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  • Reject All-of-the-Above Energy Approaches

    With Congress divided, will anything actually get done in the next two years? President Obama recently suggested energy policy as an area in which bipartisan support could exist. Rather than trying to pass  a large climate change bill, Obama stressed the importance of increasing technologies and energy sources to reduce greenhouse gas emissions  – including nuclear, clean coal, electric vehicles, wind, solar, and renewable fuels. Sometimes deemed an “all of the above” energy approach, it guarantees handouts and subsidies for all energy sources to make everyone happy. In other words, all the special interests win and the consumer loses. David Friedman, son of Milton, said it like this:

    Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.

    The problem is that when everyone gets a windfall, those pennies taken from the consumers add up quickly. It signals to businesses that instead of spending time and resources figuring out how to lower costs, they should spend more time and resources in Washington begging for handouts. It removes the incentive to become economically competitive.

    Let’s take a look at how some of the winners selected by government officials are doing.  In September 2009 Vice President Joe Biden and Secretary of Energy Steven Chu participated in an event announcing a $535 million stimulus loan for solar-cell manufacturer Solyndra. Biden said:

    This announcement today is part of the unprecedented investment this Administration is making in renewable energy and exactly what the Recovery Act is all about. … By investing in the infrastructure and technology of the future, we are not only creating jobs today, but laying the foundation for long-term growth in the 21st-century economy. (Emphasis added)

    A little over a year later, what’s going on with Solyndra? The solar manufacturer is closing its first factory in Fremont, California only weeks after opening its second .  George Avalos of the Oakland Tribune writes, “The moves mean that instead of having 2,000 workers in Fremont, Solyndra will cap its work force at 1,000, which is about the current level. Solyndra also will, over the next several weeks, eliminate 155 to 175 jobs in Fremont. That includes 135 contract employees and 20 to 40 full-time workers.”  Part of the reason: “Investors are backing away from capital-intensive cleantech now and instead looking to cheaper companies.”

    And then there’s this from The Hill: “The wind power industry’s main trade group said Friday that growth has slowed to its lowest level in years—data the group called proof Congress should approve a nationwide renewable power standard.”

    So after receiving stimulus funds and special tax incentives, the wind industry struggles to remain cost competitive. And that’s a sign for our government to mandate that a certain percentage of our electricity come from this energy source? In effect, that’s a mandate for higher energy prices; otherwise, it wouldn’t need the mandate.

    Subsidies for clean coal, oil, nuclear, and natural gas are no different. Energy industries should be freed from all government subsidies. This would allow companies to rely on innovation and efficiency, not taxpayer handouts, to remain competitive.  In such a scenario, the businesses who deserve to win  will  by means of higher profits and the consumer reaps the benfits by having the cheapest energy available.

    Posted in Energy [slideshow_deploy]

    11 Responses to Reject All-of-the-Above Energy Approaches

    1. Kris, Washington says:

      Hi Nicolas – I'm a believer in a free market determining winners and losers, sparking innovation and driving down costs. The problem is that there is no free market in energy today (particularly when it comes to electricity). In about half the country, vertically integrated, government regulated utilities have monopoly control of the electricity market. The rest of the country is governed by a hodgepodge of various federal and state structures over partially competitive wholesale electricity markets. And in almost no states is there real retail competition for electricity.

      This balkanized, outdated regulatory structure was developed specifically to advance and support large thermal electricity power plants. This is true for siting, rate setting, transmission and just about every layer of regulations that effect the industry.

      So there are enormous barriers to entry for new technologies, no real vehicle for consumer demand to drive the market and a system stacked in favor of the incumbent fuels / utilities.

      Given that reality, we really only have one choice: determine our national goals for power generation (some balance of cost, domesticity, reliability and environmental impact) and then add additional gov't layers on top to make it happen. That or tear down and rebuild the current system which, unfortunately, is completely unrealistic.

      My point being that I don't think the free market critique of renewables is entirely fair in this context.

