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Eight Energy Myths Explained

Gail Tverberg's picture
Researcher OurFiniteWorld.com

My background is as an actuary, making financial forecasts for the insurance industry. In 2015, I began investigating how the limits of a finite world might affect the financial system, oil...

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Republicans, Democrats, and environmentalists all have favorite energy myths. Even Peak Oil believers have favorite energy myths. The following are a few common mis-beliefs, coming from a variety of energy perspectives. I will start with a recent myth, and then discuss some longer-standing ones.

Myth 1. The fact that oil producers are talking about wanting to export crude oil means that the US has more than enough crude oil for its own needs.

The real story is that producers want to sell their crude oil at as high a price as possible. If they have a choice of refineries A, B, and C in this country to sell their crude oil to, the maximum amount they can receive for their oil is limited by the price the price these refineries are paying, less the cost of shipping the oil to these refineries.

If it suddenly becomes possible to sell crude oil to refineries elsewhere, the possibility arises that a higher price will be available in another country. Refineries are optimized for a particular type of crude. If, for example, refineries in Europe are short of light, sweet crude because such oil from Libya is mostly still unavailable, a European refinery might be willing to pay a higher price for crude oil from the Bakken (which also produces light sweet, crude) than a refinery in this country. Even with shipping costs, an oil producer might be able to make a bigger profit on its oil sold outside of the US than sold within the US.

The US consumed 18.9 million barrels a day of petroleum products during 2013. In order to meet its oil needs, the US imported 6.2 million barrels of oil a day in 2013 (netting exported oil products against imported crude oil). Thus, the US is, and will likely continue to be, a major oil crude oil importer.

If production and consumption remain at a constant level, adding crude oil exports would require adding crude oil imports as well. These crude oil imports might be of a different kind of oil than that that is exported–quite possibly sour, heavy crude instead of sweet, light crude. Or perhaps US refineries specializing in light, sweet crude will be forced to raise their purchase prices, to match world crude oil prices for that type of product.

The reason exports of crude oil make sense from an oil producer’s point of view is that they stand to make more money by exporting their crude to overseas refineries that will pay more. How this will work out in the end is unclear. If US refiners of light, sweet crude are forced to raise the prices they pay for oil, and the selling price of US oil products doesn’t rise to compensate, then more US refiners of light, sweet crude will go out of business, fixing a likely world oversupply of such refiners. Or perhaps prices of US finished products will rise, reflecting the fact that the US has to some extent in the past received a bargain (related to the gap between European Brent and US WTI oil prices), relative to world prices. In this case US consumers will end up paying more.

The one thing that is very clear is that the desire to ship crude oil abroad does not reflect too much total crude oil being produced in the United States. At most, what it means is an overabundance of refineries, worldwide, adapted to light, sweet crude. This happens because over the years, the world’s oil mix has been generally changing to heavier, sourer types of oil. Perhaps if there is more oil from shale formations, the mix will start to change back again. This is a very big “if,” however. The media tend to overplay the possibilities of such extraction as well.

Myth 2. The economy doesn’t really need very much energy.

 

We humans need food of the right type, to provide us with the energy we need to carry out our activities. The economy is very similar: it needs energy of the right types to carry out its activities.

One essential activity of the economy is growing and processing food. In developing countries in warm parts of the world, food production, storage, transport, and preparation accounts for the vast majority of economic activity (Pimental and Pimental, 2007). In traditional societies, much of the energy comes from human and animal labor and burning biomass.

If a developing country substitutes modern fuels for traditional energy sources in food production and preparation, the whole nature of the economy changes. We can see this starting to happen on a world-wide basis in the early 1800s, as energy other than biomass use ramped up.

Figure 1. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

Figure 1. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

The Industrial Revolution began in the late 1700s in Britain. It was enabled by coal usage, which made it possible to make metals, glass, and cement in much greater quantities than in the past. Without coal, deforestation had become a problem, especially near cold urban areas, such as London. With coal, it became possible to use industrial processes that required heat without the problem of deforestation. Processes using high levels of heat also became cheaper, because it was no longer necessary to cut down trees, make charcoal from the wood, and transport the charcoal long distances (because near-by wood had already been depleted).

The availability of coal allowed the use of new technology to be ramped up. For example, according to Wikipedia, the first steam engine was patented in 1608, and the first commercial steam engine was patented in 1712. In 1781, James Watt invented an improved version of the steam engine. But to actually implement the steam engine widely using metal trains running on metal tracks, coal was needed to make relatively inexpensive metal in quantity.

