What if the US gave solar the same subsidies as coal?

Today's post tries to quantify US subsidies for coal power.

This blog is basically a response to an eponymous 1BOG advertisement, which is so pathetic that I will not mention it again. Except to say that I will use the same source for US fossil fuel subsidies (the "$72 billion" figure), a dubious study by the "Environmental Law Institute" (ELI).

[ELI] Energy Subsidies Favor Fossil Fuels Over Renewables

I don't actually agree with much of this study, I think it is dishonest (for instance classifying oil company's benefits from the Foreign Tax Credit as a "fossil fuel subsidy", when it applies to all international companies), and needless to say heavily biased. But I'll use its results anyway.

Let's begin. The ELI figure is $72 billion in US fossil fuel subsidies over 2002-2008, an average of $10 billion per year in that period.

First thing to note is that almost none ELI's alleged subsidies deal with coal electricity (and with those that do the link is very dubious -- but I won't challenge this). Going through every item in their report, an upper bound of $9,961 million of it can be linked to coal electricity at all -- the rest being unambiguously oil/gas or some synthetic transport fuel.

• The largest single item I've included is the "Low Income Housing Energy Assistance Program" (LIHEAP), at $6,358 million. Because there is no breakdown, I've attributed the entirety of it to coal electricity to be generous (I would assume it's less than half). Personally I think it's ridiculous to classify welfare to the needy as a "subsidy to fossil fuels", but it's in my source so I'll stick to it.
• Next is a coal-injury subsidy, the "Black Lung Disability Trust Fund" ($1,035 million) and tax exemptions on its payments ($438 million, "Exclusion of Benefit Payments to Disabled Miners"). This is disability with should be paid by the liable coal companies; the trust fund shortfall is paid by taxpayers and therefore a subsidy.
• Then there's "Characterizing Coal Royalty Payments as Capital Gains" ($986 million).
• Small-ticket items make up the balance ($1,144 million).

In all, $9,961 million or less for coal subsidies over 2002-2008, or an average $1,423 million per year. For comparison, the EIA statistics account $854 million in "coal subsidies... to electricity generation" in 2007. (The table at the bottom).

To clarify the things that I did not count as coal-electricity subsidies include:

• The entirety of the Foreign Tax Credit ($15,300), because US coal production is almost purely domestic (c.f. EIA data, production vs. imports). I assert almost all of fossil-fuel FTC benefits go to petroleum.
• "Credit for Production of Nonconventional Fuels" ($14,097), because it is for transportation fuel, not electricity.

So I say, solar advocates: you want the same solar electricity subsidies as US coal gets? Um, okay, $1.4 billion a year it is then...

To compare with German solar power. The current subsidy for home installations is 0.3303 €/kWh (USD 46 c/kWh). With the same $1.4B/yr subsidies as coal, that could support... 353 MWe of average generation. (About 1.4-3.5 GWe of capacity, depending on location). Less than 1/1,000th of US electricity.

Not that by "same subsidies" we're using absolute amounts -- $1.4 billion for coal, $1.4 billion for solar. In the US coal generates almost 2,000x more electricity than solar (2010 YTD). In fact the coal subsidy averages out to less than 0.07 cents/kWh. (The EIA figure here is 0.044 c/kWh for FY2007).

Rough accounting of US coal electricity subsidies 2002-2008, based on ELI study

Entry	ELI's fossil fuel amount (million USD)	Amount for coal electricity
Tax Expenditures and Other Foregone Revenues
Foreign Tax Credit	$15,300	$0
Credit for Production of Nonconventional Fuels	$14,097	$0
Oil and Gas Exploration & Development Expensing	$7,100	$0
Oil and Gas Excess Percentage over Cost Depletion	$5,441	$0
Credit for Enhanced Oil Recovery Costs	$1,575	$0
Characterizing Coal Royalty Payments as Capital Gains	$986	$986
Exclusion of Benefit Payments to Disabled Miners	$438	$438
Reduced Government Take from Federal Oil and Gas Leasing	$7,049	$0
(remaining small items)	$2,468	$1,144
Grants and Other Direct Payments
Low Income Home Energy Assistance Program	$6,358	$6,358
Strategic Petroleum Reserve	$6,183	$0
Black Lung Disability Trust Fund	$1,035	$1,035
Highway Trust Fund	$1,035	$0
(remaining small items)	$78	$0
Total	$68,608	$9,961

(Yes, there is a $3.4 billion discrepancy between mine and ELI's total sum ($68.6 vs. $72 billion). Where is it? (I don't know))

How to spin a transmission line

(Update: check out Rod Adams' take on this).

The cynical scam of the day is:

[Google] The wind cries transmission

[New York Times] Offshore Wind Power Line Wins Praise, and Backing

In a stunning victory for Green Utopia, the market today cast a decisive vote of confidence in wind power. Google, partnering with a Wall Street investment firm, invested $5 billion in an "Offshore Wind Power Line". That is, a $5 billion underwater transmission line which could potentially carry wind power. Although, as it happens, there are 0 offshore wind farms in the area.