    2. Verona, Milwaukee, W says:

      Pope Pius XII affirms in his 1944 Christmas radio message: The people and a shapeless multitude(or, as it is called, the "mass") are two distinct concepts. 1. The people live and move by their own energy; the masses are inert and can only be moved from outside. 2. The people live by the fullness of life in the men that compose them, each of whom–is a person conscious of his own responsibility and of his own views. The masses, on the contrary, wait for the impulse from the outside, an easy plaything in the hands of anyone who exploits their instincts and impressions; ready to follow in turn, today this way, tomorrow another.

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    4. c. j. shank, port or says:

      In order to destroy the most productive economy on Earth, simply attack its dependence on oil.

      Have a Department of Education indoctrinate the people into an environmental religion whose mission is to save the Earth from man-made global warming. Despite the revealed hoax of global warming, legislate mandates to reduce carbon dioxide emissions anyway.

      Put a Department of Transportation in charge of funding and implementing an all electronic toll-based ground transportation system dependent upon all electric vehicles. Destroy current entrepreneurial liberty by constricting transportation flow through traffic management systems, and entrepreneurial success through artificially high fuel pricing.

      Put a Department of Energy in charge of government funding of high tech energy solutions that cannot compete in the free market place without enormous government subsidies.

      Have this Department of Energy restrict States rights to harvest and profit from their own oil, gas, and coal deposits, while forcing overweening dependence upon foreign oil.

      Ignore or discredit such new technology as discussed in Discover Vol 24 No, 5 (May 2003) "Anything into Oil".

      Also ignore or discredit Science 1 February 2008: Vol. 319. no. 5863, pp. 604 – 607, "Abiogenic Hydrocarbon Production at Lost City Hydrothermal Field".

      Ignore or discredit the Fischer-Tropsch process.

      All the above are currently in play.

      On the other hand, what should be done to preserve our Republic? Have Congress defund the Departments of Education, Energy, Transportation, and Housing and Urban Development, so that the separate States keep their own means and manage their own ways.

    5. Bob, Missoula says:

      There is only one way to prove once and for all that solar, wind and renewables are nothing but auxillary forms of energy production and not true alternatives.

      Choose eight cities each city gets one and only one form of energy.

      City one gets nuclear.

      City two gets coal.

      City three gets natural gas.

      City four gets oil.

      City five gets hydro.

      City six gets solar.

      City seven gets wind.

      City eight gets any combination of renewable fuels.

      I predict that for cities one through five life will go on pretty much business as usual.

      Cities six, seven and eight will be begging for customary forms of energy within a matter of months. These are not alternative forms of energy and never will be the most we can hope for from them is an auxiliary capacity.

      Since it is unlikely that you could find whole cities foolish enough to actually choose options six, seven and eight the only option would be to install a switch in residences for people who believe in and will choose solar, wind or renewables and they must live with the choice they make until such time as they publicly ask for the local utility to come to the residence with the press and turn the switch so they too can enjoy the dependability and comfort of real forms of energy.

    6. Randall Buckner says:

      But there you illuminate the real problem with America. Although your proposition is completely correct and I agree whole-heartedly with the premise, we, and particularly our government, don't operate on the basis of a "true capitalism". The government doesn't operate on the basis of capitalism that describes a system of "endeavor" to "innovation" to "profit" and finally "reward". As long as we let them operate with a "fractional reserve system" based on limitless fiat money based on debt and inflation there will never be a true rendering of benefit to either business or consumers. Just like some people believe that a "real" communism, not the tyrannical or elitist dictatorial forms we have seen over the last 100 years, has a utopian, almost christian possibility, we have not had "real" capitalism in this country since the days after the Civil War when "greenbacks" were created so the government could fund the war with non-existant value. So, before we can expect real innovation to excel like it would normally, we have to get true value back in the rewards. Having said that though, and based on the bastardized system we currently have, it would be refreshing to allow real "free enterprise" to work again. Maybe the alternative energy industry would be a great place to start. Possibly, it could have a ripple effect on other industry as well.

    7. Pingback: William S. Becker: "All of the Above" is No Energy Policy: Part 1 | Politimo

    8. Pingback: William S. Becker: "All of the Above" is No Energy Policy: Part 1 | Mahvrick

    9. Pingback: William S. Becker: "All of the Above" Is No Energy Policy - SparkInjector.com

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