(Credit: Michael Felletter)

The latest report from NPD Solarbuzz — a market research firm based out of Santa Clara, California — projects that global revenues for the solar photovoltaic (PV) module industry will drop from $25.5 billion last year to $20.5 billion for this year. That 20 percent plunge, according to Solarbuzz, is a simple matter of overproduction.

The supply of potential solar PV capacity shot all the way up to 45 gigawatts by 2012, while end-market demand only reached 29 gigawatts. The cause was a precipitous drop of 50 percent in the average selling price of the modules, which is great for anyone who wants to buy, install, or use solar energy, but not so great for firms that supply it.

So now there’s an ongoing drop in revenues, and a lot of backtracking amongst firms to bring supply back into line with demand, according to NPD Solarbuzz Senior Analyst Michael Barker:

Share values of several publicly listed PV companies have been falling close to delisting levels, operating losses have been reported in the hundreds of millions of dollars per quarter, and many manufacturers are continuing to file for insolvency.

As CleanTechnica noted, the recent bankruptcy of then Chinese solar manufacturer Suntech Power is only the most high-profile example of the problem. (Though it looks like Suntech’s troubles also had a lot to do with bad financial management outside of any question of market fundamentals.) The good news is that the reckoning should be short. NPD Solarbuzz also projects revenues will start climbing again in 2014, and should clear 2012′s level by 2016.

Solar PV Module Supplier Revenues Forecast To 2017

Source: NPD Solarbuzz Marketbuzz 2013

There’s an argument to be made that the short-term culprit here is the contest between the United States and China, to see who can subsidize their respective solar industries the most (Hint: China is winning). On the other hand, finding the most economically efficient way to deliver energy — or finding the best “comparative advantage” roles for the U.S. and China in the solar market — is only the second most important goal of promoting renewables.

The most important goal is preventing worldwide ecological and civilizational catastrophe. And the entire way we currently conceptualize and measure economic activity doesn’t grapple with the damage we’re doing on that account.

Admittedly, tax and grant subsidies for renewable energy technology are an imperfect response to that problem. Building prices into the energy we get from fossil fuels that actually account for the ecological and social risks of carbon emissions would be far more elegant — and might help avoid some of these annoying overshoots and busts in the renewable energy market. But getting a price on carbon is proving to be a difficult political lift.

And in the meantime, simply sitting on our hands isn’t an option.

(h/t: CleanTechnica)

American families have been plagued by higher oil and gasoline prices over the past several years despite a significant increase in domestic oil production and a decline in consumption. But while high gas prices threaten the economy and family budgets, they enrich oil companies with huge profits. Apparently that doesn’t bother House Budget Committee Chairman Paul Ryan (R-WI), since his proposed fiscal year 2014 budget resolution appears to again keep a decade’s worth of oil tax breaks worth $40 billion for the oil-and-gas industry. Even more astounding, the budget would give the five biggest oil companies an additional multibillion-dollar tax cut by slashing the corporate income tax rate.

Rep. Ryan’s latest budget is a retread of the budget, complete with oil giveaways, that he and Republican presidential nominee and former Massachusetts Gov. Mitt Romney ran on in 2012 — and which was soundly rejected by voters in November. Hasn’t Rep. Ryan learned anything?

Big Oil companies continue to rake in the profits, while gasoline prices have risen by 38 cents since January 1 of this year — an 11 percent increase. What’s more, the Energy Information Administration reported that U.S. households spent an average of $2,912 on gasoline in 2012. This is the highest level in four years, equivalent to nearly 4 percent of the average household income before taxes. Last year the average gasoline price was $3.66 — a dime more than the previous record set in 2011. Time magazine reported in December that “2012 will go down as the most expensive year ever for gas.”

While higher gasoline prices cause families pain at the pump, they are a boon to the world’s largest oil companies. The big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — made a combined record profit of $118 billion in 2012 on top of a record profit of $137 billion in 2011. These companies also have a total of nearly $72 billion in cash reserves. Yet under the Ryan budget, it seems that the big five oil companies would continue to benefit from their $2.4 billion share of the $4 billion in annual tax breaks for all large oil and gas companies.

