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Opinion — Does a 35% increase in fossil fuels subsidies impact my No Energy East Analysis?
My blog, No Energy East Analysis, isn't a traditional economic analysis, it's a "cocktail napkin" design analysis. I had a lot of feedback from this blog. Most of it positive, for what it is — a tool to help us think of how green innovation will be changing many rules of the global energy game. I did include some ballpark numbers — seems one of my assumptions is now weak?
The IMF pegged Canada's Fossil Fuel subsidies at $34,000,000,000, my design analysis draws on this ~$35B value — the latest report from IMF now pegs Canada's Fossil Fuel subsidies at $46,000,000,000. That's a 35% increase in subsidies to an industry that has no viable* future at $34,000,000,000.
In 2008, I concluded investing in these stranded assets a fools game — in 2014, The World Bank confirmed my assertions, followed by Bank of England. and now Moody's Ratings. They agree, investing in dead horses won't win in the global horsepower game.
There is criticism to be made of my analysis, yes, but the reality of rates of innovation are very real, and very important, in maintaining market leadership and dominance. My nemesis**, IBM, manages its technology innovation by buying up the winners. Some only start companies to become a buy-out target. It's a smart plan — top dogs get golden parachutes and IBM now has design authority to use its technology, or not use it, how IBM chooses.
Fossil fuel subsidies hurt the green economy in Canada. By artificially lowering production cost with taxpayer's money, economies of scale for viable green technology is throttled by the "free market" monopolies.
So, will I update my No Energy East Analysis? No, I will let it stay the way it is, an idea captured in time. In design analysis, mistakes are okay, but, the concept that Energy East will operate profitably for 50 years is a bigger and sharper pill to swallow than my simple design analysis. Sorry if I underestimated how bad it is by ~35%.
* — Should fossil fuels industry be subsidized until it's economically unviable? The unsubsidized production cost of fossil fuels makes it an instant loser in today's competitive energy market.
* — IBM bought RFID intellectual property rights from a US company that I worked at. I'm kidding, they are no my nemesis, but they do steal a lot of my ideas.