The claim that taxing people less is the same as a subsidy makes sense only if you are a socialist who believes that the government owns everything and does us a favor by letting us keep some of what we earn.
Thanks again David for your characteristically forensic take down of the fossil fuel subsidy myth. We live in an increasingly infantile political world whereby the obsessions of billionaires with a legacy to leave, are filtered into the fish tank of accepted wisdom by academics who are either ideologically inclined or themselves subsidy sustained by the green lobby. They then filtrate their findings to incurious politicians who can’t even be bothered to turn up to a debate on a piece of pivotal legislation. The media full of the same types then panics the public into believing their lifestyle is unsustainable. When i use your wisdom in argument i can see that people who want to live a prosperous life with cheap energy get it. Thanks.
"Now the energy crisis has subsided we are left with just £200m of indirect subsidy to help the elderly and most vulnerable with their energy bills offset by close to £50bn of direct and indirect taxes as shown in Figure 3."
The idea that Western nations currently subsidize fossil fuels is ridiculous. Western nations heavily tax fossil fuels, a practice supported by the very people who claim that fossil fuels are subsidized.
Look any subsidies or taxes are a way of leveling the economic playing field across an uneven economic wealth gradient so that poor get an advantage over the rich or industries remain competitive with others etc.
It has nothing to do with the operating merits of different sources of energy which as stated is a huge building block of a modern economy and way of life.
So, when we look at all sources of energy they must stand on their own merits without any subsidies.
This makes it clear that if we started from scratch with no mines and no factories and only infinite technological knowledge free at hand and the capability to build our energy sources from scratch and with no concern for CO2 generation we would start with coal that most of the world has and then move to natural gas (if we have it) and move quickly to nuclear power and hydro (if that is an option). The focus will be on reliability and affordability with solar and wind not making the cut due to both of these being less competitive.
If CO2 generation is considered an issue, then nuclear offers the best option. And like any technology once focused on will obey a leaning cycle advantage in cost and implementation time.
If we want prosperity and don’t consider CO2 to be a pollutant, then let the energy industry get on with it so they find the best options to service the economy.
The total for 2023 was £14.34bn. There is of course further VAT paid on oil and propane for domestic heating (5%), lubricants (20%), etc. , as well as on non domestic use of oil at 20%.
ISTR reading an article on this topic a few decades ago, with reference to the (now departed) coal industry… subsidies and support included government medical compensation for pneumoconiosis, compensation for coal mining subsidence and all sorts of things you’d not easily think of. Tricky topic.
One of the bigger subsidies to renewables is that they do not pay the extra costs that they cause. They get paid to curtail, but do not pay for extra grid to deliver their output, or for the extra costs for grid stabilisation and backup. The taxes on fossil fuelled generation act as protectionist tariffs that allow renewables on ROCs and supposedly selling on a market basis to sell at higher prices than they would otherwise achieve.
Another subsidy that is a bit opaque is REGO payments. Although the volume of these is reported by OFGEM, prices are only occasionally reported in the specialist press, not generally accessible without costly subscriptions. These apply to almost all renewables output, and lately have been running at £10-15/MWh. Call it another £800m that you pay for greenwash certificates. .
The main reason they have to curtail is because OFGEM agreed to all the unreliables being connected but stopped the transmission companies expanding grid capacity under the "connect and manage" policy. They've now flipped the other way and consented to the Great Grid upgrade irrespective of whether the windmills even get built but it doesn't matter to them they aren't the ones paying for policy error.
That's the myth, but I'm not sure it is entirely true. It provides very convenient cover for the need to ensure there is adequate inertia on the grid to reduce the risk of blackout when there is a major trip (most frequently, an interconnector at least on windy days).
If you look at the way Eirgrid and the SEM in Ireland is run they have an explicit limit on the proportion of supply from renewables for precisely this reason. They have been inching up the maximum as they get more experience of operations with higher renewables penetration, and as they install other synthetic and real sources of inertia to compensate for turning down conventional generation. They also operate their interconnectors in export mode on windy days so that they can keep more conventional generation online.
