Thursday, October 1, 2009, 04:14 PM
Posted by Administrator
It has been brought to my attention that certain renewable energy sources do not pay for themselves. I've been told there is no real return on investment - or is there? In my mind, a product or resource that I have come to depend on and refuse to do without is something I pay for. If I have opportunity to attain the product or resource at a lesser cost, the difference is viewable as savings. When my "savings" cumulates to match the cost of the product or resource, I consider that as the point I experience the return on my investment and every time I use the item or resource going forward, I am ahead by the savings.Posted by Administrator
I am sure you have a similar interpretation. Here is the catch, the subject is solar power cells. The actual cost of a cell is so high that in its expected life, it is not likely to give you a return on investment. The catch is a financial boost known as a subsidy.
Subsidies are very real and we need to consider what we are comparing. Remember, we are comparing the old product or resource, fossil fuel, to a new one, solar. We can not compare a new product or resource without subsidy to an established one that is heavily subsidized. This is a comparison process, we need a common denominator, cost to cost, without subsidy in both cases.
The following information may come as a surprise to some people, but a large amount of our fossil fuels are subsidized. What would happen to the return on investment comparison if the subsidy shifted or went away?
A new study from the Environmental Law Institute in partnership with the Woodrow Wilson International Center for Scholars titled "Estimating U.S. Government Subsidies to Energy Sources: 2002-2008," sheds light on U.S. energy subsidies.
The study finds that fossil fuels received almost two-and-a-half times more subsidies over the 7 year period than renewables: $72 billion for fossil fuels compared to $29 billion for renewables.
Of equal concern is that 58% of renewables subsidies ($16.8 billion) went towards corn-based ethanol, a fuel that's carbon credentials are in question and has been linked to increasing world food prices.
Not only do fossil fuels get more subsidies, they also get better subsidies. Fossil fuel subsidies are primarily permanent provisions in the U.S. tax codes. Renewable subsidies, on the other hand, are usually tied in with energy bills and come with an expiration date.
This makes it harder for renewable industry firms to plan long-term, while oil and coal companies can be confident that their financial statements will be padded today, tomorrow, and in perpetuity.
As a population we need to effect legislation, the fossil fuels can not continue to obtain these subsidies. With climate change finally becoming common knowledge I do not think it will take long before these fossil fuel subsidies are challenged.
We need to think long term and wheather or not you feel or believe there is a return on investment with solar, there is a grand return for the environment we protect. Renewable energy sources need the support that fossil fuels continue to claim.
I know I have not answered the question in the title, it is well beyond a simple blog article. Hopefully what I have done is raise your awareness.
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