Concrete and metal could be used to make modern hydroelectric power plants, allowing electricity to be made in quantity. Devices such as light bulbs (using glass and metal) could be made in quantity, as well as wires used for transmitting electricity, allowing a longer work-day.

The use of coal also led to agriculture changes as well, cutting back on the need for farmers and ranchers. New devices such as steel plows and reapers and hay rakes were manufactured, which could be pulled by horses, transferring work from humans to animals. Barbed-wire fence allowed the western part of the US to become cropland, instead one large unfenced range. With fewer people needed in agriculture, more people became available to work in cities in factories.

Our economy is now very different from what it was back about 1820, because of increased energy use. We have large cities, with food and raw materials transported from a distance to population centers. Water and sewer treatments greatly reduce the risk of disease transmission of people living in such close proximity. Vehicles powered by oil or electricity eliminate the mess of animal-powered transport. Many more roads can be paved.

If we were to try to leave today’s high-energy system and go back to a system that uses biofuels (or only biofuels plus some additional devices that can be made with biofuels), it would require huge changes.

Myth 3. We can easily transition to renewables.

On Figure 1, above, the only renewables are hydroelectric and biofuels. While energy supply has risen rapidly, population has risen rapidly as well.

Figure 2. World Population, based on Angus Maddison estimates, interpolated where necessary.

Figure 2. World Population, based on Angus Maddison estimates, interpolated where necessary.

When we look at energy use on a per capita basis, the result is as shown in Figure 3, below.

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

The energy consumption level in 1820 would be at a basic level–only enough to grow and process food, heat homes, make clothing, and provide for some very basic industries. Based on Figure 3, even this required a little over 20 gigajoules of energy per capita. If we add together per capita biofuels and hydroelectric on Figure 3, they would come out to only about 11 gigajoules of energy per capita. To get to the 1820  level of per capita energy consumption, we would either need to add something else, such as coal, or wait a very, very long time until (perhaps) renewables including hydroelectric could be ramped up enough.

If we want to talk about renewables that can be made without fossil fuels, the amount would be smaller yet. As noted previously, modern hydroelectric power is enabled by coal, so we would need to exclude this. We would also need to exclude modern biofuels, such as ethanol made from corn and biodiesel made from rape seed, because they are greatly enabled by today’s farming and transportation equipment and indirectly by our ability to make metal in quantity.

I have included wind and solar in the “Biofuels” category for convenience. They are so small in quantity that they wouldn’t be visible as a separate categories, wind amounting to only 1.0% of world energy supply in 2012, and solar amounting to 0.2%, according to BP data. We would need to exclude them as well, because they too require fossil fuels to be produced and transported.

In total, the biofuels category without all of these modern additions might be close to the amount available in 1820. Population now is roughly seven times as large, suggesting only one-seventh as much energy per capita. Of course, in 1820 the amount of wood used led  to significant deforestation, so even this level of biofuel use was not ideal. And there would be the additional detail of transporting wood to markets. Back in 1820, we had horses for transport, but we would not have enough horses for this purpose today.

Myth 4. Population isn’t related to energy availability.

If we compare Figures 2 and 3, we see that the surge in population that took place immediately after World War II coincided with the period that per-capita energy use was ramping up rapidly. The increased affluence of the 1950s (fueled by low oil prices and increased ability to buy goods using oil) allowed parents to have more children. Better sanitation and innovations such as antibiotics (made possible by fossil fuels) also allowed more of these children to live to maturity.

Furthermore, the Green Revolution which took place during this time period is credited with saving over a billion people from starvation. It ramped up the use of irrigation, synthetic fertilizers and pesticides, hybrid seed, and the development of high yield grains. All of these techniques were enabled by availability of oil. Greater use of agricultural equipment, allowing seeds to be sowed closer together, also helped raise production. By this time, electricity reached farming communities, allowing use of equipment such as milking machines.

If we take a longer view of the situation, we find that a “bend” in the world population occurred about the time of Industrial Revolution, and the ramp up of coal use (Figure 4). Increased farming equipment made with metals increased food output, allowing greater world population.

Figure 4. World population based on data from

Figure 4. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978
and Wikipedia-World Population.