Here's an example of the Irish operation at the time of Storm Ophelia in 2017
You can see that actual wind generation was curtailed below forecast particularly overnight when demand was low and exports were at capacity in the couple of days before the storm hit in order to limit the proportion. Wind was curtailed on the day itself because of high wind speeds. The calm that followed saw supply from imports and conventional generation.
Oh yes good point and i wonder if Starkie understands inertia and has explained to Millibrain the fundamental importance of it for grid stability. Of course he hasn't as he wont understand it but its a significant impediment to NZ as NESO says it needs a minimum of 120GVAs to manage the grid. By my reckoning that needs c8GW of spinning generators to provide that but i do know there are some moves towards synthetic inertia providers from the asynchronous generators.
"do claim that the UK offered fossil fuel subsidies of ~£6bn in 2022, but none in any other year"
Could this be related to the government's subsidy to "cap" consumers' and businesses' gas/electricity prices at below market prices in 2022? (yes, people demanded that).
David delighted you have produced this post and shone a spotlight on this and give me plenty of factual information to respond to those that are repat verbatim the fossil fuel subsidy narrative.
Looking ahead as they force out fossil fuels, well attempt to which will fail, have they not realised what a huge source of income the govt will lose which will need replacing. My bet is VAT will go up on gas for sure and in due course followed by electricity when they've squeezed that pip dry as well.
On VAT on fuel UK consumed 46B Litres of petrol & diesel last year so at avg of 1.32 would be £12B as im pretty sure VAT is levied on the wholesale price+duty. Also as an aside road fuel use isn't going down so not sign of EVs displacing it yet!
Also they are introducing road tax on EVs from April 25.
One thing you didn't mention in your article is how the decommissioning of PRT-liable oil and gas fields in the North Sea will likely result in a net outflow of cash from the Treasury in the future. Each field is assessed for tax on its own costs and revenues over its lifetime. In its profitable phase it paid lots of PRT, which sits in a virtual bank account with the Treasury. When the field makes losses or is decommissioned, this virtual bank account of PRT can be drawn down in the form of tax relief to help pay for the costs of decommissioning. Mad Milliband is going to hasten the point at which these older fields become uneconomic (by preventing the development and tie-back of any new fields to their extensive infrastructure) and so he will also bring forward the repayments of past taxes to pay for the early decommissioning.
Doubtless there will be new howls of protest when this starts to become apparent.
Going to be fun cleaning up the mess of broken and rotting wind turbines, horrendously difficult to recycle, remove and replace. The North Sea will become a rubbish tip for Carbon fibre wind turbine blades.
The important point here is that it was Tony Benn as Energy Minister who decided that oil companies should not be trusted to build up and use decommissioning reserves. In consequence, the rate of PRT was set at 75% on revenue after 12.5% Royalty tax (applied to all production) had been deducted, with CT (then an eye watering 52%) was applied to anything left. Total taxation was thus over 90%. There were investment allowances against PRT and CT on a cumulative cashflow basis, and some ability to fund new projects from the proceeds of existing ones, but of course it just hastened the day when the full taxes were levied on the new projects. The extra PRT was effectively an unindexed, interest free loan to government, instead of the investment return that a proper decommissioning reserve would have made. All taxes were inside a ring fence, allowing for no offsetting of tax losses in other parts of group businesses: if your UK refinery and marketing name a loss - tant pis. The upstream taxes must be paid.
To compound the benefit to government, PRT rates were lowered to 50% after the new regime of Supplemental CT was introduced for more recent fields. This meant a small reduction in tax revenue near the end of the lives of the original fields by then on much reduced production, but crucially it limited the tax credit for decommissioning costs. Effectively the government appropriated a third of the decommissioning reserve on top of failing to index it or accrue interest.
I beg to differ. Zero tax is a subsidy when some people have to pay the tax and others don't.
Carbon cap and trade costs are imposed on big industrial users of fossil fuels, and this includes power generation. Power plants no longer burn coal, as the last coal plant was discontinued earlier this year.
