Rhein on Energy and Climate

The decision by BP to sell off 4.6 GW capacity of wind power plants and projects in North America puts an end to an expensive dream to combine renewable with fossil energies that has cost BP some $ 6.5 billion since 2005. Through their investment in 16 wind farms across nine US States, BP had become one of the big investors in wind energy world-wide.

No other oil company had followed BP with a comparable zeal; Royal Dutch has already disposed of its wind parks,while TOTAL keeps no more than tiny investments in solar power. None of the US oil majors nor any of the state owned companies in Russia, China, Brazil or the Gulf have ever thought of undertaking major investments in renewable sources of energy.

From a business point of view the sell-out is perfectly understandable and even overdue:

  • Like most investors in wind and solar energy BP has lost a lot of money, which demonstrates that renewable energy continues to be dependent on subsidies. Especially after the discovery of non-conventional gas energy companies find it much more thrilling to explore and drill new gas or oil fields, however expensive and risky this may be. That is what all oil companies, big or small, public or private have been doing during the last few years.

  • Oil and gas production does not marry ideally with power generation, whether from fossil or renewable sources, as they offer hardly any synergies.

  • Contrary to received views, oil and gas have a very long life time ahead. By the middle of the century the industry will continue to flourish, even if peak oil will long have been reached. More worrying, the industry seems determined to bet on “dirty” oil shale/sands in Venezuela, Canada or Kazakhstan,whatever the higher C02 emissions they generate.

Policy makers have to accept these realities. They cannot force investors to go for solar or wind.

But they can make fossil energy less attractive by imposing high excise taxes on gas, fuel and gasoline, while making wind and solar more attractive by generous, but degressive subsidies

So far, almost all countries are doing the opposite by not taxing fuels at least $ 25 per ton of C02 emissions, the cost of climate change.

Eberhard Rhein, Brussels

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  1. Dear Mr E Rhein:

    Your note and Blog here is of interest. As always a very interesting disertation.

    I have to say that I disagree with the Facts purported here in that Both Solar and Wind Technologies as reported here are Extremely Lucrative Investments because the styles of Solar Cells and Wind Energy systems as currently used are Subsidised to the Hilt and are depriving Our Collegiate Companies who have far better systems that cost around 25% of these systems do not get anywhere near the realms of being trialled because of the hegemony of the organisations that “say” they “represent” the industry.

    >>>Wind Energy-The farce<<>> They are given huge Grants of over 60% to build them:

    >>>These preferential Electricity Tariffs that apply all the time (24 hours a day whether they are working or idling) from the day a contract is signed off to build, even before they start producing electricty!

    >>>Then – as in the UK for example – the Government pays these £0-95 (or €1.14) per kWh of energy – which is exorbitant even compared to Denmark and previously Spain!

    >>>This is absolute nonsense Mr Rhein!

    >>>Then they are allowed a Corporation Tax Hike of 10 years wherein they do not pay any such Taxes.

    >>>So what is the consequence of this issue?

    1] Well to put it frankly, if you build such wind turbines adjacent to a Border between two Countries (say as has built near Eniskillen) you can get subsidies from the UK Government to build the plant (and it did not cost the Company involved anything) and then you can supply the Electricity to the highest bidder which in this case was the Republic of Ireland and then you can reap benefits from both Countries.

    2] Or in the other and more common case the developers of these Wind Energy Turbine Farms can sell them onwards for over 500% of their Build Costs even before they are finished built.

    3] In an example we have read in the EU the amount of money to be made from the development of spending barely £120 Million (€150 Million) is over £1000 Million (€1250 Million) in 8 years of operation!

    Is it any wonder, Sir, that we – as the Public – are sick and tired and fed up with all this winging from the Wind Energy Associations in their Lobbying of the EU. This is totally wrong Mr E Rhein as the above information confirms.

