Only the US Government Would Call a Tax a Subsidy
Dec24

Only the US Government Would Call a Tax a Subsidy

Podcast Episode 115 – Download the mp3 file Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.  Play the Podcast My first reaction was “Wow! Did I just read that correctly?!” It was one of those “ah-ha moments” when a seemingly mundane statement leapt out of the page and whacked me on the forehead.  This time the catalyst was a twitter reply from Chris Pragman (@ChrisPragman) who describes himself as an “Avid Podcast listener, Engineer, Nuclear Power, Fire Protection, and beer geek with a long commute!” You see, I had posted a tweet earlier in the day about the cost to taxpayers of some “green energy” jobs.  There’s a new wind farm in Oregon called Shepherds Flat that received federal cash grants totaling $490 million under the guise of job creation.  For that grand sum the Shepherds Flat project will create 35 new jobs.  The math is easy; $14 million per “green energy” job. Our tax dollars at work! This tidbit about Shepherds Flat was part of a larger report by the Energy Tribune that among other things compared the relative size of US government subsidies to various energy industries.  The report by Robert Bryce calculated subsidy dollars per unit energy produced and concluded the renewable energy industry receives 6.5 times more federal government subsidies than the nuclear industry, and 12 times more than the oil and gas industry.  That fact really didn’t surprise me considering the billions of dollars in grants, production tax credits, and favorable depreciation rules the government lavishes upon anything branded with the “renewable” label.  Then Chris asked a great question, “What do they consider nuclear subsidies?” When I dug into that question I learned the Congressional Budget Office is tasked with tracking the amount the government spends subsidizing various industries, and they publish their findings periodically.  There it was on page 3: $900 million in “subsidies” for the “favorable tax treatment of nuclear decommissioning funds.”  Hmmm. What could that be? You see, every nuclear plant owner is required by federal law to set aside funds to ensure there’ll be enough money to pay for decommissioning the plant when the time comes.  Typically plant operators add to the fund each year and over time the fund grows until it’s used. The NRC monitors each fund and will require plant owners to make additional payments if they think they’re behind.  These funds are essentially forced savings accounts that add to each nuclear plants annual operating expenses. So what’s the “favorable tax treatment?”  It turns out Title 26...

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Irrational Pro-Renewable Policies, Nuclear Energy Tax Hikes Harm Spain’s Economic Recovery
Dec19

Irrational Pro-Renewable Policies, Nuclear Energy Tax Hikes Harm Spain’s Economic Recovery

Spain’s electrical supply industry is caught in a decade long death spiral of failed energy policy, over-reliance on imported fuels, and massive debt. Their new taxes on nuclear energy, an attempt to reduce utility debt, are likely to worsen their economy. Spain imports fuel for about 51 % of their electricity production in the form of coal and natural gas. Payments for these imported commodities contribute to a debilitating trade imbalance. Nuclear energy makes up the lion’s share (47%) of Spain’s domestic energy production. Their eight nuclear energy facilities add tens of thousands of jobs and billions of euros per year to the national economy while reducing the need for imported coal or gas.  At the same time Spain’s nuclear plants provide reliable, predictable energy without greenhouse gas emissions. The amount of renewable energy generated in Spain has increased considerably over the last several years.  In fact, in 2012 wind energy production exceeded nuclear energy production for brief periods when demand was low, some nuclear plants were out of service, and wind conditions were nearly optimal.  Unfortunately, Spain’s methods of encouraging investment in renewables have contributed to their current financial crises. The Spanish electricity industry is carrying $32 billion of debt, putting serious strain on an already faltering economy. Spain began deregulating their electricity supply system in the late 1990’s.  Their approach was eerily similar to the failed California experiment; they removed price controls to allow power generators to compete among themselves, but they limited rates paid by customers. As wholesale energy prices rose utilities were unable to recover the higher costs through higher rates to customers.  The result was predictable: electric utilities began loosing money on a grand scale.  Since 2005 annual “energy deficits” have been in the billions of euros per year.  With slight-of-hand economics, the Spanish government allowed utilities to “bank” their annual deficits against future earnings.  Unfortunately those future earnings never materialized and deficits ballooned. A the same time Spain (like California) began a heavily subsidized renewable energy program that included “feed-in tariffs” which guaranteed wind and solar generators above market prices for all of the energy they could produce.  Consequently utilities were forced to buy wind and solar energy at inflated rates, but were not allowed to recover the costs because of those same price controls.  Solar and wind energy investors raked in billions of euros per year while the utility deficit grew even faster.  By some accounts electric utility debt in Spain now stands at $32 billion. These out-of-whack energy policies cost Spanish workers dearly; for every renewable energy job created more than five existing jobs were lost and unemployment soared to over 20%....

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Only the Energy Impoverished Run Towards a Gasoline Spill

