Putting ethanol and solar subsidies in perspective

I have written elsewhere on the importance of both biofuels and solar power as components in a national energy solution, and have published elsewhere on the advantages and importance of solar feed-in tariffs. I begin with this statement because a comparison of ethanol and solar incentives is decidedly lopsided, and ethanol is a clear winner in terms of “subsidy efficiency”, and I do not mean to imply that solar is not important. It is vital. We need more. But ethanol has received a bad rap, and there is a general supposition in general media, and even in many academic and political circles, that ethanol has ruinous levels of subsidization.

The federal solar tax incentive, in BTUs.

The federal solar incentive today is a 30% tax credit.

Coolflatroof.com puts the solar installation cost at $9,000-$12,000 per KW for residential system, and gives a general figure of 11 cents per watt for a 3 KW installation, dealer-installed and sun-tracking. An average home needs 4.62KW of solar to cover the average monthly load, according to the state of Minnesota (and the average home uses 10,600 KWh per year, according to the Energy Information Administration).

Using a figure of 10 cents per watt for a 4.62 KW installation (to take into account economies of scale), we come up with a cost of $46,200 for an installation that covers the annual residential load.

The federal tax credit is 30 percent, as mentioned above, giving us an incentive of $13,860 per residential system. There are 3412 BTUs in a KWh, giving us a total of 36.17 million BTUs per year in solar energy for the $13,860.

That’s 2609 BTUs per federal dollar.

To make it simple, I have excluded additional local incentives, which can be substantial. For example, the city of Lompoc, CA offers an additional $3.50 per watt [capped at 50 percent of total installation], and Palo Alto, CA offers $2.20 per watt.

The federal ethanol tax incentive, in BTUs.

The federal ethanol incentive today is a 45 cent per gallon credit to the blender of the fuel. No guarantee that this reachs the consumer, but let’s assume it is fully passed through in the form of an incentive.

Ethanol has 76,000 BTUs per gallon, according to the Energy Information Administration.

Based on 84,000 BTUs of renewable energy for $.045 in tax credits, that gives us 168,888 BTUs per federal dollar

Comparing ethanol and solar

Solar is a one-time install, while ethanol is the renewable energy you have to keep on buying. So it’s important to keep that in mind when making comparisons.

However, it’s fair to conclude that a solar system would have to be in place for 64 years to amortize the federal dollars to match the efficiency of ethanol. Solar installers and residents think in 5-20 years periods, not 64, and that makes ethanol a hands-down winner.

The danger in all this

Foes of renewable energy must be laughing their heads off to see the “war over incentives” that have broken out between sections of the environmental movement over the division of the spoils. Ethanol has been taking a strong hit from food manufacturers and the livestock industry. Most environmental organizations have been sitting on the sidelines, or pouring it on. The data does not support the noise

The struggle for a global energy solution needs all the forms of renewable energy available. Squabbles over the relative merits of one form or another of renewable energy are diverting attention from the real problems, which are dependence on imported energy and a profligacy of usage.

Further, environmentalists, having been marginalized for so long by the foes of global warming, should be wary of the tactics of diversion that the foes of alternative energy have successfully employed. Truth based on evidence should be the weapon of choice, not the convenient and familiar tactic of deciding one’s views first, and choosing facts to suit the arguments for solar and wind, over biofuels.

All renewable energies need incentives and support until there is a cost for carbon, and quibbling about the amount of support, when support is vital to progress, is detrimental to the movement as a whole. Better has truly bccome the enemy of good.

The increasing balkanization of the renewable energy movement over subsidies and emissions data is “the inconvenient truth” that bedevils the movement, at the precipice of a great victory in a just war.

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