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Posts Tagged ‘Green Energy’
August 22nd, 2012 at 12:20 pm
Federal Energy Policy in Microcosm
Posted by Troy Senik Print

As a resident of the Los Angeles area, I’m accustomed to the petty indignities of big government. In a number of local communities, I can’t get a plastic bag from a grocery store and remain on the right side of the law. In the bedroom community of Calabasas (where I used to live), lighting up a cigarette is illegal virtually everywhere. There was even a small uproar earlier this year when it looked like L.A. was green-lighting $1,000 fines for playing football on the beach (of course that was the one that actually got the public incensed).

Traveling in South Florida last week, I encountered a new one: jam-packed parking lots where the only open spaces (and yes, they were virtually always open) were set aside for electric cars. In an instance of federalism working in exactly the opposite fashion it should — bad state and local ideas trickling up to Washington — it looks like the Capitol is about to get a taste of similar medicine. From National Journal:

Both the House and Senate approved plans to install public charging stations for electric vehicles earlier this month, and President Barack Obama signed those laws late last week. But in conversations with more than a dozen relevant Capitol Hill offices, the Alley could only track down one staffer with an electric car.

The phenomenon — whether in Miami, Capitol Hill, or anywhere else in the nation — is always the same: No one’s buying what the government’s selling. A better parking spot, a charging station, and a guest pass to the HOV lanes aren’t enough to convince the average American consumer to sacrifice quality, reliability, and safety.

This, I think, is the most telling part of the NJ piece:

Though few staffers currently drive electric cars, the sponsors of the legislation hope the stations will act as incentive for staffers considering purchasing one. There are only about 55,000 electric vehicles on the road, according to a CBS projection, which falls well short of Obama’s goals to have 1 million electric vehicles on the road by 2015.

Count me skeptical of the incentive argument. The proponents of electric cars think they have a chicken and egg problem on their hands: no one will buy electric cars if there aren’t widespread charging stations, but no one will build the charging stations if there aren’t widespread electric cars. There’s an oft-unacknowledged parallel with the infrastructure, of course: conventional vehicles require gasoline, but you don’t see government having to mandate the creation of your local service station. It turns out that when people actually want a good, the logistics normally sort themselves out.

The problem isn’t that the product creates a chicken and egg dilemma. If we stay with this metaphor, the problem is that the consumer is a vegan. No matter how you present the product, they’re just not interested. When we start realizing this — and applying the principle writ large — we’ll save billions in taxpayer dollars, unravel the green crony capitalism represented by firms like Solyndra, and get our energy economy back on track.

May 29th, 2012 at 12:53 pm
The New Math of Alternative Energy
Posted by Troy Senik Print

In a recent commentary piece here at CFIF, I noted how the green energy initiatives that President Obama has repeatedly sold as the cure for the nation’s economic ailments have been shown to lead to economic ruin in places like Spain. For those who still doubt that a similar outcome will result stateside, this piece of representative math, courtesy of the Heritage Foundation’s David Kreutzer, should give pause:

In a speech at a wind-turbine blade manufacturer in Iowa, President Obama called for extending two sets of subsidies that turn energy economics upside down and force higher costs on consumers and taxpayers.

The first extension is for the production tax credit (PTC), which is set to expire at the end of the year. It provides wind-energy producers with a subsidy of about 40 percent of the wholesale cost of electricity. So, when a wind-energy producer sells $50 worth of electricity, Uncle Sam adds another $20 for a total revenue of $70 to the producer.

The second extension is for the Advanced Energy Manufacturing Credit—originally funded in President Obama’s “stimulus” bill. This 30 percent credit cuts the cost of $100 worth of equipment to just $70.

So there you have it. Fifty dollars of actual revenue is bumped up to $70 with the PTC and $100 of costs are cut to $70 after the special tax credit. That is, $50 = $100 after taxpayers make up the difference.

Imagine for a moment if the federal government was proposing to use taxpayer dollars to double the incoming revenue of major Wall Street investment firms. It would rightly be denounced as the worst kind of crony capitalism. So why should the reaction be any different when that money is going into windmills?

April 24th, 2012 at 9:13 am
Ramirez Cartoon: Obama’s Energy Blinders
Posted by CFIF Staff Print

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

April 5th, 2012 at 11:37 am
Nevada Green Energy Initiative Spends Over $400,000 to Save Less than $3,000
Posted by Troy Senik Print

Clean energy is the dream that refuses to die. From the Obama Administration on down, liberal politicians throughout the nation are constantly promising “green jobs” boomlets, acting as though the only thing standing between a better future where energy is both cleaner and more affordable is political will and obstructionist special interests. In reality, the real hurdle to achieving their dream is substantially higher: the economics just don’t work out. A recent initiative in Nevada shows the complete fiscal folly underpinning clean tech. From the Las Vegas Sun:

The electricity produced by NV Energy’s $46 million wind rebate program has fallen far short of expectations.

In a startling example, the city of Reno’s wind turbines — for which the city received more than $150,000 in rate-payer funded rebates — produced dramatically less electricity than the manufacturers of its turbines promised.

As first reported by the Reno Gazette-Journal, one turbine that cost the city $21,000 to install saved the city $4 on its energy bill. Overall, $416,000 worth of turbines have netted the city $2,800 in energy savings.

That means that the savings from the Nevada program have equaled only about 2/3 of 1% of the cost of installing the turbines. Remind me again, isn’t the oft-cited goal for this new era of technological progress to promote science and math?