However, there is no such tax imposed on domestic gas. For industrial users, UK ETS carbon permits trade at around £40 per tonne of CO2.
Gas generation has around 60% efficiency and emits around 0.5 tonnes of CO2 per MWh. So the carbon cost per MWh of heat output is around £40 * 0.5 * 60% = £12/MWh of heat, or 1.2p per kWh of heat.
UK homes in 2021 burned around 320 TWh of gas per year for heating (of buildings, water and food - cooking). I make that around £4bn of carbon costs not paid on domestic gas.
Over the last 12 calendar months gas generation supplied 70 TWh of electricity, with a carbon cost of £20/MWh, so total direct carbon costs of £1.4bn. Then there is drag along in terms of increased net payments to various other kinds of generation because gas sets the market price most of the time, paid to the other generators. Note that any generation on a CfD contract doesn't get this, because CfD is essentially just a complicated a fixed price contract.
Electricity prices are still mainly determined by natural gas generation, and that does incur carbon costs. Whether you regard the lack of carbon costs as a subsidy for gas, or an extra tax on electricity is up to semantics. But it makes zero sense, given the push for heat pumps to apply carbon taxes to efficient heat pump heating by electricity, but not by gas boiler.
I prefer to stick with the idea that a tax involves payment by an economic actor, and a subsidy arises when they are paid. Where the incidence of taxes is uneven they become protectionist tariffs that allow competitors to secure higher incomes and undercut the taxed entity.
Of course many of the green levies are in fact payed directly to green businesses: for example ROCs and REGOs. CFDs only have the LCCC as the intermediary rather than HMRC/Treasury.
It's worth remembering that ever since the Stern Report the government dropped any attempt to measure a real cost of the net externalities of CO2 emissions (some observers estimate they are a net benefit). Carbon pricing has been determined by the price necessary to eliminate sufficient domestic emissions to meet an arbitrary target set by government and the CCC from time to time. It has had the perverse effect of increasing global emissions and closing our own industry. Declines in carbon prices reflect the fact that the earlier levels of up to £100/tCO2e caused a faster pace of shutdowns, leaving a supply surplus, and causing future supply of allowances to be trimmed: next year there will be just 56 million allowances offered as recently announced by DESNZ.
It's worth pointing out that large industrial users are exempted from some of the green levies, with their share being added to household bills. There are other complications in the way that costs are allocated between different kinds of consumer under OFGEM rules. This particularly affects the charging of rising network costs that come with increased renewables.
Oh didn't realise that about domestic gas. Im sure thats an opportunity that Millibrain would want to exploit but would of course then lead to the need to compensate those (domestic) that can't afford it already to be further subsidised by the rest of us and would drag down disposable income and be a tax on working people.
Nuclear upfront cost is high but falling as technology leads to scalable power plants, right?
In any case, as you say, capital is not the issue. Capital can be very patient, especially in a world of very low interest rates that still seems to be the desired norm. The issue is regulation, in other words government. Always government.
Right, overzealous regulation beyond what is needed for safety has been blocking nuclear. I might add - If the capital that is expended on so-called 'renewables' was re-allocated to nuclear, we'd have no problem capitalizing new nuclear power plants.
Nuclear up front cost is only high in this country but until govt make it a key policy for energy production nothing will change and Millibrain has convinced himself that all we need is wind and solar.
The outcome may have been disappointing, initially, from the 60/70's AGR investments but nuclear was a central govt policy for nearly two decades and had we not had the Dungeness fiasco Thatcher would have perpetuated it.
Thank you once again for some excellent digging David - you are a virtuoso with the shovel!
I wonder if at some point you would care to speculate how energy sources including wind, solar and nuclear would have developed without subsidies but with tax incentives, and is there a clear political distinction between investment and subsidy, or are these just nuances of language? Many years ago it was said that politicians (who didn't like railways) referred to "spending" on railways while "investing" in road infrastructure.