Furthermore, when we look at countries that have seen large drops in energy consumption, we tend to see population declines. For example, following the collapse of the Soviet Union, there were drops in energy consumption in a number of countries whose energy was affected (Figure 5).

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Myth 5. It is easy to substitute one type of energy for another.

Any changeover from one type of energy to another is likely to be slow and expensive, if it can be accomplished at all.

One major issue is the fact that different types of energy have very different uses. When oil production was ramped up, during and following World War II, it added new capabilities, compared to coal. With only coal (and hydroelectric, enabled by coal), we could have battery-powered cars, with limited range. Or ethanol-powered cars, but ethanol required a huge amount of land to grow the necessary crops. We could have trains, but these didn’t go from door to door. With the availability of oil, we were able to have personal transportation vehicles that went from door to door, and trucks that delivered goods from where they were produced to the consumer, or to any other desired location.

We were also able to build airplanes. With airplanes, we were able to win World War II. Airplanes also made international business feasible on much greater scale, because it became possible for managers to visit operations abroad in a relatively short time-frame, and because it was possible to bring workers from one country to another for training, if needed. Without air transport, it is doubtful that the current number of internationally integrated businesses could be maintained.

The passage of time does not change the inherent differences between different types of fuels. Oil is still the fuel of preference for long-distance travel, because (a) it is energy dense so it fits in a relatively small tank, (b) it is a liquid, so it is easy to dispense at refueling stations, and (c) we are now set up for liquid fuel use, with a huge number of cars and trucks on the road which use oil and refueling stations to serve these vehicles. Also, oil works much better than electricity for air transport.

Changing to electricity for transportation is likely to be a slow and expensive process. One important point is that the cost of electric vehicles needs to be brought down to where they are affordable for buyers, if we do not want the changeover to have a hugely adverse effect on the economy. This is the case because salaries are not going to rise to pay for high-priced cars, and the government cannot afford large subsidies for everyone. Another issue is that the range of electric vehicles needs to be increased, if vehicle owners are to be able to continue to use their vehicles for long-distance driving.

No matter what type of changeover is made, the changeover needs to implemented slowly, over a period of 25 years or more, so that buyers do not lose the trade in value of their oil-powered vehicles. If the changeover is done too quickly, citizens will lose their trade in value of their oil-powered cars, and because of this, will not be able to afford the new vehicles.

If a changeover to electric transportation vehicles is to be made, many vehicles other than cars will need to be made electric, as well. These would include long haul trucks, busses, airplanes, construction equipment, and agricultural equipment, all of which would need to be made electric. Costs would need to be brought down, and necessary refueling equipment would need to be installed, further adding to the slowness of the changeover process.

Another issue is that even apart from energy uses, oil is used in many applications as a raw material. For example, it is used in making herbicides and pesticides, asphalt roads and asphalt shingles for roofs, medicines, cosmetics, building materials, dyes, and flavoring. There is no possibility that electricity could be adapted to these uses. Coal could perhaps be adapted for these uses, because it is also a fossil fuel.

Myth 6. Oil will “run out” because it is limited in supply and non-renewable.

This myth is actually closer to the truth than the other myths. The situation is a little different from “running out,” however. The real situation is that oil limits are likely to disrupt the economy in various ways. This economic disruption is likely to be what leads to an  abrupt drop in oil supply. One likely possibility is that a lack of debt availability and low wages will keep oil prices from rising to the level that oil producers need for extraction. Under this scenario, oil producers will see little point in investing in new production. There is evidence that this scenario is already starting to happen.

There is another version of this myth that is even more incorrect. According to this myth, the situation with oil supply (and other types of fossil fuel supply) is as follows:

Myth 7. Oil supply (and the supply of other fossil fuels) will start depleting when the supply is 50% exhausted. We can therefore expect a long, slow decline in fossil fuel use.

This myth is a favorite of peak oil believers. Indirectly, similar beliefs underly climate change models as well. It is based on what I believe is an incorrect reading of the writings of M. King Hubbert. Hubbert is a geologist and physicist who foretold a decline of US oil production, and eventually world production, in various documents, including Nuclear Energy and the Fossil Fuels, published in 1956. Hubbert observed that under certain circumstances, the production of various fossil fuels tends to follow a rather symmetric curve.

Figure 7. M. King Hubbert's 1956 image of expected world crude oil production, assuming ultimate recoverable oil of 1,250 billion barrels.

