Earth Track Subsidy Update - November 2009
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Earth Track Subsidy Update
November 2009
New Information on Environmentally-Harmful Subsidies and Subsidy Reform ___________________________________________________________________________________________________ |
| in this issue |
| Biofuels: Money for Nothing |
| Costing Subsidies to the Nuclear Fuel Chain |
| Up and Coming Subsidy Assessments |
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Dear Colleague, Earth Track is happy to announce the beta launch of its new website and blog.
We hope you'll take a look and share your thoughts and suggestions. If
your own work on environmentally harmful subsidies or related policies
is not yet in the resource database, you are now able add it yourself. Check back periodically for subsidy-related commentary. RSS feeds are also available. There are mixed trends at present in the subsidies arena. On the positive side, the G20 has made a clear statement on their intent to phase out subsidies to fossil fuels (see paragraphs 24-26). The logic is clear: it makes little sense to constrain global carbon emissions with one set of policies while subsidizing them with another. Yet the World Trade Organisation's Agreement on Subsidies and Countervailing Measures is a cautionary note that agreements without teeth do little to address the challenge of environmentally harmful subsidies, worth hundreds of billions of dollars per year globally. For more on the measurement challenges of tracking global subsidies, see Earth Track's recent white paper. While the direction of change internationally appears positive, the US Congress is in the midst of implementing some of the largest new energy subsidies in US history. From handing out free emissions credits like poker chips, to growing subsidization of carbon capture and sequestration, to creating an enormous federally-financed energy bank to fund new energy infrastructure allocated by political appointees, it is clear that much remains to be done. Sincerely,
Doug Koplow
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Biofuels: Money for Nothing
__________________________________________________________________  The
shine of biofuels as a leading green technology has long ago
tarnished. However, the fierce political battles over huge pots of
biofuel subsidy money continue. Earth Track joined up with Friends of
the Earth to analyze the size of subsidies under existing and proposed
US biofuel programs. The sums are staggering:
$400 billion between 2008 and 2022 with existing rules; much higher (in
excess of $1 trillion) should past proposals to boost consumption
mandates from 36 to 60 billion gallons per year be passed into law.
The subsidies escalate over the period with the mandates, reaching $60
billion per year in 2022. Roughly 40% of the cumulative total goes not
to "advanced" fuels, but is expected to support traditional corn-based
ethanol. What is particularly troubling is the lack of environmental controls on this expenditure. The analysis estimates 60% of the subsidies are through tax credits, policies that at present contain no environmental metrics at all. The remaining 40% of the subsidies come through market price support associated with mandates under the Renewable Fuel Standards (RFS). Though the RFS does contain some potential environmental constraints, the political pressure to weaken them appears to be bearing fruit through delays and expanded grandfathering. The industry is also pushing to be exempted entirely from a US cap-and-trade program. In the face of this political maneuvering for more money and less accountability, new work by Melillo et al., and Searchinger et al. are great reminders of how serious the global environmental implications will be for getting biofuel policy wrong. Earlier Earth Track work on biofuels subsidies is available here. See also many great country studies on biofuels supports completed by the Global Subsidies Initiative. |
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Costing the Nuclear Fuel Chain
__________________________________________________________________ The media has been full of articles on the critical role nuclear power must play in greenhouse gas abatement, with write-ups full of pundits expousing the low-carbon benefits of fission. Nor has the industry been shy about its ballooning wish list of public subs  idies.
What is missing from nearly all of these assessments is an evaluation
of the cost of carbon reductions through the nuclear fuel chain versus
options elsewhere in the economy. After all, with limited money and
limited response times, shouldn't society look to buy the lowest cost,
lowest risk abatement first? A great chart (page 3) by Mark Cooper of the Vermont Law School illustrates the history of nuclear cost escalation. It shows not only rising costs over time, but also how much lower estimates from industry promoters, as opposed to investors, tended to be. In a case study of a proposed new reactor at Calvert Cliffs in Maryland, Earth Track evaluated the many existing and new subsidies to the nuclear fuel chain. In total, the public investment in this facility approaches or exceeds the private investment, though with no share in venture profits should the plant turn out well. Although the nuclear fuel chain is low carbon, its full cost (private investment plus public subsidy) so high that many other abatement options can be attained more rapidly and at a lower cost. Earth Track was also privileged to contribute to The World Nuclear Industry Status Report 2009, prepared for the German Federal Ministry of Environment, Nature Conservation and Reactor Safety. |
Up and Coming: Nuclear Subsidies in Detail, Vetting EIA Subsidy Estimates, Tracking Fossil Fuel Subsidies Around the World__________________________________________________________________
A
number of publications are nearing release. If you wish to be notified
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