I believe in common parlance that at subsidy is given by governments to special interests for which the rest of us pay, in order to achieve something, while an investment is made with the expectation of a financial return. However, I expect politicians to fudge the terms.
Almost no form of new electricity generation would develop without subsidy, nowadays. The development costs are just too high, and the timescale to get to competitive, mass market, volumes is just too long - no private money is going to take the risk.
You could argue that nuclear fusion research is an exception, because, in addition to ITER and other government projects (such as the UK STEP prototype reactor in West Burton), billions in private money has recently gone in to various fusion R&D projects. However, these are nowhere near the stage of initial deployment, for which the bills are likely to be huge. The successful projects finances will almost certainly need subsidies for initial implementations.
In this country, I don't think wind would have been developed at all without subsidy. There might be some domestic solar installations and some on roofs of industrial buildings, but I don't think we would have seen the vast solar farms on farmland.
Nuclear is a tricky one because of the high upfront costs. We would need a radical overhaul of the regulatory framework to make nuclear attractive for private investment.
14 years ago I had a 4kw set of PV's. Without the subsidies I would never have afforded them. They took 10 years to pay back even with the subsidies & guaranteed price of generated electricity. 3 replacement panels and a replacement inverter ate into the income, a cost nobody seems to take into account.
Another thing they do, is take tax relief on R&D investment (which is available to ALL businesses), and call that a subsidy. They then forget about the massive taxes on fossil fuels, that you have highlighted here.
The claim that taxing people less is the same as a subsidy makes sense only if you are a socialist who believes that the government owns everything and does us a favor by letting us keep some of what we earn.
Thanks again David for your characteristically forensic take down of the fossil fuel subsidy myth. We live in an increasingly infantile political world whereby the obsessions of billionaires with a legacy to leave, are filtered into the fish tank of accepted wisdom by academics who are either ideologically inclined or themselves subsidy sustained by the green lobby. They then filtrate their findings to incurious politicians who can’t even be bothered to turn up to a debate on a piece of pivotal legislation. The media full of the same types then panics the public into believing their lifestyle is unsustainable. When i use your wisdom in argument i can see that people who want to live a prosperous life with cheap energy get it. Thanks.
"Now the energy crisis has subsided we are left with just £200m of indirect subsidy to help the elderly and most vulnerable with their energy bills offset by close to £50bn of direct and indirect taxes as shown in Figure 3."
Is it £200m or £200,000?
£200m
The idea that Western nations currently subsidize fossil fuels is ridiculous. Western nations heavily tax fossil fuels, a practice supported by the very people who claim that fossil fuels are subsidized.
Thank you for an excellent rebuttal to the claims that fossil fuels are heavily subsidized - they're not.
Look any subsidies or taxes are a way of leveling the economic playing field across an uneven economic wealth gradient so that poor get an advantage over the rich or industries remain competitive with others etc.
It has nothing to do with the operating merits of different sources of energy which as stated is a huge building block of a modern economy and way of life.
So, when we look at all sources of energy they must stand on their own merits without any subsidies.
This makes it clear that if we started from scratch with no mines and no factories and only infinite technological knowledge free at hand and the capability to build our energy sources from scratch and with no concern for CO2 generation we would start with coal that most of the world has and then move to natural gas (if we have it) and move quickly to nuclear power and hydro (if that is an option). The focus will be on reliability and affordability with solar and wind not making the cut due to both of these being less competitive.
If CO2 generation is considered an issue, then nuclear offers the best option. And like any technology once focused on will obey a leaning cycle advantage in cost and implementation time.
If we want prosperity and don’t consider CO2 to be a pollutant, then let the energy industry get on with it so they find the best options to service the economy.
VAT on motor fuels is reported by UKPIA - see their latest data here:
https://www.fuelsindustryuk.org/media-centre/publications/
The total for 2023 was £14.34bn. There is of course further VAT paid on oil and propane for domestic heating (5%), lubricants (20%), etc. , as well as on non domestic use of oil at 20%.