There was a horrible accident in Kenya this week.  More than 100 people were burned to death, and hundreds more were injured when a gasoline pipeline began leaking and then exploded.  My heart goes out to the victims, and their families, and to all the people of Kenya who are dealing with the worst industrial disaster in their history.  Eyewitnesses reported seeing burning people leaping into a nearby river trying to extinguish the flames that engulfed them.  Rescue workers had to place a net across the river to catch the charred bodies of the dead so they would not wash down stream. The death toll continues to grow, and most of the 100+ injured including many children are not expected to survive. The pipeline runs through Sinai, a Nairobi ghetto of corrugated tin and cardboard huts.  When the pipe began leaking hundreds of people gathered around to scoop up the spilled gasoline.  As the crowd grew a spark from a cigarette butt or some other heat source ignited the fuel.  The blast incinerated scores of people nearby.  Flames cascaded down on nearby huts then raced through the crowded slum. Trying to image the chaotic and horrific scene, I realized there was something so far outside my own paradigm that I had to stop for moment to collect my thoughts…who runs TOWARDS a leaking gasoline pipeline?  Maybe that’s a silly question; but if anyone reading this came upon a leaking gasoline pipeline they would stop, back away, and call for help.  You would keep your distance while warning others not to go near for fear of igniting the leak and causing a fire or explosion.  If you were forced to approach the leak you would fear for your life and rightfully so! So what is different between you and the hundreds of people in Kenya that did the exact opposite?  As word spread through Sinai about the leaking pipeline hundreds of people grabbed every container they could find and rushed towards the explosive spill! You might settle on a simple socioeconomic answer: because they are poor they’ll risk their lives for a few dollars worth of anything of value.  The real answer is a lot more complicated.  These people are not only poor, they are super poor, and one of the factors that separates the poor from truly impoverished is the lack of access to even basic energy sources that human beings need to survive.  They are energy destitute. Another way of saying this is availability of plentiful, accessible energy is the greatest single factor that allows people to rise out of poverty.  All of the world’s developed economies got...

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NY State Gives Fossil Fuels Favored Treatment

Podcast – Download Audio File Here This is a follow up to the podcast titled “Water Wars in New York” on May 27, 2010 in which I discussed how NY State is using their authority to issue Water Quality Certificates to wage war against the Indian Point Nuclear Plant.  In case you missed that show, New York is holding the plant’s 20 year  license renewal hostage by refusing to issue a Certificate of Water Quality unless the plant agrees to install expensive cooling towers.  The plant has argued that the cost of cooling towers, approximately $2 Billion, is excessive and disproportionate to the environmental benefit that would be derived.  In fact, the plant has identified an alternate technology that would provide greater environmental benefits at about one-tenth of the cost of installing cooling towers. Thus far those arguments have fallen on deaf ears. In my further research on this topic I discovered a damning piece of evidence that proves NY State is giving preferential treatment to fossil fuels while at the same time imposing unfair regulations on neighboring nuclear energy facilities, the largest competitors to fossil fuels. There are several other large power plants on the Hudson River that generate electricity by burning coal, oil, and natural gas.  All of those plants, like Indian Point, use the Hudson River for cooling.  One of the plants, the Bowline plant, is in Haverstraw, NY only about five miles across the river and downstream from Indian Point.  Bowline is a two unit gas and oil fired power plant with a combined output of 1,182 MW (slightly larger than each Indian Point nuclear unit). There are many similarities between Bowline and Indian Point: Bowline, like Indian Point, is required to maintain a NY State water permit.  Bowline, also like Indian Point, evaluated several alternative technologies to reduce fish and fish larva mortality. The Bowline analysis reached similar conclusions to the one performed by Indian Point; they concluded that converting to a closed cooling water system using cooling towers would provide the greatest reduction in fish mortality, but at a very high cost.  Instead, the Bowline plant offered to use a combination of technologies that would provide 80% to 95% percent of the benefit that would be derived from the vastly more expensive cooling towers, but at 1/30th of the cost. That’s where the similarities end.  In the case of the Bowline oil and gas plant, the New York State Department of Environmental Conversation accepted the lower cost alternatives to installing cooling towers.  On the topic of cooling towers, in a letter from Denise Sheehan, the DEC Commissioner they stated; The estimated cost of retrofitting...

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Episode 74 – The Renewable Question and Germany’s Nuclear Reversal (audio podcast)

Download the Audio File Here In this podcast I discuss the question “Is Nuclear Energy Renewable?” that I first posed in a recent blog post. In addition, I added the following discussion of recent news and events: Indian Point License Extension Proceeds Despite Anti-Nuclear Hurdles Despite barriers erected by anti-nuclear groups to block the license renewal for the Indian Point nuclear reactors, the two unit nuclear plant in NY has passed two major hurdles in the life extension process. On August 12 NRC issued their final safety evaluation report and concluded there are no safety issues that would preclude running the plants for another 20 years. On Sept 23 the independent Advisory Committee on Reactor Safeguards, and independent team of experts that advice the NRC, recommended that the license extension be granted. Unless renewed, the current licenses expire in 2013 and 2015. In 2007 the anti-nuclear group Riverkeeper filed five contentions opposing the 20 year license extensions.  The NRC granted Riverkeeper a hearing to review arguments on three of their five contentions.  In those hearings Riverkeeper was unable to provide sufficient evidence to support their claims and the NRC ruled the contentions had no merit. On the NRC’s web site they have a schedule showing a tentative final decision on Indian Point’s relicensing in February of 2010. Riverkeeper’s opposition of the plant is backed by several elected officials including Andrew Cuomo, the State Attorney General with a long family tradition of anti-nuclear politics.  Twenty years ago his father, then Governor Mario Cuomo successfully closed the brand new Shoreham nuclear plant.  In Super Mario’s deal the state purchased the plant for $1, and passed on $5 Billion in construction costs to taxpayers who received nothing in return except some of the highest electricity rates in the country.  That case was a perfect example of the flawed two-step licensing process in which utilities were first issued a permit to construct the plant, and then after the plant was built they applied for a license to operate the reactor.  The new reactor licensing process is a combined construction and operating license (called a COL) that should be more predictable for utilities and investors. The NRC has received 17 COL applications from utilities interested in building 26 new reactors, but has suspended the review of four applications at the request of the applicants. Pro-Nuclear Victory in Germany This week there was a huge win in Germany for supporters of nuclear energy.  Angela Merkel was reelected Chancellor and vowed to reverse that nation’s plans to prematurely shut down their 17 nuclear reactors.  Nuclear energy currently provides 31% of Germany’s electricity and closing the reactors...

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