Figure 7. M. King Hubbert’s 1956 image of expected world crude oil production, assuming ultimate recoverable oil of 1,250 billion barrels.

A major reason that this type of forecast is wrong is because it is based on a scenario in which some other type of energy supply was able to be ramped up, before oil supply started to decline.

Figure 8. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 8. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

With this ramp up in energy supply, the economy can continue as in the past without a major financial problem arising relating to the reduced oil supply. Without a ramp up in energy supply of some other type, there would be a problem with too high a population in relationship to the declining energy supply. Per-capita energy supply would drop rapidly, making it increasingly difficult to produce enough goods and services. In particular, maintaining government services is likely to become a problem. Needed taxes are likely to rise too high relative to what citizens can afford, leading to major problems, even collapse, based on the research of Turchin and Nefedov (2009).

Myth 8. Renewable energy is available in essentially unlimited supply.

The issue with all types of energy supply, from fossil fuels, to nuclear (based on uranium), to geothermal, to hydroelectric, to wind and solar, is diminishing returns. At some point, the cost of producing energy becomes less efficient, and because of this, the cost of production begins to rise. It is the fact wages do not rise to compensate for these higher costs and that cheaper substitutes do not become available that causes financial problems for the economic system.

In the case of oil, rising cost of extraction comes because the cheap-to-extract oil is extracted first, leaving only the expensive-to-extract oil. This is the problem we recently have been experiencing. Similar problems arise with natural gas and coal, but the sharp upturn in costs may come later because they are available in somewhat greater supply relative to demand.

Uranium and other metals experience the same problem with diminishing returns, as the cheapest to extract portions of these minerals is extracted first, and we must eventually move on to lower-grade ores.

Part of the problem with so-called renewables is that they are made of minerals, and these minerals are subject to the same depletion issues as other minerals. This may not be a problem if the minerals are very abundant, such as iron or aluminum. But if minerals are lesser supply, such as rare earth minerals and lithium, depletion may lead to rising costs of extraction, and ultimately higher costs of devices using the minerals.

Another issue is choice of sites. When hydroelectric plants are installed, the best locations tend to be chosen first. Gradually, less desirable locations are added. The same holds for wind turbines. Offshore wind turbines tend to be more expensive than onshore turbines. If abundant onshore locations, close to population centers, had been available for recent European construction, it seems likely that these would have been used instead of offshore turbines.

When it comes to wood, overuse and deforestation has been a constant problem throughout the ages. As population rises, and other energy resources become less available, the situation is likely to become even worse.

Finally, renewables, even if they use less oil, still tend to be dependent on oil. Oil is  important for operating mining equipment and for transporting devices from the location where they are made to the location where they are to be put in service. Helicopters (requiring oil) are used in maintenance of wind turbines, especially off shore, and in maintenance of electric transmission lines. Even if repairs can be made with trucks, operation of these trucks still generally requires oil. Maintenance of roads also requires oil. Even transporting wood to market requires oil.

If there is a true shortage of oil, there will be a huge drop-off in the production of renewables, and maintenance of existing renewables will become more difficult. Solar panels that are used apart from the electric grid may be long-lasting, but batteries, inverters, long distance electric transmission lines, and many other things we now take for granted are likely to disappear.

Thus, renewables are not available in unlimited supply. If oil supply is severely constrained, we may even discover that many existing renewables are not even last very long lasting.

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Eric Lane's picture
Eric Lane on May 6, 2014

Paul, I’m not locking anything in.  What I am saying is that we move forward with solar and use Natural Gas when necessary.  I would argue that in a very short period of time, if we truly turned to solar as our base for energy, storage as a problem would disappear rather quickly.  It’s quite obvious that for you and Nate nuclear is the only way foward.  For me it’s solar.  To equate a tsunami to the nuclear debacle that has been created is pure propaganda.  Sure the tsunami killed 20,000 people right away.  But, the tsunami has been gone for three years and people who lived near Fukushima, over 250,000 have been displaced.  Long term consequences are unknown.  The real issue is that Fukushima-Daiichi, like most nuclear power plants were buildt to withstand natural disasters.  Fukushima did not.  And we are living with its consequences.  It amazes me how flipantly you dismiss this on going tragedy.  I don’t.  To me it is a red warning sign and we should heed it.  Especially since known alternatives that can only be improved exist.  I prefer solar, especially thermal to wind farms.  As I’ve said from the start, nuclear has so many problems from uranium mining to uranium dependency on third world countries to the waste stream that has to be protected for thousands of years to the specter of Black Swans that will occur no matter how much you promise they won’t.  Why on earth would we want to become dependent on such a lethal energy source? 