A
ISTR reading an article on this topic a few decades ago, with reference to the (now departed) coal industry… subsidies and support included government medical compensation for pneumoconiosis, compensation for coal mining subsidence and all sorts of things you’d not easily think of. Tricky topic.
One of the bigger subsidies to renewables is that they do not pay the extra costs that they cause. They get paid to curtail, but do not pay for extra grid to deliver their output, or for the extra costs for grid stabilisation and backup. The taxes on fossil fuelled generation act as protectionist tariffs that allow renewables on ROCs and supposedly selling on a market basis to sell at higher prices than they would otherwise achieve.
Another subsidy that is a bit opaque is REGO payments. Although the volume of these is reported by OFGEM, prices are only occasionally reported in the specialist press, not generally accessible without costly subscriptions. These apply to almost all renewables output, and lately have been running at £10-15/MWh. Call it another £800m that you pay for greenwash certificates. .
I guess we could call the extra costs that 'renewables' don't pay are like invisible subsidies. Thanks for bringing this out.
The main reason they have to curtail is because OFGEM agreed to all the unreliables being connected but stopped the transmission companies expanding grid capacity under the "connect and manage" policy. They've now flipped the other way and consented to the Great Grid upgrade irrespective of whether the windmills even get built but it doesn't matter to them they aren't the ones paying for policy error.
That's the myth, but I'm not sure it is entirely true. It provides very convenient cover for the need to ensure there is adequate inertia on the grid to reduce the risk of blackout when there is a major trip (most frequently, an interconnector at least on windy days).
If you look at the way Eirgrid and the SEM in Ireland is run they have an explicit limit on the proportion of supply from renewables for precisely this reason. They have been inching up the maximum as they get more experience of operations with higher renewables penetration, and as they install other synthetic and real sources of inertia to compensate for turning down conventional generation. They also operate their interconnectors in export mode on windy days so that they can keep more conventional generation online.
Here's an example of the Irish operation at the time of Storm Ophelia in 2017
https://uploads.disquscdn.com/images/12fcfe6e695b58a2a497ed4521dd30b631cb058268799591829498342f4e951b.png
You can see that actual wind generation was curtailed below forecast particularly overnight when demand was low and exports were at capacity in the couple of days before the storm hit in order to limit the proportion. Wind was curtailed on the day itself because of high wind speeds. The calm that followed saw supply from imports and conventional generation.
Oh yes good point and i wonder if Starkie understands inertia and has explained to Millibrain the fundamental importance of it for grid stability. Of course he hasn't as he wont understand it but its a significant impediment to NZ as NESO says it needs a minimum of 120GVAs to manage the grid. By my reckoning that needs c8GW of spinning generators to provide that but i do know there are some moves towards synthetic inertia providers from the asynchronous generators.
Thank you for the analysis, David.
"do claim that the UK offered fossil fuel subsidies of ~£6bn in 2022, but none in any other year"
Could this be related to the government's subsidy to "cap" consumers' and businesses' gas/electricity prices at below market prices in 2022? (yes, people demanded that).
https://obr.uk/box/the-cost-of-the-governments-energy-support-policies/
David delighted you have produced this post and shone a spotlight on this and give me plenty of factual information to respond to those that are repat verbatim the fossil fuel subsidy narrative.
Looking ahead as they force out fossil fuels, well attempt to which will fail, have they not realised what a huge source of income the govt will lose which will need replacing. My bet is VAT will go up on gas for sure and in due course followed by electricity when they've squeezed that pip dry as well.
On VAT on fuel UK consumed 46B Litres of petrol & diesel last year so at avg of 1.32 would be £12B as im pretty sure VAT is levied on the wholesale price+duty. Also as an aside road fuel use isn't going down so not sign of EVs displacing it yet!
Also they are introducing road tax on EVs from April 25.
There aint no free lunch in this world.
Yes you are correct: I found a while ago that VAT is charged on top of the fuel duty so it's double-taxed.
VAT is simply a sixth of the pump price. 6/5ths is 20% on top.
