Post image for Can Wind ‘Compete’ without Subsidy?

The House Science, Space, and Technology Committee this week held a hearing on the efficiency and effectiveness of federal wind energy incentives.

The first witness, Frank Rusco, director of energy and natural resources for the Government Accountability Office, summarized his March 2013 GAO report on federal financial support for wind energy. Rusco testified that nine agencies administer 82 programs providing $4 billion in financial support to the wind industry in 2011 in the form of grants, loans, loan guarantees, and tax expenditures (targeted tax breaks). Some wind projects received support from seven initiatives, Rusco found.

Rob Gramlich, Interim CEO of the American Wind Energy Association (AWEA), disputed those numbers, arguing that of the 82 initiatives only two are wind-specific, dozens are defunct, and fewer than 1% of wind projects built in recent years took both a tax credit and a Department of Energy loan.

Gramlich, however, did not dispute Rusco’s finding that 99% of federal support went for deployment of wind energy rather than R&D (pp. 17-18), nor his assessment that “it is unclear whether the incremental support some initiatives provided was always necessary for wind projects to be built” (p. 43).

Citing Rusco’s testimony in his opening statement, Oversight Subcommittee Chairman Paul Broun (R-Ga.) suggested that instead of subsidizing firms that would install wind turbines anyway, Congress should fund R&D to make wind energy more competitive.

A fair point but one that indicates a more fundamental problem. When government subsidizes activities that would happen anyway, the money goes to free riders. The subsidy is a clear case of government waste. When government subsidizes activities that would otherwise be unprofitable to undertake, the money may simply prop up investments that consume more wealth than they create. If so, the subsidy is a waste of economic resources.

As three MIT scholars wrote in their assessment of President Carter’s energy programs:

The experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed and if a technology is not commercially viable, no amount of government support will make it so.

Too bad the Constitution does not mandate a recitation of those words prior to every congressional debate on energy policy!

My main reason for writing this post, however, is twofold. First, if Matt Damon or anyone else in Hollywood ever wants to make a reality-based movie about a conflict between community activists and greedy energy developers, he should look no further than the testimony of Audra Parker, CEO of the Alliance to Protect Nantucket Sound. Second, anyone seeking a clear overview of the economics of wind energy, should read the testimony of Cal State Fullerton professor Robert Michaels, who testified on behalf of the Institute for Energy Research.

[click to continue…]

The Green Jobs Fumble

by Brian McGraw on August 19, 2011

in Blog

Post image for The Green Jobs Fumble

Coming out of The New York Times of all places, “Number of Green Jobs Fails to Live Up to Promises.” Unsurprisingly, it has the green groups riled up.

A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.

Federal and state efforts to stimulate creation of green jobs have largely failed, government records show. Two years after it was awarded $186 million in federal stimulus money to weatherize drafty homes, California has spent only a little over half that sum and has so far created the equivalent of just 538 full-time jobs in the last quarter, according to the State Department of Community Services and Development.

The weatherization program was initially delayed for seven months while the federal Department of Labor determined prevailing wage standards for the industry. Even after that issue was resolved, the program never really caught on as homeowners balked at the upfront costs.

(Note that it took seven months, as in 210 days or almost 60% of a year, to figure out wage standards for an industry. Good enough for government work.)

[click to continue…]

Post image for ‘Renewables’ Surpass Nuclear Electricity Production

This is the new claim being thrown around by renewable energy proponents with supporting data by the Energy Information Administration (EIA). Check the link here:

During the first quarter of 2011, renewable energy sources (biomass/biofuels, geothermal, solar, water, wind) provided 2.245 quadrillion Btus of energy or 11.73 percent of U.S. energy production. More significantly, energy production from renewable energy sources in 2011 was 5.65 percent more than that from nuclear power, which provided 2.125 quadrillion Btus and has remained largely unchanged in recent years. Energy from renewable sources is now 77.15 percent of that from domestic crude oil production, with the gap closing rapidly.

Looking at all energy sectors (e.g., electricity, transportation, thermal), production of renewable energy, including hydropower, has increased by 15.07 percent compared to the first quarter of 2010, and by 25.07 percent when compared to the first quarter of 2009. Among the renewable energy sources, biomass/biofuels accounted for 48.06 percent, hydropower for 35.41 percent, wind for 12.87 percent, geothermal for 2.45 percent, and solar for 1.16 percent. [click to continue…]

Post image for Renewable Energy Inputs and Human Pessimism

Today The New York Times ran two dueling opinion pieces featuring Robert Bryce, author of a number of books, and Tom Friedman, who chose this column to unleash his inner Paul Ehrlich. The latter column will make regular NYT readers anxious and depressed, the former will make them angry.

Bryce argues that though wind and solar farms do not produce emissions, they require a whole lot of land, significant natural resource inputs, and new transmission lines. He believes that these shortfalls are under appreciated by renewable energy proponents, and the scaling of renewable energy might have other environmental consequences. California appears to have plenty of land, but that is to meet a 33% renewables goal, which is unlikely to satisfy environmentalists, and California has much more land than other states. The takeaway is that all energy choices have their tradeoffs:

[click to continue…]

Post image for Unscientific American

I almost choked on a complimentary pretzel during a recent flight when I read the final page of the April edition of Scientific American, this country’s premier science periodical for mainstream audiences. The page was titled “Clean Tech Rising” and the subtitle read, “China outshines the U.S. as the top investor, while Europe is a close third.” It featured bar graphs indicating what different nations are spending on so-called clean energy, like biofuel, wind, and solar power. The attendant text warned that “The U.S. has been a major player in clean energy technologies, but China is now the leader.” It recommended that, “…stepping up U.S. investment could enhance the country’s competitiveness…”

Now, it might or might not be true that China is spending more than the U.S. on “clean” energy. The ruling Communist government is not known for openness and transparency, so I take “official” investment data with a grain of salt. However, it is unequivocal that the Chinese are building coal power plants at an unprecedented rate. Estimates vary, from 4 new coal plants every week to 1 plant every week. All we know for sure is that coal, and not renewable energy, is powering the Middle Kingdom’s meteoric economic growth. This is why China, which became the world’s number one emitter of greenhouse gases only three years ago, now has a carbon footprint 40 percent bigger than the next largest emitter (the United States).

[click to continue…]