In addition to the apparent retention of these existing special tax breaks, Rep. Ryan’s FY 2014 budget explicitly includes the Romney presidential campaign’s economic plan proposal to cut the corporate income tax rate from 35 percent to 25 percent — nearly a one-third reduction. That could provide an additional combined tax cut of at least $2.3 billion annually to the big five oil companies, according to an analysis of their 2011 public financial statements. That includes $1.5 billion for the three domestic oil companies and $800 million for the two foreign-owned companies. Since it is of course impossible to predict their future profits, this estimate is based on their 2011 financial data, including their U.S. federal income tax expense.

Of course Big Oil and the American Petroleum Institute, their wealthy lobbying organization, trot out a number of specious arguments to keep existing tax breaks in place, such as:

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In 2009, world leaders at the G20 summit agreed that phasing out fossil fuel subsidies should be a top priority. Three years later, with very little progress on actually repealing those subsidies, promises for reform ring hollow.

Now, as diplomats gather in Doha, Qatar for an international climate summit — an event that experts say will bring very few meaningful commitments — groups are stepping up the pressure on fossil fuel subsidy reform.

Rich countries spent $58 billion on fossil fuel subsidies in 2011. That’s roughly five times the amount they spent on “fast start” financing for climate adaptation and mitigation in developing countries, according to an analysis released today at the Doha climate talks by Oil Change International.

Established at the Cancun climate talks in 2010, fast-start finance is designed to help the most vulnerable countries fund renewable energy, efficiency, water access, and climate change adaptation projects. The goal is to raise $100 billion a year for these projects by 2020.

The Oil Change International analysis is derived from OECD figures on fossil fuel subsidies and World Resources Institute data on international commitments for climate-resiliency projects in developing countries. It found that the average yearly commitment from developed countries for climate financing over the last three years was $11 billion — a fifth of what they spent to support the fossil fuel industry.

“What this analysis shows is that governments gathered in Doha to supposedly fight climate change need to put their money where their mouths are,” said Oil Change International’s Executive Director Stephen Kretzmann in a statement. “It should be plainly obvious that you can’t solve a problem when you’re spending vastly more to continue creating it than you are to fix it.”

Fossil fuel subsidies have become an important fight in the climate advocacy world. With very little movement on an international plan to price greenhouse gas emissions, campaigners are now pushing countries to drop their support of dirty energy. But progress in this area has been stubborn as well. Although the issue is widely discussed in international negotiations as an option, there is very little appetite within individual countries to repeal subsidies for coal, oil, and gas.

Even the International Energy Agency — an organization set up in the 1970′s to counter the power of OPEC in the oil markets — strongly agrees that fossil fuel subsidies must be eliminated in order to seriously address climate change.

Earlier today, IEA Executive Director Maria van der Hoeven released a very strong statement on the importance of fossil fuel divestment that happened to coincide with the Oil Change International analysis:

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Federal support for energy technologies has been a central piece of this year’s presidential and congressional campaigning. Since last week’s presidential debate, however, the issue become even more interesting.

Mitt Romney surprised many during the debate when he said that cutting billions of dollars in yearly tax breaks for the oil and gas industry would be “on the table.” Of course, he followed that up by grossly inflating federal investments for renewables and lying about the number of clean energy companies that went bankrupt.

Still, Romney’s statement is notable considering that he’s never said anything like it as a presidential candidate. (It’s also very likely that Romney — who once called himself “severely conservative” — made the comment only to Etch-A-Sketch himself back to being a centrist, as he tried to on almost every issue during the debate).

Yesterday brought another surprise comment on the issue from a prominent Republican. In a debate against his Democratic challenger last night, Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, took Romney’s comments further and actually proposed an end to federal tax support for fossil fuels: “I’m for putting all of these on an even footing. Let’s look at the oil and gas subsidies, let’s take them away. Let’s let them compete just like everyone else at the same level.” Upton then went on to criticize government investments in renewable energy.

Like many other politicians who oppose federal support for clean energy, both Romney and Upton have previously protected tax breaks for the fossil fuel industry (Romney through his campaign, Upton through House votes). However, now that they’re being forced to message to the general electorate, both candidates are changing positions to make their opposition to renewable energy spending sound more reasonable.

Whether or not Romney and Upton are being sincere or just saying what may get them elected, they’ve added their prominent voices to a chorus of Republicans and conservative free-marketeers who want to see an end to all federal support for energy — mostly clean energy.