Nathan Wilson's picture
Nathan Wilson on May 7, 2014

“…Black Swans that will occur no matter how much you promise they won’t.

I never said nuclear accidents won’t happen.  I said you are wrong about their seriousness, in particular nuclear accidents will do less harm than continuing to burn fossil fuel (whether primary, or as backup for variable renewables).  The only support for your position which you provide comes from the fossil fuel industry’s “think tanks” and shills. 

As an individual, you of course are free to have faith in the advancement of solar, but when you claim or hint that your beliefs are based on prudent engineering judgement, or a scientific understanding of the world, then you should expect to be refuted.  With today’s technology and economics, solar when built in non-desert climates locks-in fossil fuel use, and is thus a much risky path for the environment than nuclear.

This presentation might help clarify why fossil fuels become more and more important to the grid the more solar and wind get added (and why adding more wind and solar becomes less economical the more you have).

And by the way, I don’t claim that renewables can’t be used in a sustainable energy portfolio, it’s just that much of their output would need to go directly to syn-fuel, and only the regions with the very best resources could compete economically (other regions would either go nuclear or stay with mostly fossil fuel).

Ps. I’m having a hard time understanding why you think an evacuation is more important than 20,000 fatalities.  I’m also quite suspicious than several times more people were evacuated than was medically justified.

Robert Bernal's picture
Robert Bernal on May 7, 2014

A mere 30% or 50% reduction in coal and NG by developed countries would be eclipsed by even more usage by developing countries (should anti-nuclear fear mongers get their way).

Solar energy is the beginning of clean energy awareness. Let it not become a stumbling block towards the overall goal of electrons powering the future devoid of excess CO2.

There is really no reason other than political and mass division to wait until the solar and wind experiments fail miserably at providing even a 10% cut in present FF usage, to mass produce any of the many varieties of molten salt reactors in a factory setting, in 1/10th gigaWatt capacities, shippable by truck to all parts of the world which will, and to the lessor extent, already use coal. That is, modular MSR (or better) must replace most all coal plants (as the drop in replacement) in the future.

There is no reason (other than political and mass division) to not geologically store waste products in deep holes as well, because natural (and toxic) hydrocarbons resources prove that ground water does not become contaminated (in such areas of geologic strata).

There is also no reason other than fear of public misperception of such priorities to not build solar PV as long as the prefered backup comes from hydro, wind and, of course, nuclear.

I agree with you about using NG in the transition to full scale (really cheap) energy storage, however, it is (much) better to use it in the same (high temp) nuclear powered turbines, because far less of it would be needed and burned far more efficiently (for load following).

Joris van Dorp's picture
Joris van Dorp on May 7, 2014

There is really no reason other than political and mass division to wait until the solar and wind experiments fail miserably at providing even a 10% cut in present FF usage, to mass produce any of the many varieties of molten salt reactors in a factory setting, in 1/10th gigaWatt capacities, shippable by truck to all parts of the world which will, and to the lessor extent, already use coal.”

Excellent point. However, waiting for solar and wind to fail is exactly what proponents of solar and wind intend to do. And when they fail, these proponents will lay the blame at the feet of everybody except themselves.

A few days ago, I had the pleasure of talking to Spanish engineering consultants lamenting the demise of support for solar energy in their country. They were convinced that Spanish politicians in cahoots with the Spanish utilities were behind the ‘blocking’ of solar power in Spain. I found I was unable to convince these people that the real reason for the demise of solar in Spain was that Spain’s government is all but bankrupt, so there is no more money to keep subsidizing the solar build-out. The Spanish government has obviously made a deal with the utilities about removing the (direct and indirect) stimulus for new solar power, in order to prevent the utilities from going bankrupt and causing blackouts. And so it will go in every country that seeks to ‘go solar’ or ‘go wind’ and runs into financial difficulties along the way.

During the conversation, I was struck by the apparent inability of even these rather educated, technically trained people to approach the question of solar power from the viewpoint of economics, once they are (as in this case) used to viewing the ‘rise of solar power’ as an unequivocal common-good and economic blessing that will solve all energy and climate problems. When this ideology turned out to fail in reality, they naturally moved to believing in comspiracy rather than accept that solar power – even in sunny Spain – is a blatant economic no-go without permanent, high subsidies that can only exist in a rich economy with money to spare (such as Germany).

