I’ve been a vehement critic of the Department of Energy’s Loan Guarantee Program (see here and here). In a nutshell, I argue that the DOE has no business starting a bank from scratch. Even if it could cobble together the necessary expertise and infrastructure, the U.S. government has a long history of picking losers in the energy market (see: breeder reactors, synfuels).
My case against the DOE’s green bank has been made persuasively by the Government Accountability Office, the top federal watchdog. In 2007, 2008, and 2010, the GAO released reports concluding that the program is being not being run well.
My case was further made by the pending collapse of the first recipient of a loan guarantee. In September 2009, the DOE issued a $535 million loan guarantee to Solyndra, a company that you may recall from reports of it being a total financial disaster. It canceled an IPO after a PriceWaterhouse Cooper audit found that the company’s shaky finances “raise substantial doubt about its ability to continue as a going concern.” Evidently, Solyndra already has lost $557 million. In November, the company announced that it would shutter a plant and lay off 170 employees.
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Today, my friendly neighborhood Potbelly Sandwich Shop posted small flyers along the ordering line, asking: “Where are the tomatoes?” The flyer explained:
The recent cold weather across North America has had a severe impact on the availability, quality and cost of tomatoes.
Due to these factors, we will temporarily cease to offer tomatoes on your sandwich. As soon as the tomato crop returns to normal we will add them back to your sandwiches.
We apologize for this inconvenience. We do not want to compromise on the quality or value of our sandwiches.
More evidence — if any were needed — that winter endangers public health and welfare. Tomatoes are a great source of anti-oxidents and other health-enhancing nutrients. And they are delish!
Besides ruining tomatoes, winter is strongly correlated with cold and flu. Winter can also cause or contribute to power outages, travel disruptions and delays, traffic accidents, and injuries from slipping on ice.
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EPA’s end-run around democracy is just the most egregious example of a more pervasive disorder. Regulation without representation — Congress’s delegation of lawmaking power to non-elected bureaucrats — is the malady. The cure is the Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require congressional approval before major agency rules can take effect.
Or so I argue today in “Put the REINS on EPA,” at Pajamas Media.Com.
My column harks back to the political philosphy of the American Founders and one of their great teachers, the English philosopher John Locke, who said:
The legislative cannot transfer the power of making laws to any other hands, for it being but a delegated power from the people, they who have it cannot pass it on to others.
“Can electric vehicles change the game?” That’s the question Edison Electric Institute President Tom Kuhn poses this week on National Journal’s energy blog.
I answer in the negative, pointing out, for example, that even if electric vehicle battery prices drop by 65%, the five-year fuel savings would not offset the additional up-front purchase price unless oil hits $280 a barrel (according to Boston Consulting Group). You can read my response and those of other wonks and activists at NationalJournal.Com.
Here, I would like to share (with permission) the reaction of an industry expert who read the National Journal blog posts: [click to continue…]
The hand writing was already on the wall last December even though Congress extended the Volumetric Ethanol Excise Tax Credit (VEETC) for another year.
As explained here, ethanol’s policy privileges lost their perceived legitimacy. Beef, hog, poultry, and dairy farmers objected that ethanol policy inflates livestock feed costs, making their products less competitive in global markets. Humanitarian organizations objected that ethanol policy aggravates world hunger by driving up grain costs. Environmental groups objected that corn ethanol production damages water quality and, on a life-cycle basis, probably emits more carbon dioxide than the gasoline it replaces. Budget hawks objected to Congress lavishing billions on a favored few in the midst of a budget crisis. Free market groups objected to the fleecing of consumers compelled to buy a product that delivers less bang for buck than gasoline.
The corn lobby could rally its congressional patrons one last time, but the ideological climate had shifted against them, with even Al Gore recanting his earlier support for ethanol subsidies. If the VEETC had come up for renewal in Dec. 2009, Congress would likely have extended it for five years, not just one. But in 2010 a broad-based Left-Right coalition arose to challenge King Corn, and the tide turned. [click to continue…]
Yesterday (Feb. 16), House Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) engaged in a colloquy with Interior and Agriculture Subcommittee Chairman Mike Simpson (R-ID) on Sec. 1746 of H.R. 1, the One-Year Continuing Appropriations Act of 2011.
Sec. 1746 of H.R. 1 states:
None of the funds made available to the Environmental Protection Agency by this division or any other Act may be expended for purposes of enforcing or promulgating any regulation (other than with respect to section 202 of the Clean Air Act) or order, taking action relating to, or denying approval of state implementation plans or permits because of the emissions of greenhouse gases due to concerns regarding possible climate change.