This argument is quickly becoming the new “center” of the debate. While a realistic conversation around how, how much, and how long to incentivize certain energy sources is absolutely necessary, it’s important that clean energy advocates not get pulled in to the question of if the government should lend its support to emerging industries.

As we’ve covered over and over, it’s preposterous to claim that the free market delivered us the energy system we have today. We’ve enjoyed cheap fossil fuels in part because of government’s attempts to bring the industry to scale. Over the last century, the federal government has practically given away land for extraction of coal, oil and gas; helped build infrastructure to transport fuels; and has provided a range of tax breaks, loan programs, and technical support for the fossil fuel industry. But now that the clean energy industry is asking for many of the same incentives in order to compete against an incumbent industry, hypocritical politicians call it “picking winners and losers.”

And that makes the second point so crucial. It’s important to remember why we’re putting federal and state support behind clean energy in the first place. We have to limit our use of fossil fuels within a pretty compressed time frame in order to transition to a low-carbon future and avoid irreversible climate change. Period. And that means providing support for renewable energy, efficiency and conservation while taking away support for the polluting resources causing the problem. Global warming pollution needs to be a loser since it is the greatest threat to human health and well-being. It’s as simple as that.

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by Harald Heubaum, via The Carbon Brief

US presidential contender Mitt Romney recently said that, if elected, he would not extend the production tax credits (PTCs) that have helped grow the US domestic wind energy industry since the early 1990s. But does Romney’s claim that discontinuing PTCs is necessary to “level the playing field” for energy sources stand up? A recent study taking the long view of subsidies to energy sources suggests renewables have received only a fraction of the historical support given to their fossil fuel competitors.

Romney’s position on support for renewables has vacillated over the years. In 2003, when governor of Massachusetts, Romney drew on a state fund to provide subsidies to a select group of renewable energy companies. But, nine years on, Romney’s support for free markets over government intervention has apparently hardened. He blamed the failure of Solyndra, a solar cell manufacturer that benefited from stimulus spending only to file for bankruptcy last year, on the Obama government’s decision to pick “winners and losers”.

Romney’s new stance should come as no surprise. It chimes with the current US Republican enthusiasm for unfettered free markets. And it also echoes the criticisms of predominantly right-of-centre politicians around the world, who have claimed government support has given low-carbon technologies an unfair competitive advantage over established energy players.

But are they right? Do renewable energy subsidies distort the market? To answer these questions it helps to take a closer look at government involvement in energy markets over time. The US experience is particularly illustrative.

Mapping US fossil fuel subsidies

In a 2011 study of historical US energy subsidies published by DBL Investors, Nancy Pfund and Ben Healy analyse US federal government support for various energy industries during their formative years. For the coal industry this meant cheap land grants in the 19th century. For oil and gas it was tax incentives during the first half of the 20th century, followed by costs of regulation, civillian R&D and liability risk-shifting among others for nuclear power from the late 1940s. Finally, for modern renewables it was tax incentives from the early 1990s onward.

Drawing on government, academic and NGO sources, Pfund and Healy find that when the first 15 years of subsidy life are compared, government support for the oil, gas and nuclear industries as a percentage of inflation-adjusted federal spending far outweighed the support granted to renewables.

Taking a longer-term view and again adjusting for inflation, the authors find that between 1918 and 2009, the oil and gas industry received a cumulative $446.96 billion in subsidies compared to just $5.93 billion given to renewables in the years between 1994 and 2009. Meanwhile, the nuclear industry benefitted from a cumulative $185.38 billion in federal subsidies between 1947 and 1999.

Pfund and Healy conclude:

“[C]urrent renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. Rather … federal incentives for early fossil fuel production and the nascent nuclear industry were much more robust than the support provided to renewables today.”

The study doesn’t just highlight the advantage the federal government gave oil, gas and nuclear in the form of subsidies. It also shows that the government continued the financial support as these industries matured, arguably enshrining a market distortion.

Pfund and Healy uncover evidence of direct and indirect coal subsidies reaching back as far as 1789 when the US federal government enacted a tariff on imported coal. Coal is not included in the final total of subsidy amounts, however, due to a lack of reliable data reaching back to the industry’s formative years in the early 1800s.

But it’s clear that coal continues to receive subsidies more than 200 years after the height of the Industrial Revolution. The US Energy Information Administration tallied federal government subsidies to the coal industry at $3.17 billion in 2007.

Subsidies beyond the US

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