Green Jobs Lost As Green Subsidies Dry Up–But Elon Musk Set To Make Billions From Californian Taxpayers
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By Paul Homewood
The crazy world of renewable subsidies just goes from bad to worse:
Up to 100 solar PV firms in Japan could face bankruptcy this year, with more than double the number of firms going bust in the first half of this year than the same period in 2016.
According to corporate credit research company Teikoku Databank, which surveys companies across various industries and has produced its third report on solar PV company bankruptcies, 50 companies in Japan’s solar sector have already gone out of business in the first six months of 2017.
While the market overall has rapidly expanded from the launch of the feed-in tariff (FiT) in July 2012, Teikoku Databank acknowledged that there has been a slowdown in deployment in the past couple of years as the government successively made cuts of 10% or more on an annual basis to the premium prices paid for solar energy fed into the grid.
TILLSONBURG – The loss of 340 jobs at a factory that makes blades for wind turbines could be harbinger of troubles ahead in Ontario’s green-energy industry, a leading analyst says.
Siemens Canada announced Tuesday it’s closing its Tillsonburg plant, one of four Ontario green-energy factories set up under a controversial, multi-billion-dollar deal with Korean industrial giant Samsung.
The closing of one of the town’s largest employers came after weeks of nervous speculation.
But energy analyst Tom Adams said Ontario’s green-energy industry could be in for a rough ride if it doesn’t lay its hands on orders from outside Ontario, arguing the provincial market is saturated with wind and solar electricity brought online since the Liberal government plunged headlong into green energy in 2009.
“I think it was always pretty obvious that whatever jobs were going to arise from the Green Energy Act were all temporary or almost all temporary,” Adams said, referencing the provincial law that paved the way for big wind farms in Ontario under contracts paying energy giants more than consumers pay for power.
“Samsung had no history in renewable energy before they came to Ontario. They came only for the subsidies, and when the subsidies dry up, they’ll disappear as quick as they landed,” said Adams, an independent energy and environmental advisor and researcher.
In 2010, four plants to make parts for wind and solar energy farms were set up under the Samsung deal between the company and the province to generate power for Ontario and create green-energy jobs.
Not a single Tesla was sold in the country in April.
Following Hong Kong’s decision to reduce incentives for electric vehicles, sales of Tesla vehicles in the country plummeted. The local government slashed a tax break for electric vehicles on April 1, which resulted in no Model S or Model X deliveries during the whole month. Data from Hong Kong’s Transportation Department also reveals only five privately owned electric vehicles were sold in May.
For a comparison, in March alone a total of 2,939 Tesla cars were registered, almost double the result of March 2016. During the first quarter of this year, new registrations were approximately 3,700.
The California state Assembly passed a $3-billion subsidy program for electric vehicles, dwarfing the existing program. The bill is now in the state Senate. If passed, it will head to Governor Jerry Brown, who has not yet indicated if he’d sign what is ostensibly an effort to put EV sales into high gear, but below the surface appears to be a Tesla bailout.
Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero.
Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins. A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. No other EV manufacturer is anywhere near their 200,000 limit. Their customers are going to benefit from the subsidy; Tesla buyers won’t.
This could crush Tesla sales. Many car buyers are sensitive to these subsidies. For example, after Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero. The good people of Hong Kong will likely start buying Teslas again, but it shows that subsidies have a devastating impact when they’re pulled.
That’s what Tesla is facing next year in the US.
In California, the largest EV market in the US, 2.7% of new vehicles sold in the first quarter were EVs, up from 0.4% in 2012, according to the California New Dealers Association. California is Tesla’s largest market. Something big needs to be done to help the Bay Area company, which has lost money every single year of its ten years of existence. And taxpayers are going to be shanghaied into doing it.
To make this more palatable, you have to dress this up as something where others benefit too, though the biggest beneficiary would be Tesla because these California subsidies would replace the federal subsidies when they’re phased out.
It would be a rebate handled at the dealer, not a tax credit on the tax return. And it could reach “up to $30,000 to $40,000” per EV, state Senator Andy Vidak, a Republican from Hanford, explained in an emailed statement.
This is how the taxpayer-funded rebates in the “California Electric Vehicle Initiative” (AB1184) would work, according to the Mercury News:
The [California Air Resources Board] would determine the size of a rebate based on equalizing the cost of an EV and a comparable gas-powered car. For example, a new, $40,000 electric vehicle might have the same features as a $25,000 gas-powered car. The EV buyer would receive a $7,500 federal rebate, and the state would kick in an additional $7,500 to even out the bottom line.
And for instance, a $100,000 Tesla might be deemed to have the same features as a $65,000 gas-powered car. The rebate would cover the difference, minus the federal rebate (so $27,500). Because rebates for Teslas will soon be gone, the program would cover the entire difference – $35,000. This is where Senator Vidak got his “$30,000 to $40,000.”
The Tesla Model 3 would be tough to sell without the federal $7,500. But this new bill would push Californian taxpayers into filling the void. It would be a godsend for Tesla.
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July 19, 2017 at 01:48PM
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