IMF, ECB And EU Certify That “Energy Sustainability” = Fiscal Non-Sustainability

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If you wish to bail out someone in dire financial straits, then you’ll want to make sure that the party receiving the bailout funds will break its old spending habits and not continue its wasteful ways.

This is the case with insolvent Portugal, as the IMF, European Commission and the European Central Bank prepare a bailout package for the country. These bailout institutions are demanding that Portugal, among other measures, take a hard look at all its renewable expensive energy subsidies.

The author of the climate website Ecotretas informs us that the offical Portugal-bailout Memorandum Of Understanging (MOU) has been released by the above-named institutes. You can read it HERE.

Here we have the de facto financial branch of the European Union certifying that renewable energies are financially non-sustainable – a waste of money. Yes, so-called sustainability helps lead to fiscal non-sustainability.

The relevant parts on energy are on pages 24 and 25. Under Additional costs associated with electricity production under the ordinary regime; the conditions call for (emphasis added):

5.6. Take measures in order to limit the additional cost associated with the production of electricityunder the ordinary regime, in particular through renegotiation or downward revision of the guaranteed compensation mechanism (CMEC) paid to producers under the ordinary regime and the remaining long-term power-purchase agreements (PPAs). [Q4-2011]

And written under Support schemes for production of energy under the special regime (cogeneration and renewables):

5.7. Review the efficiency of support schemes for co-generation and propose possible options for adjusting downward the feed-in tariff used in co-generation (reduce the implicit subsidy) [Q4-2011]
5.8. Review in a report the efficiency of support schemes for renewables, covering their rationale, their levels, and other relevant design elements.[Q4-2011]
5.9. For existing contracts in renewables, assess in a report the possibility of agreeing a renegotiation of the contracts in view of a lower feed-in tariff. [Q4-2011]
5.10. For new contracts in renewables, revise downward the feed-in tariffs and ensure that the tariffs do not over-compensate producers for their costs and they continue to provide an incentive to reduce costs further, through digressive tariffs. For more mature technologies develop alternative mechanisms (such as feed-in premiums). Reports on action taken will be provided annually in Q3-2011, Q3-2012 and Q3-2013.
5.11. Decisions on future investments in renewables, in particular in less mature technologies,will be based on a rigorous analysis in terms of its costs and consequences for energy prices. International benchmarks should be used for the analysis and an independent evaluation should be carried out. Reports on action taken will be provided annually in Q3-2011, Q3-2012 and Q3-2013.

In a nutshell, for Portugal to stop wasting money on renewables, as the IMF, EC and ECB request, the country really ought to stop renewables altogether. Obviously renewable energy are for rich countries who have money to burn. But when you’re broke – then you ought to stop using it.

After all in the end, what good is “energy sustainability” if it leads the world to real financial ruin?

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7 responses to “IMF, ECB And EU Certify That “Energy Sustainability” = Fiscal Non-Sustainability”

  1. Edward

    Delicious irony here PG.

    I want the UK to apply for a bailout too, then we can stop the boondoggling waste of this ‘sustainable energy’ bollox.

    And! Then, we’d get some/all of our taxpayer funds/money back, we have been forced by the EU w***ers to remit to; Portugal, Greece and Ireland.

    Because, what goes around, comes around.

    Roll on the death of the EU soviet.

  2. DirkH

    Great find by Ecotretas! Will surely go unreported in the media.

  3. R. de Haan

    “After all in the end, what good is “energy sustainability” if it leads the world to real financial ruin?”

    I don’t know what energy sustainability is… other than a cuckoo wonderland fantasy.
    Ending an article with a line like that creates the impression that Portugal is suffers a great loss. In fact reality forces them to think again with two legs firmly on solid ground.

    It would be nice if the German Government experienced a similar reset of reality. Otherwise Germany will follow the faith of Portugal sooner than later.

