July 1, 2019
Disentangling the Renewable Energy Scam
By Norman Rogers
The solar energy industry is telling its pals in Congress that it is willing the lose most of its subsidies. The current subsidy for solar is 30% of the construction cost. To that subsidy, an additional 10% subsidy is available due to special fast depreciation for solar energy plants. The 30% subsidy is scheduled to ramp down to 10% by 2022 and thereafter remain at 10%. This is not a consequence of declining costs of solar that makes the industry no longer in need of such a large subsidy. Solar electricity is a mature industry, and cost declines are moderate. The real reason the solar people are happy with a lower subsidy is that the 30% investment tax credit (ITC) is not their most important subsidy. The real subsidy is more complicated and better hidden.
The real subsidy is rooted in renewable portfolio requirements in about 30 states. These states require that a certain percentage of electricity come from renewable sources. The quota ramps over time. For example it might ramp from 20% now to 50% by 2030. These quotas create a chain of events that guarantee solar and wind energy a market for years to come with a guaranteed profit. If that is not enough, the industry is trying to freeze the quotas into state constitutions so as to make it difficult for the electricity consumers to get out of the trap that has been set for them.
Renewable energy has been defined in an illogical way so as to favor solar and wind. The ostensible motive for increasing renewable energy is to lower carbon dioxide (CO2) emissions and thus avoid a supposed global warming catastrophe. But hydro and nuclear are prohibited from being used to meet the renewable energy quota, even though they don't emit CO2.
Electricity is responsible for 28% of U.S. CO2 emissions. The rest is from transportation, heating, and industrial processes. Yet the emphasis on reducing CO2 is focused on the electricity sector. The U.S. is responsible for 14% of world CO2 emissions, and our electricity generation creates less than 4% of world emissions. All the effort being put into U.S. renewable electricity will have no important effect on global warming, assuming that global warming is even real. The real source of CO2 emissions is China and India among others.
I will explain how renewable energy quotas subsidize solar. The argument for wind is similar but different in various details. To see how big the subsidy is, I will compare an imaginary, unsubsidized solar electricity business with the existing situation, propped up by subsidies and quotas.
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