AMAC EXCLUSIVE
For years, Democrats and other Western liberals have poured hundreds of billions of dollars into subsidies for so-called “green energy” under the assumption that those companies would eventually become profitable enough to stand on their own. But with revenues remaining stagnant or decreasing, it appears the left’s dreams for a “green revolution” may rely on permanent taxpayer handouts.
The latest indication that green energy is far from becoming economically viable came from Norway, where Shell announced that it is considering pulling out of involvement in the country’s first commercial offshore wind farm amid concerns about profitability. Although the Norwegian government has offered $2.17 billion in subsidies for the project, Shell executives believe that figure is insufficient to offset the expected financial losses.
Shell’s announcement followed another from the new chief executive of British Petroleum, Murray Auchincloss, who said that the company would be shifting away from renewables and focusing more on increasing oil output.
Under its previous leadership, the British energy giant shocked shareholders with its sudden embrace of so-called “net-zero” policies. It expanded its low-carbon business, including building two North Sea offshore power plants for Germany. But that decision resulted in annual profits falling from $27.7 billion in 2022 to $13.8 billion last year.
Other companies specializing in renewable energy production have also continued to see huge losses. Danish Ørsted, one of the leaders in offshore wind, was forced to write off a staggering $4 billion last year after it canceled two projects in New Jersey.
Among the reasons for the surprising decision, CEO Mads Nipper named a lack of subsidies and a failure to obtain adequate tax credits from the U.S. government – despite the fact that the Biden administration has provided the most generous tax credits and subsidies for green energy in American history.
“It speaks volumes about project efficiency if a company with a $165 billion market cap withdraws due to inaccessibility to subsidies,” observed Dr. Theo Starnberg, a former energy business analyst for Germany’s Christian Democrats (CDU). “It is clear that the “green” transition does not strengthen the economy of the United States or any other nation, and it is highly improbable it ever will.”
Orsted has also been forced to pause dividends for 2023 through 2025, lay off 800 of its 9,000 employees, and withdraw from offshore wind markets in Norway, Spain and Portugal. Nipper admitted the company had “felt the impact of market challenges over the past few years.” In other words, lucrative government subsidies still weren’t enough to keep the company profitable.
The industry’s hardships have been exacerbated as more wind turbines falter, explode and catch fire, revealing persistent issues with their quality. Siemens Energy, a leading producer of wind turbines, recorded a $5 billion annual net loss in 2023 and is expected to post a $2 billion loss in 2024. The company recently announced the redevelopment of faulty Siemens transformers at its Charlotte, North Carolina manufacturing plant.
Commenting on the dire financial situation of his firm, Siemens CEO Christian Bruch said, “One still has to note that… the speed at which grids and renewables are expanding is still not sufficient.”
“This sounds to me as a non-subtle suggestion that the taxpayers should put up more cash for his businesses,” commented Dr. Starnberg, adding that this was the only way to keep that firm afloat. “Energy policy is in urgent need of rationalization.”
However, rationalization does not appear near on the horizon. The U.S. government could dole out as much as $25 million to Siemens over the next several years. The Biden administration has also continued to approve offshore wind farms despite their relatively low power output, suspect reliability, and general unprofitability.
In the U.K., the British government recently increased the price per MWh that it pays to wind energy producers from 44 to 73 pounds, a move that some economists called “illogical.” All of this increase will be paid for by consumers.
The Biden administration is also in the midst of allocating $1.2 trillion over the next decade in green subsidies contained in the so-called “Inflation Reduction Act.” $156 billion of that will go toward renewable electricity production.
In total, world governments allocated an eye-watering $1.7 trillion to green energy companies and projects in 2023. Despite this, profit margins continued to shrink, while renewable stocks lost 30 percent of their value. Meanwhile, oil and gas companies saw record profits.
Some energy specialists have warned that the subsidies paid to renewable energy companies are little more than a continuous bail-out for an industry that will never be profitable. “It is an undeniable fact that oil, gas, and primarily coal will remain the cheapest and most reliable source that can fuel most economies,” said David Blackmon, an energy specialist with a forty-year career in the U.S. energy industry.
China and India, which have taken the opposite approach, have seen their energy sectors thrive. Last year, China opened 96 percent of the world’s new coal-fired power plants, consistent with Chinese Communist Party directives to prioritize energy security over climate issues.
India has similarly prioritized traditional forms of energy amid exploding demand in what is now the world’s most populous country.
Years of pouring taxpayer money into green energy have yielded precious few results. If governments in the United States and throughout the West do not change course soon, they may be facing both an economic crisis and an inability to keep the lights on.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