One thing you didn't mention in your article is how the decommissioning of PRT-liable oil and gas fields in the North Sea will likely result in a net outflow of cash from the Treasury in the future. Each field is assessed for tax on its own costs and revenues over its lifetime. In its profitable phase it paid lots of PRT, which sits in a virtual bank account with the Treasury. When the field makes losses or is decommissioned, this virtual bank account of PRT can be drawn down in the form of tax relief to help pay for the costs of decommissioning. Mad Milliband is going to hasten the point at which these older fields become uneconomic (by preventing the development and tie-back of any new fields to their extensive infrastructure) and so he will also bring forward the repayments of past taxes to pay for the early decommissioning.
Doubtless there will be new howls of protest when this starts to become apparent.
Going to be fun cleaning up the mess of broken and rotting wind turbines, horrendously difficult to recycle, remove and replace. The North Sea will become a rubbish tip for Carbon fibre wind turbine blades.
The important point here is that it was Tony Benn as Energy Minister who decided that oil companies should not be trusted to build up and use decommissioning reserves. In consequence, the rate of PRT was set at 75% on revenue after 12.5% Royalty tax (applied to all production) had been deducted, with CT (then an eye watering 52%) was applied to anything left. Total taxation was thus over 90%. There were investment allowances against PRT and CT on a cumulative cashflow basis, and some ability to fund new projects from the proceeds of existing ones, but of course it just hastened the day when the full taxes were levied on the new projects. The extra PRT was effectively an unindexed, interest free loan to government, instead of the investment return that a proper decommissioning reserve would have made. All taxes were inside a ring fence, allowing for no offsetting of tax losses in other parts of group businesses: if your UK refinery and marketing name a loss - tant pis. The upstream taxes must be paid.
To compound the benefit to government, PRT rates were lowered to 50% after the new regime of Supplemental CT was introduced for more recent fields. This meant a small reduction in tax revenue near the end of the lives of the original fields by then on much reduced production, but crucially it limited the tax credit for decommissioning costs. Effectively the government appropriated a third of the decommissioning reserve on top of failing to index it or accrue interest.
" Zero tax is not a subsidy"
I beg to differ. Zero tax is a subsidy when some people have to pay the tax and others don't.
Carbon cap and trade costs are imposed on big industrial users of fossil fuels, and this includes power generation. Power plants no longer burn coal, as the last coal plant was discontinued earlier this year.
However, there is no such tax imposed on domestic gas. For industrial users, UK ETS carbon permits trade at around £40 per tonne of CO2.
Gas generation has around 60% efficiency and emits around 0.5 tonnes of CO2 per MWh. So the carbon cost per MWh of heat output is around £40 * 0.5 * 60% = £12/MWh of heat, or 1.2p per kWh of heat.
UK homes in 2021 burned around 320 TWh of gas per year for heating (of buildings, water and food - cooking). I make that around £4bn of carbon costs not paid on domestic gas.
Over the last 12 calendar months gas generation supplied 70 TWh of electricity, with a carbon cost of £20/MWh, so total direct carbon costs of £1.4bn. Then there is drag along in terms of increased net payments to various other kinds of generation because gas sets the market price most of the time, paid to the other generators. Note that any generation on a CfD contract doesn't get this, because CfD is essentially just a complicated a fixed price contract.
Electricity prices are still mainly determined by natural gas generation, and that does incur carbon costs. Whether you regard the lack of carbon costs as a subsidy for gas, or an extra tax on electricity is up to semantics. But it makes zero sense, given the push for heat pumps to apply carbon taxes to efficient heat pump heating by electricity, but not by gas boiler.
I prefer to stick with the idea that a tax involves payment by an economic actor, and a subsidy arises when they are paid. Where the incidence of taxes is uneven they become protectionist tariffs that allow competitors to secure higher incomes and undercut the taxed entity.
Of course many of the green levies are in fact payed directly to green businesses: for example ROCs and REGOs. CFDs only have the LCCC as the intermediary rather than HMRC/Treasury.