    >>>Now Photo_Voltaic Cells and Solar Cells.<<>>The Remedy<<<

    The current Wind Energy and Photo_Voltaic Cell and Solar Cell Technologies are Well-Proven Technologies and the subsidies should be reduced for the Building of them.

    The current Wind Energy and Photo_Voltaic Cell and Solar Cell Technologies should have their Electricity Tariffs reduced significantly and removed altogether after 5 years (and certainly before 2020.)

    These systems and their subsidies are depriving the developers of the Newest and Latest Developments in Wind Energy Technologies and Photo_Volraic systems coming in to play.

    The new Wind Energy Systems talked about here are already developed and as an interested party it would be of use bringing them in to the EU for use. But the Wind Energy Association in Europe is preventing this.

    The new Photo_Voltaic systems we have noted been recorded in these EURACTIV and BLOGACTIV papers are already around and can be applied by simple spraying the films onto surfaces in a two-three coat ultra-thin system that has applications across old and new structures. At 25% of the costs of the current system with a loss of efficiency of 2% there can be no excuse. But the Photo_Voltaic Cell Association will prevent this happening as it has already.

    Let me repeat this again. This is the same style of Lobbying that maintains the Incineration and Gasification and Waste to Energy debacle across the EU Sir. Here-again these lobyist groups – who have mega-lobbying techniques right at the heart of the EU – destroy all other attempts to build processes and sytems that can save the EU and its member states € 10s of Billions in Treating Waste by simply converting the residues to the Biofuels for transport.

    But Sir, for some Reason nothing is done.

  2. Peter
    You are absolutely right: Member states have developed absurd and costly systems of subsidies for various renewable energies. Once in place these are difficult to reduce let alone to abolish. The Commission idea to shed some light on the different subsidies is therefore welcome and overdue.
    This being said wind, hydro and solar must be crucial components of every energy mix throughout the world, but with the necessary adaptions to weather conditions.
    Eberhard Rhein

  3. Dear Mr E Rhein:

    Your comments are received and appropriately noted.

    I see this issue to bet somewhat of an irony in that the very notion of “harmonising” such subsidies ought to be a major issue within the EU. This is a simple issue that can be addressed very easily. It also ought to be time-related. It bemoans me to understand why after 10 years (say) when the capital development costs and the operations and maintenance costs for such developments they still need to be subsidised. Is this not also part of the reason – perhaps small – that the Southern European Countries (now including the Baltic States Slovenia and Hungary) are suffering financially? If so much emphasis is placed (or mis-placed) to a certain direction it changes the balance of things.

    This distortion of the reality in subsidising renewables irrespective of the consequences, and in this we have the mad dash to meet the biofuels targets as a front-leader here that did have a major impact on the prices of food as demonstrated in the food versus fuel debate, then we really ought to be listening to the wider public. Of course we all know that the EU still subsidises oil and energy companies to the hilt, but why add further to their coffers by giving them even more subsidies. I leant from an interview with the EIB a few years ago that providing grants and low-interest loans to such companies was known to end up in the share-holders’ pockets, but they did nothing about it!

    Perversely – as I also mentioned – giving out such subsidies to these companies that are still operating in a “cloistered environment” of forever making money from their existing styles of wind and photo_voltaic systems is depriving innovation. A company that I am aware of would be very pleased to bring their wind energy system in to the EU and have it demonstrated at full scale but the hegemony of the existing companies stops them. This cannot be right: the result of this is that the Chinese and Indian and Brazilian nations will take charge here and we will lose out again as the EU. A system like theirs which is 2 to 3 times as efficient and costs half the capital to build is just what we need. the same is true with the experiments on the paint-applied photo_voltaic systems that are costed to be barely 20% of the current systems. The lobbying company Associations do not want to see change and make it difficult for such entries to gain a foot-hold.

    I seriously think though, Mr rhein, that the time has come to rethink how these subsidies work in the renewable Energy and Fuels arena and look at harmosisng them across the EU and EFTA and MENA/METAP areas.

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