Sec. 1746 would block EPA regulation of greenhouse gases from stationary sources for the remainder of fiscal year 2011, which ends on September 30. “The funding limitation will allow Congress to carefully and thoroughly debate a permanent clarification to the Clean Air Act to ensure it remains a strong tool for protecting public health by regulating and mitigating air pollutants, and that it is not transformed into a vehicle to impose a national energy tax,” explains Chairman Whitfield’s press release. Whitfield is a co-sponsor of the Energy Tax Prevention Act, which would overturn the legal force and effect of EPA’s Endangerment Rule, Tailoring Rule, and other rules imposing greenhouse gas permitting requirements on state governments and stationary sources.
In the colloquy, Chairman Simpson states: “EPA’s GHG regulations need to be stopped in their tracks, and that’s what section 1746 does – it provides a timeout for the balance of the fiscal year, during which time EPA will be prohibited from acting on them or enforcing them.” In Whitfield’s words: “This CR [Continuing Resolution] provision is Congress hitting the pause button during the very brief period of the CR, allowing time to go through regular order and pass the Upton-Inhofe bill.”
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For years, certain natural gas producers, led by Chesapeake Energy CEO Aubrey McClendon, have pursued a myopic strategy of demonizing coal in an effort to seize a larger share of the electricity generation market.
It started in 2008, when Chesapeake funded an unsigned “Dirty Coal” advertising campaign. It featured black and white photos of children, with coal smudged faces, looking sad. Having set the table with anti coal propaganda, McClendon then teamed up with the Sierra Club’s Carl Pope to implement a legislative strategy. The pair traveled around the country, pitching natural gas as the “bridge fuel” to a green energy future.
They scored one major success, in Colorado. There, ex-Governor Bill Ritter had made the “New Energy Economy,” the centerpiece of his administration. As such, he was receptive to fuel switching as a way to meet his Climate Action Plan, a non-binding mandate to reduce the state’s greenhouse gas emissions 20% below 2008 levels. As I’ve written about at length here, the Ritter Administration engaged in a number of deceptions to carry Chesapeake’s water.
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Energy Secretary Steven Chu today testified before the Senate Energy and Natural Resources Committee on the Obama administration’s budget for the Department of Energy (DOE). Despite the fact that the DOE has yet to spend $21 billion in stimulus money (about 60% of its 2010 budget), the White House proposed a 12% budget increase.
Minnesota Senator Al Franken was unconcerned with the deficit implications of giving billions more taxpayer dollars to a bureaucracy that has yet to spend the billions of taxpayer dollars it already has. Instead, he had a much more parochial matter in mind.
His line of questioning for the Energy Secretary focused on Sage Electrochromic, a Minnesota-based window manufacturer. Senator Franken explained that the window company had received a $70 million loan guarantee from the Department of Energy, which you’d think would be pleasing to the Senator. After all, a federally backed loan is a taxpayer subsidy that allows recipients to obtain better financing.
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Last week the New York Times Paul Krugman noted that near-record high food prices instigated the social instability in Cairo that has since led to overturning of Egypt’s government. However, Krugman went on to blame the rise in food prices on global warming, which is pure poppycock, as is explained by Roger Pielke Jr. In an editorial last Tuesday, the Washington Post identified a much more plausible explanation for the spike in food prices: ethanol.
This year, American farmers will divert a third of the corn crop into the production of corn fuels that are more expensive and environmentally harmful than regular gasoline. Naturally, this has increased demand for corn, which, in turn, has pushed prices to historic highs. American farmers set the global price for corn, so the impact of our foolish ethanol prices is felt worldwide. American corn is one of the largest crops in the world, and by displacing land given to other crops, the ethanol mandate also increases the price of wheat and soybeans on the international market.
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So-called “sustainability” advocates never tire of condemning fossil fuels as unsustainable. Their assessment is based on ideology, not facts, I argue in “Sustainability: Some Free Market Reflections” over at MasterResource.Org, the free-market energy blog.
By any reasonable definition, modern commercial energy (except for heavily subsidized renewables) is sustainable. Whether we consider air pollution, life expectancy, health of the elderly, vulnerability to extreme weather, per capita food consumption, or access to safe drinking water, the long-term trends show dramatic — and continuing — global improvement. Abundant, affordable, reliable energy from fossil fuels is a key factor driving those improvements.
The truly unsustainable energy sources are those that cannot ‘compete’ without special policy privileges. Clearly, subsidy-dependent enterprises are not self-sustaining. Chronic subsidy-dependence is an indication the value of the resources an enterprise consumes exceeds the value of the products and services it provides. So from both a business and environmental standpoint, wind and solar power do not deserve to be called sustainable.
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