Eric Lane's picture
Eric Lane on May 7, 2014

Joris, and you don’t think nuclear is subsidized? 

Robert Bernal's picture
Robert Bernal on May 7, 2014

It should be! Let’s stop subsidizing FF’s and let’s reduce subsidies for wind and solar (substantually, so manufacturers would lower their prices) and put that subsidy where it counts… towards small modular molten salt (or better) reactor development. I believe it is really hard to get the giant nuclear plants online because they take so long to build. We need a production tax credit for such meltdown proof nuclear made in a factory setting because we need to develop clean baseload electricity needed to charge electric cars at night or to make hydrogen based fuels from water and nitrogen or (CO2 extracted from the ocean) from its high process heat.

Eric Lane's picture
Eric Lane on May 7, 2014

I agree with stopping to subsidize FF’s.  I don’t agree with then subsidizing nuclear.  I am always shocked at this site how little respect is really paid to engeneering ingenuity that exists here in the U.S.  Why not turn the energy and subsidizes to solar?  Oh, I know.  There is too much money in nuclear and centralized energy power.  Sorry, I’m not with that agenda.

Joris van Dorp's picture
Joris van Dorp on May 8, 2014

Nuclear is not subsidised. There are subsidies for nuclear power and taxes on nuclear power. The taxes outweigh the subsidies. I know that this situation is poorly understood by most people, but I think the following news-item gives a striking glimps in the extreme hypocricy and misinformation typically surrounding nuclear energy economics. It is no wonder that the general public doesn’t understand energy economics and is therefore swayed easily by the deluge of propaganda which is washing over it continuously. People who are seriously interested in energy and our common future do well try to swim upwards and out of the cess-pit of misinformation that makes normal discussion about energy issues all but impossible today.

Especially in Germany, the tax/subsidy situation with nuclear power is a complete farce, as illustrated in this short news item, which seems to have gone totally unnoticed by the energy community, especially in Germany which is currently under the influence of a particulary virulent and prolonged epidemic of devastating anti-nuclear propaganda.

A Hamburg court ordered Germany to pay back utilities, mostly EON SE (EOAN) and RWE AG (RWE), a combined 2.2 billion euros ($3 billion) in nuclear-fuel taxes after they mounted a legal challenge to the charges introduced in 2011.

Customs offices must repay five reactor operators, the finance court said today in a statement. EON’s refund is about 1.7 billion euros, said Josef Nelles, a company spokesman. RWE’s is about 400 million euros, said Annett Urbaczka, a spokeswoman.

“This verdict once again confirms serious doubts over the constitutionality of the nuclear-fuel tax and its compatibility with European Union law,” Nelles said by phone from Dusseldorf, where EON is based. The customs offices are able to challenge the ruling at the Federal Finance Court, Urbaczka said.

German utilities have won cases in Hamburg and Munich, while a Stuttgart court approved the tax. Today’s ruling affects the Grafenrheinfeld, Isar-2, Emsland, Grohnde and Brokdorf reactors, said Matthias Tiemann, a court spokesman. The Hamburg court has asked the European Court of Justice and Germany’s top constitutional court to review whether the tax is valid. Customs offices have a month to file a complaint against the decision and it’s “not unlikely” they will, Tiemann said.

“As soon as one of the two courts will rule the nuclear-fuel tax illegal, plant operators will win the lawsuit,” said Tiemann. The court expects a decision by EU judges in 18 months to two years since starting in January, he said, declining to give a forecast for a ruling from the constitutional court.

The Hamburg court sees the tax as unconstitutional, it said in the statement. The tax “doesn’t tax the use of nuclear fuel or electricity but is to skim profits of plant operators.”

http://www.bloomberg.com/news/2014-04-14/germany-told-to-pay-mostly-eon-rwe-3-billion-in-nuclear-taxes.html

 

 

 

Joris van Dorp's picture
Joris van Dorp on May 8, 2014

Solar is already heavily subsidized indirectly and directly in all countries where it is successfull.

I would prefer subsidies for any technology to be limited to whatever is needed to create an optimal distribution of risk between public and private parties. Moreover, subsidies should never exceed tax-revenues, on a net present value basis.

