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Posts tagged “subsidies”

By Robert Rapier on Mar 25, 2010 with 103 responses

Bad Assumptions

As I have been traveling around New Zealand, I have had a lot of discussions about various renewable energy companies. Inevitably, there is some discussion as to why certain approaches have failed. Occasionally, companies failed simply because they were running a scam and lying about what they were doing. More common, however, are companies that failed due to bad assumptions on their part. Those discussions have led me to reflect on what some of the bad assumptions – or potentially bad assumptions – companies may be making that will result in failure of their business models. Of course I have to make assumptions as well, and I must constantly evaluate those assumptions in light of new evidence. I would say… Continue»

By Robert Rapier on Jan 4, 2010 with no responses

The Wheels Come Off the Biodiesel Wagon

Domestic Biodiesel Production Plummets One of my Top 10 Energy Stories of 2009 involved the actions taken by the EU against U.S. biodiesel producers. U.S. tax dollars had been generously subsidizing biodiesel that was being exported out of the U.S. European producers couldn’t compete against the subsidized imports, so the EU effectively cut off the imports by imposing five-year tariffs on U.S. biodiesel. This was a big blow to U.S. biodiesel producers, and was one of the factors leading to a disastrous 2009 for U.S. biodiesel production. How disastrous was 2009? Per the National Biodiesel Board (NBB), here are the statistics from the past 6 years of biodiesel production: 2004: 25 million gallons 2005: 75 million gallons 2006: 250 million… Continue»

By Robert Rapier on Sep 21, 2009 with no responses

About That $72 Billion Subsidy

I am going to be pretty busy for the next few days, and probably won’t be able to put anything new up until at least mid-week. Until then, over the past few days there have been a lot of headlines about a recently released study from the Environmental Law Institute. The study concluded that over the past seven years, fossil fuels have benefited from some $72 billion in subsidies. Their headline was innocent enough:U.S. Tax Breaks Subsidize Foreign Oil Production (Washington, DC) — The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production, according to research to be released on Friday by the Environmental Law Institute in partnership with the Woodrow Wilson International… Continue»

By Robert Rapier on Mar 23, 2009 with no responses

Tariff Turnabout

This is a timely story, coming on the heels of the previous story on the tariffs the U.S. applies to Brazilian ethanol: European tariffs stun U.S. biodiesel industry The U.S. biodiesel industry will suffer from new trade barriers that threaten to end its lucrative export business to Europe, and in Texas the measure could be devastating. Last week, the European Commission said U.S. biodiesel exporters will now have to pay additional anti-dumping tariffs of up to 29 percent, and anti-subsidy duties of up to 41 percent. The tariffs are temporary for the next six months, but the commission will decide by this summer whether to extend them for five years. The tariffs came after complaints last year that U.S. biodiesel… Continue»

By Robert Rapier on Aug 5, 2008 with no responses

Taxes versus Subsidies

The RAND Corporation, a nonprofit research organization, has just issued a report comparing the effectiveness of fossil-fuel taxes versus renewable energy subsidies for increasing the usage of renewable energy: Impacts on U.S. Energy Expenditures and Greenhouse-Gas Emissions of Increasing Renewable-Energy Use From their concluding remarks: Our analysis also indicated that increasing to 25 percent the share of renewables can significantly reduce CO2 emissions. However, the incremental increase in energy cost per unit of CO2 reduction varies widely depending on circumstances, reaching very high levels unless there is very substantial cost-reducing innovation in expanding renewables. Fossil-fuel prices that are higher than the baseline levels assumed in this analysis would induce greater use of renewable energy and thus reduce the incremental cost… Continue»

By Robert Rapier on Mar 10, 2008 with no responses

A Vicious Circle

What a vicious chain of events our politicians have set into motion. It just continues to worsen. It started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S. So, Step 1 is to propose a solution: 1. Subsidize ethanol production to encourage biofuels and enhance energy security. However, subsidies didn’t do the trick. It was still too expensive to produce ethanol. People still chose gasoline derived from hostile sources over more expensive ethanol. What we really needed was Step 2. 2. Let’s mandate ethanol usage. At the point that the subsidy turns into a mandate, things change. Now, the fuel doesn’t have to be… Continue»

By Robert Rapier on Mar 7, 2008 with 2 responses

Cellulosic Ethanol is Dead

Cellulosic Ethanol is Dead! Long Live Biomass Gasification! My thunder has been stolen. I have been kicking around a post in my head for the past couple of weeks. I just haven’t had time to get around to it, with the move and all. But this has been nagging away at me for a long time. My thinking goes something like this. Cellulosic ethanol, and by that I mean cellulosic ethanol in the traditional mold of what Iogen has been working on for years – will never be commercially viable. How can I be so sure? For one, I have covered the logistical challenges here and here. These are not going away, and are serious barriers to commercialization. In brief,… Continue»

By Robert Rapier on Apr 23, 2007 with no responses

Are Subsidies to Oil Companies Ever Justified?

Should We Ever Subsidize an Oil Company? “Of course not!” might be the immediate reaction of most people. But doesn’t it depend on the objectives you are trying to achieve or the behaviors you wish to influence? Are there no cases in which it would be warranted? What if the end result was a reduction in our fossil fuel consumption? I think most people would like to see us move away from fossil fuels. But fossil fuels are money-makers for the oil companies, and the cheapest option (strictly in terms of dollars at the pump) for consumers. So how do we wean off of fossil fuels? Reducing Fossil Fuel Usage There are really two options. By far the most efficient… Continue»

By Robert Rapier on Apr 18, 2007 with no responses

The Biodiesel Lobby Cries Foul

Let me be clear that I strongly support biodiesel. It has a better energy return than does corn ethanol, and diesel engines are far more efficient than gasoline engines. Each gallon of biodiesel displaces far more fossil fuel than a gallon of ethanol. Therefore, I am much more in favor of biodiesel production than I am of corn ethanol production. I am also not opposed to subsidies directed at giving alternative fuels a boost. (However, in order to avoid picking technology winners, I think a better system would be to boost carbon taxes on fossil fuels. That would mean all alternatives competed on equal footing). So, I was quite pleased to read the announcement yesterday of the collaboration between Tyson… Continue»