The 4th myth in the Greenpeace brochure is:
The growth of renewable energy in Germany is only possible thanks to subsidies
This is the summary of how they try to debunk it:
Support for renewable energy in Germany is nothing compared to the aid that has gone to coal and nuclear power in the last forty years. It received 631 billion euro of aid, compared to 67 billion euro for renewable energy. Also the support for renewable energy reduces year after year.
That doesn’t make much sense. Those three sentences raise more questions than they answered. What do they consider renewables this time (solar and wind or also hydro and/or biomass)? What is their exact definition of a “subsidy” and is that the same for both renewables and coal/nuclear? Even if these are the same or similar, is it fair to compare both subsidies over a 40-year time frame considering coal and nuclear were there from the beginning and renewables only got traction in the last years of that period? They suggest that subsidies for coal/nuclear are high, contrary to those for renewables that are low and ever lowering. Is that really true?
Let’s start with that reduction over time. What is reducing exactly? It is probably not the total subsidies given to renewables. I think that is overall still rising because the installed capacity is still increasing. I suppose they mean the feed-in tariff is lowering over time. If I look at the tariffs in 2014 (up to and including 7/2014 and from 8/2014) which is the time of the last data used, this was true for onshore wind an solar, but it was not true for offshore wind. But I would agree however that all feed-in tariffs will lower eventually.
But more importantly: what are they calling a subsidy? From the text in the brochure I gather that they mean the feed-in tariff:
This support is based on the principle of the “feed-in tariff”, this guarantees renewable energy sustainable access to the grid at a cost equivalent to that of the production. The European Court ruled in 2001 that feed-in tariffs are not governmental aid, which made rapid development of renewable energy possible.
That renewables get access to the grid equivalent to that of production depends on what the definition is of “the production”. If they mean by it “production of electricity”, then I don’t agree. At the time the brochure was published, the feed-in tariff was 3 times higher than the market price for onshore wind and about 5 times for offshore wind. For solar the feed-in tariff was lower (and lowering). If they mean “production of the mills/panels” then I think it might be true. But it is still drives up the cost above the market price. Whether the European Court decreed that the feed-in tariff is not considered governmental aid or not, it is still an extra cost imposed by the government.
On the other hand, it is not really explained what that subsidy for coal and nuclear consists of. My initial assumption was that it could not be a feed-in tariff. Looking somewhat deeper into coal/nuclear subsidies, I encountered lots of hand-waving, but not much specifics. Finally, in the Subsidies and costs of EU energy report by Ecofys I found a description of what are considered subsidies for coal and nuclear:
- transfer of risk
- fiscal exemptions for certain users of certain types of fossil fuels
- support for R&D
- support for building new power plants, usually in the form of governmental guarantees
- explicit or implicit limited liability in case of major accidents (reduced insurance costs)
Indeed, quite different from what I would think are subsidies. Furthermore, are these governmental supports also counted at the renewables side? For example, I can’t imagine that there are no R&D costs for renewables or that no R&D costs were compensated by the government or that the renewable industry receives no fiscal exemptions. To me, this looks far from an apple-to-apple comparison.
But there is that incredibly big elephant in the room.
I think it is unfair to compare energy sources that were already there in the 1970s with an energy source that is only getting traction in the last years. Even if it were two comparable subsidies, the most recent one would inherently be in the advantage.
Also, even if those two numbers are comparable, coal and nuclear were the backbone of energy supply in those 40 years, while renewables were, ahem, the largest supplier of electricity only in 2014. The produced energy by coal and nuclear over this period would overwhelm that of renewables. I would love to see those subsidies calculated as euro per produced MWh. That would be an very interesting number.
In the end, are more subsidies given to coal/nuclear than to renewables? That completely depends on one’s definition of “subsidy” and on the time frame. Varying these two controls, one can prove that no/few/plentiful subsidies were given to any of both sides. Which renders this discussion completely meaningless without clear definitions.