Nuclear can be done without subsidies, but the price would be higher because in that case the political risk is not shared with the public. Conversely, if the public shares some of the political risk, then the public has a stake in the efficient implementation of the nuclear power project, which means that the public is less likely to tolerate spurious contrived legal harassment of the nuclear power project (in order to delay construction and increase costs) by the organised opposition to nuclear power. Such risk sharing reduces risk and hence the price of nuclear power. Lower priced nuclear power means there is more room to effect nuclear energy taxation during the exploitation phase, maximising a win/win/win for the operator, the tax collector, and the energy consumer.

Conversely, if there is to be no subsidy, much or all of the economic benefit of the nuclear power project could be lost. All this would benefit is law firms working for the organised opposition.

Subsidies are good if they help to minimize the price of energy. Subsidies are bad if they enable inferior technologies to take market share from superior technologies.

Eric Lane's picture
Eric Lane on May 8, 2014

I think most of you guys live in some nuclear fantasyland.  Nuclear has never supported itself.  It has lived off the government teat since it was born.  Let me illustrate.  First, the nuclear industry is not responsible for any nuclear accidents.  We the people are.  The industry’s clean-up costs are capped.  Isn’t that nice?  I’d like to have that franchise.  Build anything I want and if it pollutes an entire country or planet well, you guys pay to clean it up.  Nice.  Second, without federal loan guarantees, there would be absolutely no discussion about nuclear power as an option.  You know what a loan guarantee is, right?  That’s when the borrower fails to make the payments, the federal governement guarantees to make the paymensts.  Sweet, huh?  I’d love one of those loans.  These little bennies are before we even open up the nuclear energy spigot.  Then comes all the other inconveniences we need to deal with like waste, water, uranium, etc. but why worry our pretty little heads about all this.  After all, the pro-nuclear nutties have it all under control and don’t need any subsidies.  Yeah, right.

Robert Bernal's picture
Robert Bernal on May 8, 2014

My only “agenda” is for the world to stop emitting CO2 and to talk about the ways that are possible under the contraints of costs and physics, that is to develop the least expensive, most abundant and safe CO2 free sources. I like the idea of Tesla cars and Elon Musk’s vision but don’t think solar and wind “can do it all” 24/7.

Robert Bernal's picture
Robert Bernal on May 8, 2014

It is a mistake to think that nuclear has, for tech reasons, failed. The fully mature and developed LWR’s (and similar) is the same tech conceived from the get go. Alvin Weinberg, the inventor of the LWR wanted the MSR to be the safer solution for unlimited world energy (because it is meltdown proof and spits out less wastes). But the LWR was the path chosen by governments for use in submarines, etc.

It is not the tech, but public opposition to that tech which has made it fail miserably in the last two decades. France’s and the United States’s ability to deploy numerous reactors decades ago provides empirical evidence for that last statement. That same public opposition will now convert the Holocene into a holocaust (due to excess CO2 and ocean acidification) unless we develop the quickest CO2 free source to power a planetary civilization.

Eric Lane's picture
Eric Lane on May 8, 2014

Robert, I am going to start a new thread since this one is becoming way to tinie. 

 

Eric Lane's picture
Eric Lane on May 8, 2014

Robert, you are arguing that only nuclear can save our planet.  Nice argument for the pro-nuclear crowd.  You seem to base this on two arguments.  The first is we need to break our dependence of fossil fuels and only nuclear can save our chestnuts.  Second, the only thing standing in the way of your vision are the anti-nuclear, don’t know what they are talking about, crowd.   

I would counter your argument by saying that your first argument is completely theoretical.  In a nuclear energy dependent world the waste stream problem would be huge within a very short period of time.  Imagine thousands of nuclear power plants spewing toxic waste everyday of every year in the future.  Until the waste issue is resolved, we are replacing one catastrophe with another.  Second, you believe the anti-nuclear crowd is the problem with nuclear power.  I hope they are.  But, the reality is that the fossil fuel industry is the real threat to any alternative to fossil fuel dependency.  It is why solar power is hindered at every step.  The fossil fuel industry and the Kock brothers specifically, are doing everything in their power to grow the fossil fuel industry and stimmie any alternatives.  I’ve said before that I am not optomistic about the chances for human survival.  We need to be walking gently on this earth.  We aren’t.  Population growth alone is taking us to the edge of survival.  Capatalism, the idea of constant and endless growth based on greed, is not exactly an economic system preparing us for living on a finite planet.  Do you think the economic elite want anything to change?  You believe nuclear power is pulling a rabbit out of the hat.  It will save our chestnuts.  It won’t.  At best, it is part of the problem.       

