The Carbon Race To The Bottom For Subsidies
The Carbon Race To The Bottom For Subsidies
Climate Change Dispatch / 3h
gas fired power plantAnd they’re off … across Canada and around the world, from Norway to China, oil corporations from Suncor to Exxon, carmakers from Ford to GM, battery developers, solar power firms and mining companies, bankers and investment houses are scrambling to get their hands on the global trillion-dollar net-zero carbon-reduction subsidy bonanza.
For the most part, the transition to net-zero carbon emissions is being portrayed as a golden opportunity.
We can remake the world’s energy system, and the economy, by using massive government funding and regulation, including heavy applications of central planning and industrial strategy techniques.
Whether the objectives are achievable remains a great unknown, but there is no shortage of corporate executives, politicians, and government officials ready to channel taxpayer dollars into projects and industries that carry massive risks and uncertainties.
A good example of the carbon subsidy rush is a recent Public Policy Forum “paper” titled “Carbon Capture, Utilization and Storage — The Time is Now.” …
The theme of the paper can be summarized: We want massive taxpayer funding and government regulatory support to guarantee that if the whole scheme is bonkers we won’t be left with the tab.
Naturally, the corporate/activist power group supports a solid carbon tax to boost carbon capture, utilization, and storage (CCUS), along with aggressive adoption of U.S.-style tax credits, creation of a CCUS fund to “leverage private sector investment,” carbon capture criteria at the Canada Infrastructure Bank, creation of green transition bonds and “equity investments by the federal and provincial governments.”
The dollar value of all this has yet to be tabulated, national or globally. A few days after the PPF document was issued in March, Alberta Premier Jason Kenney asked Ottawa to kick in $30 billion to advance the province’s carbon capture plans.
Alberta has already subsidized CCUS projects, with more to come as it joins the global plan to capture carbon and either use it or store it underground or wherever.
Oil-rich (and therefore carbon-producing) Norway is considered a leader in CCUS funding, having committed at least $3 billion to funding projects. Norway will also host an international conference in June, part of a global series of events to raise the profile of carbon capture and taxpayer support.
In the U.S. on April 22, Exxon-Mobil marked Earth Day with a call for “bold thinking” on climate policy and outlined a plan for a major $100-billion carbon capture project in Houston, Texas.
An Exxon executive said the project would require public and private funding, along with “enhanced regulatory and legal frameworks that enable investment and innovation.”
Exxon-Mobil reportedly wants Washington to kick in tax breaks or set carbon-pricing policies to help get the project off the ground.
The International Energy Agency, keeper of world stats and research on energy issues, recently outlined the scale of government support carbon capture needs.
“The rapid deployment (of CCUS) hinges critically on a massive increase in government support, as well as new approaches to public and private investment,” said the IEA in a special report.
Among other measures, the IEA said carbon capture needs grant support, operational subsidies, carbon pricing, carbon trading mechanisms, regulatory standards, risk mitigation measures, and government-funded innovation and R&D.
That’s capitalism in the new carbon economy: give us subsidies etc and we may or may not get the job done. Certainly, the IEA is not full of confidence. Without CCUS, the global net-zero carbon emissions target will not be achieved, and that achievement requires all-out effort.
Even more of an effort will be needed to fulfill another objective in the net-zero industrial planning system.
A new report from the IEA this month — The Role of Critical Minerals in Clean Energy Transitions — documents key problems behind what appears to be wildly optimistic claims that the world can transition to electric vehicles and other clean technology without running up against massive and insurmountable shortages of commodities.
The chemicals that will enable carbon-free transition are in short supply and current investment plans “fall well short” of what is needed to support the accelerated deployment of solar panels, wind turbines, and electric vehicles.
Many minerals come from a small number of producers. For example, in the cases of graphite, cobalt, and rare earth elements, the world’s top three producers control well over three-quarters of global output. Prices for nickel, copper, and other commodities could soar.
One commentator noted the IEA observation that “A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired power plant.”
Warns the IEA: “High geographical concentration, the long lead times to bring new mineral production on stream, the declining resource quality in some areas and social impacts all raise concerns around reliable and sustainable supplies of minerals to support the energy transition. These hazards are real, but they are surmountable.”
How can they be surmounted? Take a guess. To avoid shortages and soaring prices and lack of supply will require governments to take measures to send clear policy signals — and “attract investment” into the sector.
To avoid “bottlenecks,” governments will need to streamline permitting procedures and provide financing support to de-risk strategic projects.
Government de-risks — that’s the net-zero business model. Good luck with that.
Read more at Financial Post