cheap forms will be utilized.

Coal resurgence threatens climate change targets | Environment | The Guardian:

Graphic from source article

In the UK, between the second quarter of 2011 and the second quarter of 2012, coal consumption rose by nearly a quarter. Europe overall has burned more coal in the past year than any time since it pledged steep emissions cuts, and China and India have also been burning more. Cheap coal, caused by weakening demand in the US where power stations have switched fuels to use gas, has been the biggest factor.

Read the entire article at The Guardian:

Trust and Policy: George Herbert Walker Obama

A fascinating article from Andrew Ferguson, who took part in the unsuccessful campaign to re-elect George H. Bush.  He sees parallels between a President's campaign 20 years ago, and the current one's campaign.
I was looking at polling on the US presidential election yesterday and the data trends are not very promising for President Obama, who leads in two educational demographics - the least educated (high school or less) and the most educated (post graduate).  The most educated are the least numerous, ant the least educated are also the least likely to vote. 
My expectation is that the President will fail to collect as many votes as Mitt Romney.  
My guess his Romney will also win the electoral College.

George Herbert Walker Obama | The Weekly Standard:

Any veteran of the ’92 presidential campaign has learned to identify marks of intellectual exhaustion. The déjà vu this year is especially creepy. President Bush went to a Waffle House to illustrate Bill Clinton’s “waffling” on the issues. He took to calling Al Gore “Ozone Man,” and surrogates warned darkly of Clinton’s unexamined past, just as the president today dwells on Big Bird and “Romnesia,” and his surrogates raise half-baked questions about foreign bank accounts. Both presidents are dignified men, yet their campaigns have felt compelled to abase themselves in the same way for the same reason. They couldn’t think of anything else to say.
I see you can buy Agenda on Amazon for $141. It’s a ridiculous price, but I briefly thought of buying a copy anyway, for old time’s sake. Then I realized I wouldn’t know what to do with one if I had it—like an incumbent with a second term.

Read the entire article at The Weekly Standard:

EON, RWE Said to Sell Nuclear Site to SNC-Lavilin's consortium partner, Hitachi

Bloomberg is reporting the buyer of the Horizon site for a potential nuclear reactor in the UK will be Hitachi, while the Financial Times is reporting they are the front-runner with an announcement pending next week.

The FT report repeats news from earlier last month that Hitachi "is in a consortium with SNC-Lavalin, Canada’s largest engineering group."   Earlier this year SNC-Lavalin's CANDU's were promoted as a solution for disposing plutonium, along with the GE-Hitachi PRISM.  Since that time GE has not sounded interested in pursuing it's nuclear business.

EON, RWE Said to Sell Nuclear JV for About $967 Million - Bloomberg:

EON AG (EOAN) and RWE AG (RWE), Germany’s two largest utilities, are set to sell their U.K. venture Horizon Nuclear Power to Japan’s Hitachi Ltd. (6501) for about 600 million pounds ($967 million), people familiar with the matter said.
The sale for the venture with government backing to build plants in Wales and western England may be signed in the next few days, according to two people, who asked not to be identified because the negotiations are private. An announcement may come on Oct. 30, one of the people said.

Continue Reading at Bloomberg

In the Ottawa Citizen: Ontario Electricity Costs 48 Times greater than in 2006

I know it's a letter to the editor from a Charlatan, but I'm still amazed at the combination of fake environmentalism and declining mainstream media standards

Clean electricity:

The addition of renewable energy sources is not to blame for increases to electricity prices in Ontario. According to a recent Ontario Energy Board report, 45 per cent of the increase in Ontario's electricity generation costs since 2006 is associated with nuclear power, while only six per cent of the increase is due to renewable energy.

The OEB's Market Surveillance panel reported that the obscure global adjustment pool was 45% due to nuclear since 2006, but they did not say that was responsible for the increase in Ontario's electricity supply costs because that would be an ignorant thing to say - or a lie if one did understand it.

The global adjustment over the past 12 months is $6, 320 million.
In 2006 it was $130 million.

For the global adjustment to equate with the increase in generation costs, bills would need to have increased to 48.6 times 2006 levels.

They have not.

Point Lepreau synchronizes to grid: 3rd CANDU Reactor to do so this fall

Bruce Unit 1 in early September, Bruce Unit 2 this month, and now Point Lepreau are returning to service after mid-life refurbishments.
Bruce Power issued a press release yesterday noting Unit 1 achieving commercial operation - 4 1/2 weeks after announcing synchronization to the grid

New Brunswick Generating Station Update: Station sends electricity to New Brunswick grid, begins final commissioning

On October 23, 2012, the Point Lepreau Generating Station successfully synchronized to the New Brunswick electrical grid for the first time since 2008, producing electricity for New Brunswick homes and businesses. The station passed a significant test and is now in the final stages of commissioning to  make the station available for commercial dispatch. Final stages include increasing and decreasing  reactor power, and disconnecting the reactor from the grid and reconnecting it...
Once returned to service, the station will contribute to the provincial goal of having as much as 75 per cent of the electricity used in New Brunswick coming from clean, renewable or non-emitting sources by 2020. The 660 megawatt station will be a baseload contributor to the New Brunswick grid, producing enough electricity to power more than 333,000 homes per year for the next 25 to 30 years.

Read the full NB Power update

EU looks to reform emissions trading scheme with price at 8 euros/tonne as Ontario plans for $300/tonne

The European Union remains convinced low pricing for emissions (~8 euros a tonne) is a problem that needs to be addressed.

Australia recently bailed on implementing its own, expensive, carbon tax by joining the cheap EU ETS scheme.

In a recent original content article, I calculated the emissions cost of Ontario's feed-in-tariff for renewables combined with Net Revenue Requirement at ~$300 a tonne.

Perhaps we too should join the EU ETS

UPDATE 3-EU needs to decide carbon reform 'without delay'-draft | Reuters: 

BRUSSELS, Oct 23 (Reuters) - A rapid rise in surplus EU carbon credits is expected to slow from 2014 onwards, but to tackle a short-term glut member states need to decide before the end of the year on a temporary fix, a European Commission draft document said.
The draft report on the carbon market also called on the member states to discuss and explore options for more lasting changes to the Emissions Trading Scheme (ETS) after allowance prices hit a record low in April.
It urged the Climate Change Committee "to decide on the proposed amendment to the auctioning regulation before the end of the year in order to provide certainty for market participants".

Read the full article at Reuters: