I’ve recently found myself perplexed by the media situation surrounding renewable energy and renewable energy development. Obviously, I am part of this conundrum, and frankly that only furthers my need to question. I recently ran across a tweet from one of my favorite Twitter contributors, @wind2power, that linked to a blog style article titled “Should we get rid of all energy subsidies?”. Naturally I was intrigued by the headline, but as I read deeper and deeper into the article I realized that this author has no idea what he’s talking about (I’ll explain my reasoning below). Additionally, we received a rather snide comment the other day from a website reader who was annoyed with the perpetual nature of incorrect media coverage. These two events in one week triggered the thought in my head, “What is it that media should be doing, and how can I be sure to do it?”
The answer to that question, on a most basic level, is that media should inform the masses about an area of interest. Local news stations inform their readers/viewers about local events, national news stations bring headlines from across the country into the homes of urban and rural America, and B2B publications (like Windpower Engineering) bring industry specific information to their readers. The problem, I assume, is that media outlets are required to publish so much information that often times the quality of the information can falter. So, in my attempts to break the perpetual cycle of bad media coverage, I want to clarify and spell out exactly what the above mentioned blog-style post would imply.
The author makes the assumption (I’m paraphrasing) that if America were to cease all forms of energy subsidies then renewable energy would become cost-competitive with fossil fuels. This is a load of hogwash and I’ll tell you why. First and foremost is the fact that energy subsidies from the federal government decrease the price of that energy. Energy costs are one of the few things that are allowing America’s manufacturing facilities to remain slightly competitive with emerging economies like Brazil, China, and India. America, thanks to the federal subsidies, has among the lowest energy prices in the world. To give some numbers, an average wholesale cost of electricity in the Northwest is around 5.5 cents per kilowatt hour. In contrast, the average price of electricity in China is about 10 cents per kilowatt hour. To those of you less versed in energy pricing and costs, this may not seem like much but for large corporations this difference can amount to over 50 million dollars in electricity expenses per year. Wouldn’t you rather be on the cheaper end as a manufacturer and consumer?
That is an example of electricity production subsidies; it is also important to think about gas subsidies such as those for our automobiles. If you look at Europe and examine their fuel prices, you’ll see that while we moan and groan over $3/gal for regular gasoline this price is unheard of in Europe even though their costs to transport the fuel from the Middle East are much less. In England for example, gas is roughly $10/gal. Not only is cheap gas good for consumers, but it also allows our country to transport materials and products much cheaper than you can in many other nations across the globe.
Back to the blog authors main point that eliminating subsidies would help out the renewable energy industry, that is just not the case. If we were to eliminate subsidies, energy costs throughout the nation would soar, profits would sharply decline, and all the money that is being put into research and development with the intent of increasing the viability of new energy would be gone. Subsequently, our country would become even more dependent on dirty, foreign energy.
So what’s the solution? Well, congress is almost there. All they need to do now is show some stability in their decisions, making long-term commitments to a sustainable energy future. If they can do this, more companies will transplant their facilities here, where they can capitalize on growing demand and low energy prices.
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