quinta-feira, 14 de Abril de 2011

A Dark Economy - an inside perspective

Many of my international readers should know that Portugal is seeking a rescue package. The reason for the bailout? Strange as it may seem: a green economy that has gotten dark, so much darker... Portugal will be the ONLY country in the World, according to the IMF (check out Table 2.2), that will have a GDP negative growth in 2012! José Sócrates, Environment Minister between 1999 and 2002, and Prime Minister since 2005, is the person behind this tragedy. His green vision has brought Portugal some recognition amongst greenies, but mainly a dark future!

Almost everything imaginable in this Green promise has gone wrong. Murphy's law at its best:

Portugal was the first country with wave power in the world, at Aguçadoura; it broke down only two months later. Portugal has one of the biggest solar photovoltaic power stations in the World, at Amareleja, owned by Acciona, a Spanish company. The huge feed-in tariffs being paid for this solar energy is being sent to our neighbors...

Wind power has been a big bet. Big promises included green jobs, but the truth is that they are only a few thousands... The reality is that the more the wind blows, the poorer we get. This is true because wind feed-in tariffs are much higher than energy prices in the spot market.

With such a high share of wind energy, dam construction has started, so that they can be used for energy storage. A double cost, which would not be needed, if wind energy was not so big. But it doesn't stop here: gas power stations had to be paid for being in standby, rising even more the indirect costs of wind power.

Portugal has boasted that it exported electricity energy for the first time in 2010. The truth is that most of that energy was exported at zero cost, a strange concept with an easy explanation: when wind blows, especially at night, energy consumption is low; the same does occur also in Spain, so they don't need the energy. Spain exports it through France, and gets our excess energy for free. Once again, Portuguese consumers and taxpayers are subsidizing other richer countries...

It isn't no surprise that electricity prices are very high in Portugal. Despite slightly above the European mean value, the low income means that energy is comparably much more expensive in Portugal. And this is only half of the picture, as the KWh energy price accounts for only about 40% of the electricity bill, the rest being taxes and subsidies...

Gasoline and Diesel also have very high prices in Portugal, amongst the biggest in the World. The reason: multiple taxes and subsidies paid at the gas pump. All this has a great impact on the Economy, and is the main reason behind fuel tourism to Spain, where prices are much lower. In fact, they are so much lower, that near the border, people drive 50Km or more just to fill the tank!

Lately, things have gotten even worse. Sócrates is pushing for electric cars, but nothing in those cars is being made in Portugal. Once again, we are effectively paying for R&D being made somewhere else, without any advantage for the country. Despite being one of the countries with the highest lithium reserves in the World, no value is added in Portugal.

Portugal also has some well proven gas reserves. Despite that, they are not being explored, with tourism fears being invoked. My view is that Sócrates wouldn't go this way, as it is not green... And despite potential shale gas reserves being pointed out, no one talks about it in Portugal!

And I could continue. Talk about CO2 compensations sent to other countries, projects involving offshore wind or even more expensive solar energy. The truth is that the green promise has brought us a dark future. Remember this the next time someone tries to sell you a green economy...