It's worth remembering that ever since the Stern Report the government dropped any attempt to measure a real cost of the net externalities of CO2 emissions (some observers estimate they are a net benefit). Carbon pricing has been determined by the price necessary to eliminate sufficient domestic emissions to meet an arbitrary target set by government and the CCC from time to time. It has had the perverse effect of increasing global emissions and closing our own industry. Declines in carbon prices reflect the fact that the earlier levels of up to £100/tCO2e caused a faster pace of shutdowns, leaving a supply surplus, and causing future supply of allowances to be trimmed: next year there will be just 56 million allowances offered as recently announced by DESNZ.
It's worth pointing out that large industrial users are exempted from some of the green levies, with their share being added to household bills. There are other complications in the way that costs are allocated between different kinds of consumer under OFGEM rules. This particularly affects the charging of rising network costs that come with increased renewables.
Oh didn't realise that about domestic gas. Im sure thats an opportunity that Millibrain would want to exploit but would of course then lead to the need to compensate those (domestic) that can't afford it already to be further subsidised by the rest of us and would drag down disposable income and be a tax on working people.
It would be helpful if you could define "working people" and let the government know - they seem to be struggling with it at the moment.
Nuclear upfront cost is high but falling as technology leads to scalable power plants, right?
In any case, as you say, capital is not the issue. Capital can be very patient, especially in a world of very low interest rates that still seems to be the desired norm. The issue is regulation, in other words government. Always government.
Right, overzealous regulation beyond what is needed for safety has been blocking nuclear. I might add - If the capital that is expended on so-called 'renewables' was re-allocated to nuclear, we'd have no problem capitalizing new nuclear power plants.
Nuclear up front cost is only high in this country but until govt make it a key policy for energy production nothing will change and Millibrain has convinced himself that all we need is wind and solar.
The outcome may have been disappointing, initially, from the 60/70's AGR investments but nuclear was a central govt policy for nearly two decades and had we not had the Dungeness fiasco Thatcher would have perpetuated it.
Thank you once again for some excellent digging David - you are a virtuoso with the shovel!
I wonder if at some point you would care to speculate how energy sources including wind, solar and nuclear would have developed without subsidies but with tax incentives, and is there a clear political distinction between investment and subsidy, or are these just nuances of language? Many years ago it was said that politicians (who didn't like railways) referred to "spending" on railways while "investing" in road infrastructure.
I believe in common parlance that at subsidy is given by governments to special interests for which the rest of us pay, in order to achieve something, while an investment is made with the expectation of a financial return. However, I expect politicians to fudge the terms.
Almost no form of new electricity generation would develop without subsidy, nowadays. The development costs are just too high, and the timescale to get to competitive, mass market, volumes is just too long - no private money is going to take the risk.
You could argue that nuclear fusion research is an exception, because, in addition to ITER and other government projects (such as the UK STEP prototype reactor in West Burton), billions in private money has recently gone in to various fusion R&D projects. However, these are nowhere near the stage of initial deployment, for which the bills are likely to be huge. The successful projects finances will almost certainly need subsidies for initial implementations.
In this country, I don't think wind would have been developed at all without subsidy. There might be some domestic solar installations and some on roofs of industrial buildings, but I don't think we would have seen the vast solar farms on farmland.
Nuclear is a tricky one because of the high upfront costs. We would need a radical overhaul of the regulatory framework to make nuclear attractive for private investment.
14 years ago I had a 4kw set of PV's. Without the subsidies I would never have afforded them. They took 10 years to pay back even with the subsidies & guaranteed price of generated electricity. 3 replacement panels and a replacement inverter ate into the income, a cost nobody seems to take into account.
Thank you!
.
Another thing they do, is take tax relief on R&D investment (which is available to ALL businesses), and call that a subsidy. They then forget about the massive taxes on fossil fuels, that you have highlighted here.
And PRESTO, fossil fuels are subsidised….!
R
It's true in the USA. See Meredith Angwin's book. But, fossil fuel pays most of the taxes, so...