More Subsidy Insanity

Over a decade ago, the German government adopted the goal of reducing the country's CO2 emissions back to 1990 levels as part of the Kyoto process.  That's why its incredible to me that after spending billions on various goofy and questionable conservation and alternative energy programs, someone has finally thought to maybe stop massively subsidizing coal production.

For decades, German lawmakers have propped up the industry,
unwilling to risk massive layoffs and reluctant to eliminate a reliable
energy source as gas and oil supplies become scarcer.

But after spending more than $200 billion in subsidies since the
1960s, the federal government this year decided that the practice had
become unaffordable. The 2018 sunset for the hard-coal industry was set.

Economists and free-market lawmakers have long decried the subsidies
as handouts to the politically influential coal industry and powerful
trade unions. This year, for instance, Deutsche Steinkohle AG, the
owner of the remaining eight mines, will receive more in government
subsidies ($3.3 billion) than it will from selling coal ($2.9 billion).

With just 32,000 miners left, that's the equivalent of more than $100,000 in annual subsidies per worker.

I don't know what is more incredible -- $100,000 per worker or the fact that subsidies actually are larger than revenue from coal sales.  In effect, the government is subsidizing more than half of coal's production costs.

Sometimes we in the US forget just how insane the economy in Europe can be.  I remember doing a consulting project for the French national railroad, the SNCF.   It turned out the SNCF, for it's 100,000 freight cars had ... 125,000 freight car maintenance workers.  The headcount number was so insane I had to check it three times to make sure it was right.  I commented at the time that they could assign one car repair worker full time to each freight car, and have him ride around with that car full time, and still cut staffing by 20%.

  • http://www.scottthong.wordpress.com Scott

    When the European economy has been run like this for decades, I can't comprehend how they still manage to remain in the top richest nations. No wonder they're desperate to bind the US and China under Kyoto, the US has been outpacing them and within a few years all their industries will be taken over by China!

    And there's the fatal flaw in their global warming bullying... If they told everyone their real intentions of tilting the playing field back in their favour, instead of the sto-global-warming alibi, Europe wouldn't have to adopt Kyoto and choke its economy off even more!

    As it is, Europe has to go along with their cash-strangling green promises while the US and China surge ahead, probably discovering clean fusion with their massive funds and reduce greenhouse gas emissions by 50%. In 20 years' time, we may see them chiding Europe for their measly 5% reduction from Kyoto!