POWER March 2011 - 6

SPEAKING OF POWER
Busting Myths
T
he popular television show Mythbusters
uses pseudo-scientific means
to examine and often expose as fiction
familiar urban myths. After made-fortelevision
lab tests, the myth is then classified
as either a fabrication ( " busted " ),
entirely possible ( " confirmed " ), or somewhere
in between ( " plausible " ).
Since 2003, Jamie Hyneman and Adam
Savage have tackled more than 700 popular
urban myths on the Discovery Channel's
Mythbusters. Although the duo's " scientific "
testing methods are lacking in many ways,
the show has its moments. At times the results
are predictable (Is it possible to catch a
bullet in your teeth? Busted), actually helpful
(Is it dangerous to use a phone in a thunderstorm?
Confirmed), or quite useless (Is
there a way to beat police speed cameras?
Plausible-but you have to drive over 200
mph to beat the camera). This is Hollywood,
not Lawrence Berkeley National Laboratory.
Exploring Industry Myths
There are also a number of oft-repeated
myths associated with the electric power
industry that deserve similar attention,
although perhaps with more research and
fewer experiments that require high explosives.
As your self-appointed mythbuster,
I've selected an often-cited but seldomresearched
myth: Does fossil-fueled generation
receive more government subsidies
and incentives than renewables? I'll challenge
other myths in future columns.
What types of subsidies are received by
the industry? From one perspective, President
Obama asserting his support for a 50% increase
in federal research spending for alternative
energy sources and more investment
in carbon capture and sequestration is tantamount
to " subsidizing " those technologies.
In essence, he is sending a signal to the energy
markets of the government's long-term
support. Nuclear benefits from such subsidies
as well. In fact, some maintain that the government
assuming the risk associated with
any nuclear plant accident, no matter how
small the probability, is also a subsidy. Even
the federal government's desire for the power
industry to move from coal to natural gas as
a " bridge fuel " could be viewed as a subsidy
6
of sorts to the natural gas industry. Others
even believe the coal industry is subsidized
by not penalizing coal-fired plants with a tax
on carbon emissions.
Taken to the limit, any government action
(or inaction) could be interpreted as
manipulating electricity supply markets-
even tax credits for electric vehicles. The
discussion becomes hopelessly complicated
when international policies are added to
the puzzle (the U.S. complaint to the World
Trade Organization over China's wind and
solar industry subsidies and Brazil's opposition
to U.S. ethanol policy come to mind).
Assigning monetary values to these policy
and trade issues is hopelessly complicated,
and given that it is impossible, I'll set those
factors aside for this analysis.
Good Data Are Available
In April 2008, the Energy Information Administration
(EIA) released a report, " Federal
Financial Interventions and Subsidies
in Energy Markets 2007, " in response to a
request from Tennessee Senator Lamar Alexander
(R). In his letter to the EIA, Alexander
requested an analysis " focus[ed] particularly
on subsidies directed to electricity production,
including an estimate of electricity
subsidies on a per unit basis " for " different
fuel types. " The 274-page report, released
in April 2008 and described by the EIA as
" comprehensive, " includes the effect of all
subsidies " through which a government or
public body provides a financial benefit with
a Federal budget impact. " The report is available
on the EIA website.
The EIA concluded that " per-unit measure
of electricity production subsidies and support
may provide a better indicator of its
market impact than an absolute measure. " I
agree that $/MWh is an appropriate comparative
measure because it's the same basis as is
used for the renewable electricity production
tax credit (PTC). The public can also relate
because this metric is the same one we see
when we pay our monthly electricity bills.
The EIA concluded at the time of the study
(data through 2007) that subsidies for wind
and solar far exceeded those for any fossil
fuel except refined coal, which is defined as
coal-based synthetic fuels. The synfuel tax
www.powermag.com
Federal energy subsidies and incentives
with a federal budget
impact and in direct support of
electricity production, 2007. The average
consumer cost of electricity was $92/
MWh in 2007. Source: EIA
Net
Electricity source $/MWh
29.81
Refined coal (coalbased
synthetic fuels)a
Solar
Wind
Nuclear
Landfill gas
Geothermal
Biomass (and biofuels)
Hydroelectric
Coal
Natural gas and
petroleum liquids
Municipal solid waste
24.34
23.37
1.59
1.37
0.92
0.89
0.67
0.44
0.25
0.13
generation
(billion kWh)
72
1
31
794
6
15
40
258
1,946
919
9
Note: Tax credit was available for synthetic fuels sold
through Jan. 1, 2008.
credit or Alternative Fuels Production Tax
Credit ended on Jan. 1, 2008 (see table).
The largest subsidy from the federal
government is the PTC at $22/MWh (today),
ignoring other federal and state financial
and indirect incentives (such as
a renewable portfolio standard). It's also
reasonable to conclude that federal legislation
over the past two years has only
increased subsidies for renewable energy
resources over those considered by the
EIA in 2008, not to mention the hundreds
of state subsidy and incentive programs.
The duration and amount of renewal electricity
subsidies is a public policy issue. In
my opinion, the rationale for maintaining
subsidies for technologies that proponents
describe as mainstream are nearing an end.
Regardless, the data are clear: Federal government
subsidies for renewables far exceed
those for fossil fuels. That myth is " busted. " ■
-Dr. Robert Peltier, PE is POWER's
editor-in-chief.
POWER | March 2011
http://www.powermag.com
POWER March 2011

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