By Louise Silberling
January 22, 2012
I know it’s nothing new under the sun, but some of the Republican responses to Obama’s comments about climate change really burn me up. I mean, to say they are suspicious of subsidies to the renewable energy sector? REALLY? What about the massive subsidies to the oil, coal, and gas industries — industries that do not need them? We could be miles ahead on producing renewable energy in this country with our vast wind, water, thermal, and solar opportunities; but to introduce new technologies to users, we must absolutely subsidize them, at the very least via energy credits and other incentives. The cost/benefit analysis would reveal huge benefits to us all. I am so ashamed of us letting Republicans hijack science and brazenly support their own special interests of coal, gas, and oil without being called out on it EVERY time they talk about it (I heard one Senator the R senator from Oklahoma, opine on this this morning and I am once again incredulous and livid). We are miles behind Germany in using solar and they hardly even get any sun!
Ironically, Oklahoma has a progressive in-state position on renewables, with a voluntary goal of 15 percent renewables by 2015 and a proposed “Energy Security Act” which would require 30 percent of state electricity to come from renewables by 2020. They are huge supporters of wind energy there. Still, their R senator in the US Senate is one of the most conservative R’s there is on energy policy.
In the U.S., renewables account for 10% of energy generation, according to the Energy Information Administration. Germany has a much higher percentage, although that can depend on the weather since much of their renewable energy comes from solar (in the US, a much higher proportion comes from wind and hydro). Germany has set itself a goal of 80% of electricity from renewable sources by 2050. According to the AP, solar power’s share in Germany’s electricity production rose in 2012 to 6.1% from 4.1% in 2011, while wind power rose to 8.6% from 8.0%, and biomass plants accounted for almost 6%. According to BDEW, the German utilities’ industry association, renewable energies combined accounted for 26% of electricity production over the first nine months of 2012. On one day in May 2012 (sunny, at midday), approximately 40 percent of Germany’s electricity was being generated by solar power alone! So much energy is produced by wind and solar in Germany that they have to export it to other countries, since they do not yet have enough storage for that energy themselves.
How did Germany get there? By greatly subsidizing the solar energy industry, from production of solar panels in German industry to installation. In the US, we currently have some tax rebates for solar installation. We could greatly increase solar installation by providing creative opportunities for financing and private investment. We could create legal structures for financing through master limited partnerships and real-estate investment trusts, and establish clean-energy finance banks. Also, states could require energy utilities to generate or buy a certain percentage of their power from renewables. Power purchase agreements exist and could be expanded; “feed-in tariff” policies would be even more efficient, since private citizens can make money with their solar production by feeding it back into the power grid.
Wind power produced on land in the US will already be self-sufficient from a cost point of view by 2016, when its cost will equal the baseline price of power on the grid, according to Bloomberg New Energy Finance. In California, solar p.v. will be cost competitive at the residential level by 2017 according to Greentech Media Inc.
Why do renewables need subsidies and incentives? They need this so that they can get established. Fossil fuels already have the infrastructure in place and utilities also tend to favor established business models, according to a recent article in the Wall Street Journal. Since the financing is hard to come by conventionally for renewable energy, it needs government help in the form of subsidies, incentives, tariffs, and other regulations.
A recent World Bank and OECD study reports that many subsidies for fossil fuels are inefficient and wasteful and should be globally phased out. The U.S. could take the lead in energy independence by helping to reach the goal of phasing out support for fossil fuels. To avoid too much burden on the consumer while this happens, direct subsidies to consumers in poverty would be a more efficient way to allow for cost distribution, also according to the World Bank/OECD study.