March 5th, 2012 at 2:13 pm
The Obama Energy Famine, Continued
Posted by Troy Senik Print

In my column last week, I focused on how the Obama Administration’s energy policies harm the economy by subsidizing “clean fuels” that are not viable at market while handicapping the energy sources that actually work (and are affordable) in the here and now. An editorial in today’s Washington Examiner drives the point home:

The number of approvals for drilling in the Outer Continental Shelf in the Gulf of Mexico — which accounts for a third of all U.S. oil production — under Obama has plunged from more than seven per month to only three. Measured in terms of how long is required for the government to consider a permit application, the average for the five years before Obama was 60.6 days. The average is now almost 110 days, according to the Institute for Energy Research. Viewed in terms of the percentage of all permits sought that are approved, the five-year average before Obama was 73 percent. Today under Obama, it is 23 percent and falling. In other words, it is almost certain that the oil-drilling rig count will head back down in coming months, but it will be in response to government interference rather than as a result of price fluctuations. And the price of gas at the pump will continue to go higher.

Read that again. A 2/3 reduction in the number of permits issued and a doubling of the time it takes to get said permits. And the president really wants us to believe he doesn’t have any “silver bullets” for gas prices?

February 13th, 2012 at 12:41 pm
Tea Party Republicans Bringing Real Energy Reform to Capitol Hill
Posted by Troy Senik Print

In my commentary last week — focusing on the economic weaknesses of the Republican presidential candidates — I spent some time looking at Newt Gingrich’s enthusiasm for various energy subsidies, a pathology that he’s shared with much of the bipartisan establishment of the last decade or so. I noted in conclusion:

The Speaker is smart enough to know that the virtues of a free market apply to the energy industry just as much as any other. Fuel markets work best when consumers are making decisions based on price and quality, not when politicians are hand-picking energy sources to please favored constituencies.

This is just as true of conventional fuel sources like coal and oil as it is of boutique alternatives like hydrogen, wind, or solar. And it’s just as true whether it’s Democrats or Republicans giving the handouts. That’s why it’s so refreshing to see a group of Tea Party conservatives on Capitol Hill attempting to strip the crony capitalism from the energy industry. As Timothy P. Carney reports in the Washington Examiner:

Freshmen Rep. Mike Pompeo of Kansas has proposed the loftily titled “Energy Freedom and Economic Prosperity Act,” while the Senate’s Tea Party heroes, Jim DeMint (S.C.) and Mike Lee (Utah), have introduced the companion bill in the upper chamber.

The bill, which Pompeo hopes to insert into legislation extending the payroll-tax credit, would take a huge bite out of energy subsidies by eliminating tax credits for everything from solar panels and wind turbines to oil drilling and nuclear power generation. At the same time, the measure would cut tax rates.

…”This is the model,” Americans for Tax Reform President Grover Norquist told me Friday. It gets rid of the hodgepodge of distorting credits that steer money away from productive energy investments and toward politically favored activities, and it also lowers everyone’s rates. Neutral, low taxes, conservatives have long argued, are the formula for prosperity and economic growth, not to mention fairness.

On this, Norquist is precisely right. By taking the federal government’s hand off the scales, this bill would allow energy providers to flourish or falter on the merits, rather than according to the size of their lobbying budgets. And by lowering tax rates, it would ensure that providing Americans with the energy they rely on to do everything from heating their homes to driving their cars would be both more profitable for producers and more affordable for consumers.

Pompeo is to be saluted for his courage. Now it falls to the American people to push for this bill’s passage. A wide array of energy industry lobbyists will be hell-bent on killing it. That’s just one more testimony in its favor.

February 1st, 2012 at 5:44 pm
Who Killed the Electric Car? The People Who Made It
Posted by Troy Senik Print

Over at RealClearMarkets, the American Enterprise Institute’s Kenneth Green has a wonderful take-down of California’s delusional alternative energy mandate, which would “require that 15.4 percent of all vehicles sold by 2025 must be electric cars, plug-in hybrid cars, or (currently non-existent) fuel cell cars.” Green notes that this is the second time the Golden State has gone down this road, after a similar mandate — imposed back in 1990 — had to be scrapped due to its total infeasibility.

As you may recall, it used to be fashionable amongst conspiracy-minded greens to posit that the electric car had been undermined by some nefarious cabal of big oil, the auto industry, and hydrogen fuel cell advocates. They even made a film about it: 2006’s “Who Killed the Electric Car?”, which included the contributions of such noted experts in transportation economics as Martin Sheen, Mel Gibson, and Phyllis Diller. As Green points out, however, the electric car and its alternative fuel cousins have never taken the market by storm for a much simpler reason — they’re just not economically viable:

The GM Volt sells for a non-competitive $40,000, and is barely selling despite federal tax subsidies up to $7,500, and some state subsidies that further sweeten the pot. Plug-in hybrid technology is more expensive to manufacture, more expensive to repair, more expensive to insure, and, after 22 years, they still have overheating and fire problems.

As Robert Bryce points out in his book Power Hungry, electric cars are the “Next Big Thing. And they always will be.” Bryce observes that EV-boosters have been flogging electric cars since 1911, when the New York Times declared that “the electric car “has long been recognized as the ideal solution” because it “is cleaner and quieter” and “much more economical.”

Scan the hard data on any alternative energy source being promoted as a panacea and you’ll find much the same thing: Too little performance for too much money and too little convenience. And that’s the real tragedy of mandates like California’s or federal handouts to firms like Solyndra. The reality is that we probably will shift away from our reliance on conventional sources of energy like coal and oil in the future. But in order to do so, alternative energy sources will have to be scalable, affordable, and efficient. Providing subsidies for those technologies before they reach that point only delays their viability by reducing the financial incentive to get a better product to market.

The upshot? Reliable green energy may indeed be on the horizon for California. But if it does arrive, it will be because of the efforts of businessmen, not bureaucrats.