The uncovered truth about green energy

About green energy

Last week I had a conversation with a friend, who, on the occasion of “Earth day”, was arguing against all types of fossil fuels and their harmful effects on the planet.

That he had invented all the data he was sharing was not the most laughable error: he shouted that one day the oil peak will end, and that day we will all blame ourselves for not having cared enough about “green energy”.

I responded him, that if peak oil was real, and in fact not a myth invented by ecologists, it would be a larger peak than Mt. Everest tself, because we have been warned of peak oil since the 1950´s. In fact oil was first expected to run out by 2010, following the predictions of the ecologists of the time.

The best part was when he mentioned that governments, and especially the Spanish one, hadn’t supported the renewable energies industry enough! The truth is that some 12 billion euros were granted in subsidies; the greatest government malinvestment in the last few decades.

After all, we can’t be defending certain companies, protecting their privileges as if they were precious jewels, when our electricity tariff shoots up by more than 35% in a month!

Pure taxes

And most important of all, we, all consumers should be aware that 52% of the total tariffs we are paying every month are pure taxes… just try it one day, when you turn on the light look at the lamp firmly, I assure you that you’ll be able to see Montoro’s face on it!

But don’t just blame the Spanish government for the fiscal pillaging and disastrous management, because the US did it just as well, or rather as badly.

In the 15-year period after 1994, the US government provided the oil and gas industries with subsidies worth more than 446 billion dollars, of which nearly 10 billion were given to renewable energy.

You might not think that’s much, but remember that this was before the real party started in 2009. Since then renewablew have received over 185 billion dollars.

Good and able companies are never dependent on subsidies as they have succeeded due to an efficient business model in a competitive environment.

Lazy and low profiting firms tend to require subsidies for their internal growth, a growth which is hardly ever reflected in the market.

Products don’t need to be magic, as if they are well designed or useful and at reasonable price they’ll always overtake competitors' products and attract consumers’ demand.

One of the most intervened-in sectors

The energy sector has historically been one of the most intervened in due to fears of energy scarcity and leaving aside the poor, but let me tell you that these fears come from events in already staunchly interventionist systems.

Real profit margins in a competitive industry might be lower, but overall revenues will be much higher, as if many companies are competing for a certain group of costumers on an inelastic product; as electricity is, the one with the best Value For Money (VMF), offering better prices, will certainly succeed, dragging down prices due to innovation and competition, where the chief beneficiaries will be consumers and later on the enterprises, leaving aside the government.

It is and has always been deeply dangerous for governmental to invest in companies directly, as administrations have always manipulated and dominated client companies from the shadows; if not, why are there several politicians with no idea about energy, seated at the right of the main energy CEOs in Spain?

In Spain, our renewable energy market is clearly strong, and consumers who see prices decrease will shift their demand towards this new non-pollutant industry and leave aside the oil companies they’ve typically depended on.

Technology and Globalization

Technology should therefore be used in the pursuit of a cleaner and safer planet, through innovation in search of efficiency in renewable energy generation, looking always forwards to reduce costs.

Globalization has minimized prices and increased profit margins all over the world, so just taking the energy industry out of hands of politicians and giving its lead to an open, free and global market will be the solution for an efficient and clean energetic future.

But for that first of all we should end subsidies to renewables, and to coal, to carbon, to oil, to gas, to methane, to coke, to kerosene… in sum, we should end the governmental perpetuation of subsidies.

As Michael Pollan; am American author puts it:

“The correlation between poverty and obesity can be traced to agricultural policies and subsidies.”