From the Daily Skeptic
Author: David Telfer
Last week I stumbled upon a government repository I had never heard of before, the Subsidy Controls Transparency Repository. The database was mentioned in an update email from DESNZ, telling me that the results for Allocation CFD Round 6 (AR6) had been loaded into the database. Of course, my curiosity got the better of me and I had to dig deeper to see what other net-zero and energy-related subsidies might be lurking there.
in the video whiskey galorethe SS Cabinet Minister ran aground and its load of whiskey was harvested by the locals. Our cabinet ministers are not yet stranded, but there are many eager to access the subsidies on offer. I’ve encountered some shocking things in the net zero world over the past two years, but even I’ve been shocked by the scale of some of the subsidy schemes that have been put in place.
Subsidy Control Transparency Database
Before we dive into net-zero and energy-related projects, we should note some important considerations across the library. Firstly, for subsidies recorded as part of the Contracts for Difference scheme (CfD), the government claims the amounts are “higher final estimates”. Secondly, there appear to be some duplicate entries, such as SC10301 and SC10069, both support measures for cinema audience development, totaling £60 million and having the same start date. Finally, the budget amount may be questionable, as the most expensive subsidy level is SC1005, the UK Film Tax Credit Extension, which is supposed to cost £2.96 trillionwhich exceeds UK GDP between April 2020 and April 2025.
Of the 1,169 scenarios in the database, 1,025 are active. Of those, I judged 144 to be net-zero or energy-related. The total budget for these projects is £328 billion – yes, billion, with a “b”.
However, there are two projects relevant to the Renewable Energy Obligation Scheme, projects SC11007 and SC10753, which have budget values of £1 and £0 respectively. This suggests that the budget has been significantly underestimated, as the OBR predicts that the RO scheme will cost well over £7 billion per year in the coming years. The RO scheme has been running for quite some time, so the cumulative subsidies by the end of the scheme must be in the tens of billions, and may even exceed £100 billion.
There are so many schemes that it's difficult to cover them all here, so we'll focus on the biggest ones and highlight some of the weirdest absurdities.
Power generation subsidy
The largest subsidy is power generation subsidies. This includes Contracts for Difference (CfD), Feed-in Tariffs (FiT) and RO. The budgeted value of CFDs allocated under Allocation Round 6 (AR6) project SC11117 will cost £45 billion over their lifetime. The AR5 CFD will cost £5 billion, the AR4 CFD will cost £15 billion, and previous rounds of CFD will cost £15 billion. A number of individual offshore wind farms have come to market, such as Hornsea (£3.4bn), Walney (£2.1bn) and Beatrice (£1.9bn). Wind energy schemes on remote islands will receive £15 billion in subsidies between October 2017 and March 2025.
Mitigating subsidies for intermittent renewable energy
Of course, wind and solar renewable energy are not only expensive, but also intermittent, so we need to pay for backup when the sun doesn't shine, the wind doesn't blow, or it blows too hard. The government has created a capacity market to provide backup, but it will also require an estimated £16.1 billion in subsidies by mid-December 2024. They clearly need to update this figure, as the OBR predicts the annual cost market for capacity will increase from around £1 billion in 2023-24 to £4 billion in 2027-28. The total forecast for 2023-24 to 2029-30 is more than £19 billion.
There is even a £14 million subsidy scheme (SC10810) to “support innovative technologies that have the potential to mitigate the impact of offshore wind farms on UK air defences”.
Subsidies for using expensive electricity
The largest single energy-related project by value is the UK's Energy Intensive Industries Booster Initiative (EII) (Project SC11062), worth £51 billion. The move aims to provide “power price support” to about 370 energy-intensive companies in industries such as steel, paper and batteries. There is also £936m for the energy bill discount scheme, also for EII.
We have a total of £87.4 billion in subsidies for CFDs, plus £31 billion in feed-in tariffs, £15 billion in remote island wind subsidies, and a huge but unknown amount of renewable energy obligation subsidies, which of course makes our electricity bills Very expensive. Beyond this, the capacity market is well over £16 billion. To make up for this, we will spend £52 billion supporting energy-intensive industries. It’s just one ridiculous government subsidy after another in a futile attempt to mitigate our crazy energy policies.
We pay for more than 4,500 people in DESNZ, many of whom devise these parasitic schemes that are destroying the economy, spending more than £400 million a year.
Biofuel subsidies
As well as generation subsidies, a total of £45bn is allocated to various Renewable Heat Incentive (RHI) schemes (SC10126, SC10120 and SC10119), which essentially incentivize farmers to burn wood to heat empty sheds.
A further £2 billion will be spent on green gas and a further £1.1 billion will be spent on the Teesside combined heat and power plant.
Subsidies that reduce power generation efficiency
But the madness doesn't stop there, as a further £30bn of subsidies have been allocated to the Dispatchable Power Agreement business model (project SC11175), designed to support gas-fired power station equipment by incentivizing the installation of carbon capture and storage (CCUS). A further £13bn is earmarked for other CCUS-related subsidies, and a further £2.5bn is earmarked for various hydrogen subsidy schemes.
Subsidies to transform society
A total of £1.28 billion has been allocated to transform the automotive industry to deliver electrified supply chains, with a further £289 million allocated to the Industrial Energy Transition Fund (IETF).
Several other projects involve decarbonising social housing heating, with a total value of £2.1bn, and a further £450m for boiler upgrade programmes. The plans are designed to implement the same types of measures calculated in the government's in-depth report, with payback periods measured in hundreds or thousands of years.
In addition to this, there is a further £567 million in subsidies for various ultra-low emission bus schemes.
Reliable energy subsidies
Compared with the hundreds of billions spent on subsidizing low-density, intermittent energy sources such as wind and solar, £409 million (with an “m”) will be spent on various nuclear research and development projects. They also calculated that Hinkley Point C would cost just £130m, an unusually low figure as they expected the cost of Sizewell C to be closer to £8bn. Compared to that, even this number seems insignificant.
in conclusion
Because of obvious problems in the data, we must exercise caution in drawing conclusions. Of course we are not going to spend £2.96 trillion on tax cuts for the film industry. However, when it comes to energy-related projects, these errors do seem to tend toward underestimating subsidy costs. The cost of the RO scheme will obviously be well over £1, while the capacity market will cost over £16bn.
We are seeing a truly surreal arrangement of subsidy programs, with hundreds of billions of dollars being poured into renewable energy, while tens of billions of dollars in additional subsidies are being provided to industry to mitigate the impact of the resulting high energy prices. This is completely crazy. All this renewable energy generosity contrasts with the £24.6 million allocated to the Armed Forces Covenant Fund Trust Fund (mainly for housing capital) alone.
Imagine what society would look like if we stopped subsidizing incompetent and expensive forms of energy and their parasitic cheerleaders. Bills will be lower, taxes will be lower and more companies will feel confident investing in the UK and creating jobs. Expensive energy and the subsidies that come with it are killing the economy. We must abandon the Net Zero madness now.
Written by David Turver own values Substack, where this article first appeared.
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