Robert Bernal's picture
Robert Bernal on May 9, 2014

Did I say  “only nuclear”? Well, not quite! I’m the one who also advocates for hundreds of thousands of square miles of solar built by the same type of robotic machines that make cheap battery storage… but I don’t think most people (and the FF companies?) would allow for that, either!

You say that nuclear waste is the problem and I agree only to a certain point. If it was done properly, then it would not be a problem. Concerning the reactors, here is yet another meltdown proof reactor design.

Overpopulation and environmental degradation can and must be conquered by science and common sense, as developed countries and the reversal of the ozone hole problem attest to.

I just want the world to rid itself of fossil fuels, just as you do. The FF companies used to be our friends ’till global warming came about. Perhaps, they will eventually invest in the big three: nuclear, wind and solar!

Joris van Dorp's picture
Joris van Dorp on May 9, 2014

Actually, the FF companies have tried nuclear in the past, and they failed. If nuclear energy could become part of normal discussion about energy and our future (i.e. without all the lies and misinformation) then FF companies would have no problem investing in nuclear. If anything, fossil fuels processing is an energy intensive business so FF companies would probably like to use cheap, reliable heat and electricity to power their operations if there was not the public relations risk.

I suppose that FF companies have mixed feelings about nuclear today. On the one hand, they might fear competition from nuclear in the space of electricity generation (specifically coal and gas sectors). On the other hand, they could benefit from using nuclear technology (for powering remote operations, refinery operations, tar sands processing, etc.). Presumably, O&G companies would be best positioned to build and operate nuclear powered synfuel factories as well, and they probably would if it was politically safe to do so.

Ultimately, I suspect, whether an energy company is for or against nuclear depends on what they are doing. If they’ve just invested in installations that depend on high demand for fossil fuels and are planning to exploit those installations for 40-60 years, then clearly they become anti-nuclear power. But if they are planning to invest, and are looking at different options, then nuclear would be something they’d look at as well. I guess that’s why its so important to solve the public acceptance problem of nuclear power. As long as companies percieve high political risk concerning nuclear power, they will necessarily tend to choose FF options, and after they have done so, they will automatically join the anti-nuclear camp, causing a feedback in a way which strengthens the anti-nuclear lobby, even in the face of mounting concern about energy poverty, pollution and increasing greenhouse gas emissions.

 

 

Eric Lane's picture
Eric Lane on May 9, 2014

Robert, we are not that far apart.  My argument is safety  and long-term repercussions.  We can argue details like the fossil fuel industry has been our ‘friend.’  We have fought one war after another over fossil fuels.  In the 70’s, the Hip-eyes were warning us about the environmental damage that was being caused by fossil fuel consumption.  Since then, FF industry has gone on a tare.  I’m not sold on nuclear.  I almost was lulled into accepting the nuclear waste issue until Fukushima.  Now I want 100% safety for nuclear power plants, that means absolutely no chance of a meltdown, no radiation leaks, no dependency on scarce water supplies or causing harm around nuclear power plants.  And the waste issue must be completely non-existent.  In other words, safety and the precautionary principle.  Why?  Because if we again become dependent on another energy source, we can’t be replacing one evil for another.  Imagine, as I said previously, thousands of nuclear plants running 24 hrs. a day all over the world.  To me, right now, this is a nightmare.  I don’t really care how many FF’s it puts out of business.  It’s just creating a whole new can of worms.

With solar, we have none of these problems.  None.  The only arguments I hear are the negative ones: we can’t do it, not enough base load, etc.  Huh?  Put a few trillion dollars in front of American/world ingenuity and watch what happens.  Solar simply makes sense.  The only real pollution is in the manufacturing of the panels. 

Finally, as I’ve said, I’m not optimistic.  There are no signs that anything serious is being done to 1. slow down FF consumption.  2. Bring population growth under control  3. look to see if capitalism is a sustainalbe economic system.  To be honest, it may take a second Civil War to save humanity.  The fossil fuel industry is so crazed with profits that they will fight to keep the profits coming until they are behind bars.  Just like the slave traders.  Many of the fossil fuel big boys come from that background.   

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