29 Apr 2011

Solar subsidies to farmers?

Let's connect the dots:
  • "The California Assembly passed a bill that would oblige state utilities to get a third of their energy from renewable sources by 2020." Governor Brown signed this update on earlier, similar laws.
  • Farmers and others are setting up big projects to meet this artificial boost in demand.
The first dot is an artificial increase in demand for renewable power. Note that this requirement of utilities does NOT apply to customer-sourced renewable power.*

The second dot belongs to the beneficiaries of big new projects for renewables. By current statistics, total capacity is about 63,000 MW. Of this, 420 solar projects have a capacity of 20,600 (about 30%) and 300 wind projects have a capacity of 23,700 (about 35%).

So we can see that current and future conditions will favor solar and wind projects that will need LOTS of space from people who own land. These facts lead me to the conclusion that farmers with useless land (due to loss in fertility or water or salting) are going to benefit from this government mandate. Seems like another case of baptists (environmentalists) helping out the bootleggers (unsuccessful farmers) via government subsidies.

Bottom Line: "Do the right thing" regulations that mandate behavior generate money for special interests.

H/Ts to DL and DW

* For a comprehensive overview of solar in the southwest, read this Miller-McCune article, which helpfully points out that rooftop solar can be more efficient than huge arrays in remote places.FYI, I'm NOT a fan of feed-in tariffs to promote solar. They are the reason why Germany (NOT a sunny place) is covered in solar (is Jersey far behind?). Better to price carbon into ALL power sources and then let market forces determine where and how to install solar. But THAT solution will not please lobbyists and special interests :(


Wayne said...

The speculation about solar subsidies to farmers is not far fetched. SB 34 proposes to imposed excise taxes called a Public Goods Water Charge of $100 per acre foot on retail water use to fund the Delta Stewardship Council and the State Water Commission and its pet project as well as other projects. This is an effort to replace the proposed Consolidated State Water Bond on the 2012 ballot because the last three opinion polls show the voters don't want new taxes. They hope to get 75% vote in legislature and Governor to sign bill. But they need to form a coalition in legislature which means they need to overcome opposition by farmers. Solution: buy them out with solar subsidies. That is what this all appears to be about. Thanks for this post.

CRG said...

I'm not sure how this equates to a "subsidy"... It does equate to money shifting hands as a result of regulation or legislation, but that is not the same as a "subsidy."

On one hand, I really have no problem with people getting income from serving a need that is mandated (as in, getting income for providing land that is needed to meet energy mandates). On the other hand, I do have a problem with short-sighted legislation enacted without regard for the inevitable unintended consequences.

All new laws should be required to undergo an EIR before they can be passed. If a new Vons, which will have moderate impact on a limited area, has to complete an EIR before it can be opened, then a new law, which can have huge impacts on an entire state, should absolutely have to pass that muster as well.

David Zetland said...

@CRG -- you put your finger on it: "mandated." If a law mandates that people named David should get free beers, then it's a subsidy for people like me. It also (obviously!) a good law that works in the public interest. :)

CRG said...

If the legislature passed such a fine and enlightened law as you suggest, it would be a subsidy for you, and also for the beer makers (assuming the gov't was paying them for providing you with beer).

But mandating that 30% of our power come from renewables is not a subsidy as far as I can figure. The government isn't paying for or providing anything. They're not requiring that the power come from solar power that was produced on Farmer X's land.

Power companies can choose whatever form of renewable power they want, and it can be produced wherever and however works economically for them. The consumers of the power pay the going rate for whatever power they use, which covers (in theory) the cost of the energy production and the land on which it is produced. I can't find the subsidy in that chain of events.

P.S. I would propose that your law should be passed post haste, without an EIR, and with slight modification...

David Zetland said...

@CRG -- We are making progress, beer-wise. I am using a different version of subsidy. It's not cash, but a "commercial advantage" that the government is giving to me (and beer makers) -- an artificial boost in demand that benefits me at a cost to others. (Consider the "rent control subsidy." People in cheap apartments do not pay market rent but their landlords get less $$.)

CRG said...

Now we're talking the same language. I agree that this is an artificially created commercial advantage for those involved (directly or indirectly) in the renewable energy trade. It's still not what I would define as a "subsidy" but that's semantics.

Now my question is: is it inherently wrong for a government to give artificial advantages in the course of making laws, and if it is, how do they avoid doing so? (I'd suggest they stop making so damn many laws, but that's just me...) Nearly every new law creates a commercial advantage for someone, even if it's just the lawyers, who, according to your definition of subsidy are a wholly subsidized industry.

Second, is it inherently wrong for a private person or company to take advantage of a government-created artificial advantage, or are they simply meeting a demand (artificially created or not) by providing a good or service? (Oh, and when I say "take advantage of" I mean that in a benign way, as in "The offer of free beer was there so I took advantage of it and had one" not "They totally took advantage of my offer of free beer by loading up their pickup trucks with as much as they could haul and then selling it on the street corner."

David Zetland said...

@CRG -- is it wrong? Yes. Government should not distort decisions. It's there to keep the field level. That's why my "some for free, pay for more"water pricing idea gives a cheap block of water to everyone (not just the poor) -- there's no point in debating even poverty. Taxes redistribute wealth, sure, but they are objective in the sense that people pay them b/c of wealth (or spending), not b/c of their name, race, etc.

people are rational to take advantage. The trouble is that politicians like to offer advantages in exchange for votes. Worse, they will design them for bribes.

BL: Better for gov't to stay out of the subsidy business.

CRG said...

Sounds like we are in agreement on that point. Government is better off staying out of most things.

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