By putting strong, secure transmission in place, the project removes a major barrier to scaling up offshore wind, an industry that despite its potential, only had its first federal lease signed last week and still has no operating projects in the U.S.

Enormous, risky gamble?

No. The ulterior motive is briefly alluded to in the Times' paragraph #13:

Yet even before any wind farms were built, the cable would channel existing supplies of electricity from southern Virginia, where it is cheap, to northern New Jersey, where it is costly, bypassing one of the most congested parts of the North American electric grid while lowering energy costs for northern customers.

An absolutely brilliant way to push a profitable transmission project through: spin it as a "wind power project". You don't need any actual wind farms, or any contracts for future wind farms, just the mere possibility of wind power being sent on these lines will win you fawning approval on the front page of the New York Times.

Incidentally here is that arbitrage quantified, the electricity price difference between the industry-friendly red state and New Jersey:

	Industrial	Commercial	Residential
New Jersey	12.72 c/kWh	15.20 c/kWh	16.86 c/kWh
Virginia	6.41 c/kWh	7.63 c/kWh	10.77 c/kWh

[EIA] Retail electricity prices by sector and state, June 2010

Yes, a very profitable transmission line it will be! And look who's just gobbling this stuff up:

Environmentalists who have been briefed on the plan were enthusiastic. Melinda Pierce, the deputy director for national campaigns at the Sierra Club, said she had campaigned against proposed transmission lines that would carry coal-fired energy around the country, but would favor this one, with its promise of tapping the potential of offshore wind.

(Virginia electricity is 51% coal, 39% nuclear. Fools!)

A few more scattered observations.

The transmission cost estimate is $5 billion for 6 GW capacity, 350 miles length. It will be built by 2021 "at earliest", 11 or more years in the future. I doubt the $5B figure includes financing costs over that time period.

Here's a few offshore wind purchase agreements in the region, for perspective:

Bluewater Wind	Delaware	13.9 c/kWh + 2.5%/year escalation	source
Cape Wind	Massachusetts	18.7 c/kWh + 3.5%/year escalation	source
Deepwater Wind	Rhode Island	24.4 c/kWh + 3.5%/year escalation	source

(The last one has a funny story: the Rhode Island Public Utilities Commission originally rejected the 24.4 c/kWh contract, state law requiring them to protect consumers from "commercially unreasonable" costs. So the state legislature changed the law!)

(Note these are wholesale purchase costs, not retail costs to end users like the other table.)

The NYT articles quotes some interesting people defending this project. For one, Jon Wellinghoff, the lawyer in charge of FERC (seriously) who thinks baseload electricity is unnecessary (seriously).

Even more curiously, it quotes

By the time the Interior Department could issue permits for such a line, for example, the federal subsidy program for wind will have expired in 2012, said Willett M. Kempton, a professor at the School of Marine Science and Policy at the University of Delaware and the author of several papers on offshore wind.

...

Mr. Kempton of the University of Delaware and Mr. Wellinghoff of the Federal Energy Regulatory Commission said the backbone would offer another plus: reducing one of wind power’s big problems, variability of output. “Along the U.S. Atlantic seaboard, we tend to have storm tracks that move along the coast and somewhat offshore,” Mr. Kempton said.

If storm winds were blowing on Friday off Virginia, they might be off Delaware by Saturday and off New Jersey by Sunday, he noted. Yet the long spine would ensure that the amount of energy coming ashore held roughly constant.

This is interesting for many reasons. For one because this quoted person recently accepted $150,000 from Google. For another because he chairs a committee in the AWEA, the US wind industry lobby.

But what's most interesting is his flat out lies about his own research. He asserts an integrated wind output that is "roughly constant":

If storm winds were blowing on Friday off Virginia, they might be off Delaware by Saturday and off New Jersey by Sunday, he noted. Yet the long spine would ensure that the amount of energy coming ashore held roughly constant.

I invite you to look at his own data -- his simulation of an integrated offshore wind grid on the entire Atlantic, Key West to Maine -- and decide for yourself whether its output looks "roughly constant".

[PNAS] Electric power from offshore wind via synoptic-scale interconnection

Kempton et. al.

(The bottom row is the sum of the outputs of the individual sites). Or for that that matter, whether it's disturbing that the entire 3,000-mile Atlantic coast integrated together is so unreliable that you get a whole week operating at 5% capacity.

I'll have more to say about this particular wind apologism in the near future.

Beware of sand

Spotted in that British tabloid, the BBC.

[BBC] Hungarian chemical sludge spill reaches Danube

For those curious, there isn't a significant amount of real heavy metals either:

The Hungarian Academy of Science said sludge samples taken two days ago showed that the muck's heavy metal concentrations do "not come close" to levels considered dangerous to the environment. But the academy said Thursday it still considered the sludge dangerous — apparently due to its caustic characteristics.

[AP] Hungary: Toxic red sludge has reached the Danube

The only hazard is the extreme alkalinity which makes the sludge corrosive. Note the CaO and Na2O content; both decompose to extremely basic hydroxides, Ca(OH)2 and NaOH, when exposed to water. Apparently a deadly sea of lye sweeping away villages isn't newsworthy enough for BBC readers without some ludicrous cancer angle being invented.