Energy Minister Angus Taylor noted that the Commonwealth budget added $1.3 billion to help unprofitable renewables, bringing total support to $22 billion by 2030. direct budget support is complemented by regulatory subsidies that force consumers to pay for otherwise unsustainable wind and solar energy. as well as the networks that need to be built to bring their energy to market.
Green energy enthusiasts and vested interests fraudulently claim that wind and solar are cheaper than electricity generated from coal. Some are also concocting data purporting to prove that fossil fuels are hugely subsidized.
One such compilation is published by the Australia Institute which claims $11.6 billion in grants go to Australia’s fossil industry. Some $8 billion of that is the Fuel Tax Credits Scheme, diesel fuel reimbursement for off-road vehicle use.
This can in no way be considered as a subsidy to the oil industry. The rebate is simply an acknowledgment that fuel excise duties in Australia and around the world were introduced as a means of paying for roads by charging users rather than the general public; agricultural, mining and other vehicles do not use public roads and taxing their fuel would violate the cardinal rule of taxation to avoid taxing production inputs.
As the OECD points out that “most OECD countries have excise duty exemptions for fossil fuels used in the production process in coal mining, oil extraction, refineries, etc.” This is true of the we, Japan, Israeland others.
In addition to the diesel fuel rebate, the Australia Institute includes in its compilation of bogus subsidies, the Grid Reliability Fund to support energy security, the Carbon Capture Use and Storage Development Fund, payments to refineries to increase liquid fuel inventories and up to $2 billion for payment for fuel security services. It even includes $79 million from the Victorian government used to support a carbon capture and storage project and a lignite-to-hydrogen conversion project.
The fact is that the production and use of fossil fuels in Australia is heavily taxed, their production is hampered by punitive regulatory regimes, and massive subsidies on renewables are destroying their market competitiveness. Government documents these days avoid identifying and publishing the full extent of renewable energy subsidies. But, in an undisputed estimate, I put them at $7 billion a year for 2019.
Although Australia continues to tax commercial energy sources and subsidize unreliable renewables, the war in Ukraine has sparked a new political agenda that promotes renewable energy supposedly to prevent climate change.
Some politicians, like the German government Rainbow Coalition, see the dependence on Russian energy that the war exposed as justification for stepping up subsidies to rid the world of carbon emissions. They have learned nothing from the escalating electricity prices resulting from current renewable energy support policies. Ukraine President Zelensky shares their point of view but not to the point of stipulating that the equipment and energy used to help defend his nation must be carbon free!
The more sober recognize that the message of the war dictates a return to cheaper and more reliable sources of energy. The UK is making slow progress towards reclaiming national oil and gas resources. France has backtracked on its earlier plans to switch from nuclear to renewables. the EU he himself has now declared gas a “sustainable” fuel and sanctioned temporary increases in the use of coal. Even the Biden administration is backtracking on its earlier hostility to oil and gas drilling.
Hostility to conventional and nuclear fuels from governments, activists and the investment community has led to a lack of investment and the closure of mines and power plants. The result is an energy shortage. These have been compounded by actions against Russia, a nation that has not shared the dream of a carbon-free future. The resulting shortage of usable energy has caused prices to spike.
The analysts of thunder said energy estimate that this year, global energy costs will compromise 13% of global GDP. This compares to the traditional level of less than 4% and exceeds the level reached in 1980 at the height of the OPEC oil crisis. A new round of investment in reliable fuel sources is needed. But among the obstacles to this is the environmental, social and governance (ESG) ideology that targets coal, oil and gas and has infected the commercial finance industry and its regulators. The EU’s bizarre redefinition of gas as “sustainable” is designed to circumvent this.
Australia has perhaps been the most aggressive country in subsidizing renewables and disfavoring their more efficient alternatives. We have to backtrack.
Some are calling for an end to Australia’s unique embargo on nuclear power. Although the embargo needs to be lifted, realistically, given the quagmire of regulatory and political hurdles, it would take a decade before a factory was operational. And in any event, for Australia, coal and gas are almost certainly cheaper, reliable sources of energy.
As the most energy-endowed nation in the world, Australia could reclaim its position as the country with the cheapest gas and electricity in the world.
But that means navigating political and bureaucratic hurdles, complemented by the powerful vested interests of those who have invested in renewable energy on the basis of endless subsidies. These interests have the support of a coterie of strongly indoctrinated activists and have shown a willingness to mobilize considerable financial resources to support political outcomes that, despite the costs to the community at large, continue to bring them benefits.
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