    In the USA even Green Electrics has turned back to basics
    http://wattsupwiththat.com/2011/05/05/back-to-basics-green-electric-becomes-general-electric-again/

    And the environmentalists have taken desperate measures indeed.
    http://wattsupwiththat.com/2011/05/04/desperate-measures-indeed/

    I wonder when we start restoring our landscapes by removing the worthless scrap called wind mills.

  4. DJL

    Mark Steyn article from last year, in responce to some one in 2008 who told him to relax “we’re rich enough to afford to be stupid.” after the crash were too broke to be this stupid.

    http://www2.macleans.ca/2010/05/27/were-too-broke-to-be-this-stupid/

  5. biggreenlie

    I guess that makes us here in Ontario, Canada really really STUPID!……….at least our Government is!………the people are just victims of a corrupt and greedy “Gang Green”. Hurry up “bankruptcy” so we can stop this madness!!!!!!!!!!!!!!

  6. DirkH

    “After all in the end, what good is “energy sustainability” if it leads the world to real financial ruin?”

    If an energy technology leads to financial ruin, it is of course not sustainable at all – negative EROEI. I have yet to find current numbers for this for wind turbines and PV installations. All i know is hearsay. Wind turbines could in theory have a positive EROEI, but as they don’t get optimized for it, but get optimized for maximizing ROI under a subsidy regime, the optimization goal necessarily neglects EROEI (you can only maximize one fitness function at a time. The maxima for ROI and EROEI are not identical as long as subsidies are paid.)

    In practize, “repowering” – replacing a turbine long before it breaks by a new one with higher output – ruins EROEI but maximizes ROI.

  7. LSARC

    Well I tried unsuccessfully to post this to comment on a Lorne Gunther article but the newspaper site is spinning its wheels so since it adds something to this thread please bear with me.

    Sadly the environment is going to pay the greatest costs of the green grift which is enabling the voracious “subsidy farmers” to penetrate wilderness and wetlands (read also rape and plunder our natural heritage) fencing our carefully protected living legacy with giant industrial wildlife killing machines. When Lake Superior’s minimally impacted watershed is to be sacrificed to save the planet only the truly perverted intellect continues to believe the environmentalist$$$$ promoting industrial-scale renewables!

    The European experience is indeed instructive! A friend from Ireland sent this:
    Extracts from page 147 and 148 of the Department of Finance’s briefing notes for the new Minister:
    http://www.finance.gov.ie/documents/foi/2011/Incoming_Minister_Brief_2011_(partially_redacted).pdf
    “the policy agenda on climate change has been driven recently more by ideology and target-setting rather than being informed by a rational assessment of what is possible and what is in Ireland’s interest, given the costs and benefits involved”
    “Climate Change Response Bill: The draft Climate Change Response Bill was at Second stage in the Seanad last month (January 2011). This bill fell with the fall of the Government. In the context of preparations of this Bill, the Department expressed grave reservations about its content, particularly targets that appeared to be well in excess of EU targets”.
    It is worth while taking a step back from the details about the EU and Irish Renewable programme and considering the analogy with Ireland’s current financial crises and how this evolved. As the “Report of the Commission of Investigation into the Banking Sector in Ireland[1]” pointed out:

    · “On the whole, it appears that actions taken by various institutions in the run-up to the Irish crises did exhibit the kinds of behaviour generated by the ‘herding’ and ‘groupthink’ hypotheses”.

    · “Herding implies that management groups in different banks implicitly follow each other with little or only modest analysis and discussion”.

    · “Groupthink occurs when people adapt to the beliefs and views of others without real intellectual conviction. A consensus forms without serious consideration of consequences or alternatives, often under overt or imaginary social pressure. Recent studies indicate that tendencies to groupthink may be stronger and more common than previously thought. One consequence of groupthink may be herding, if the views in question relate to institutional policies, but this need not be the case”.

    · “Ireland’s systematic banking crises would have been impossible without widespread suspension of prudence and care by those responsible for bank management as well as by those charged with ensuring financial conduct”.

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