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Kenneth P. Green

Who shut down Keystone?

By Kenneth P. Green

February 17, 2012, 1:36 pm

Some analysts (including myself), when pondering the Obama decision to reject Canada’s application to build a pipeline from Alberta to the Gulf coast, have laid the blame at the feet of the environmental movement and political operatives within the Obama administration. I’ve speculated that the decision was purely political, and I presumed it was driven by the intense urge to shove a thumb in the eye of congressional Republicans. Turns out, I was wrong.

Now we know that the decision to reject the Keystone pipeline really came down to the desires of one ultra-wealthy person: Susie Tompkins Buell, a leading donor to Democrats:

Buell, a co-founder of the Esprit clothing company, has donated millions of dollars to Democratic causes and presidential candidates, including Bill Clinton, John Kerry, Al Gore and her good friend, Hillary Rodham Clinton. In the past 10 years, she has given $25 million to progressive political and charitable causes and has raised $10 million for candidates and committees, her office said.

Apparently, Ms. Buell, feeling neglected and unappreciated, decided that she wanted a present from the president:

“I’ve just given so much money away, and I’ve never asked for anything,” she said in an interview at her Pacific Heights home this week. Now, “I’m asking for something: He’s got to be a leader.”

So Ms. Buell took to the streets (very tidy, upscale streets, to be sure) to protest:

In October, Buell made headlines after she led a protest of monied Democrats in San Francisco against the controversial 1,700-mile Keystone XL oil pipeline. Her fellow protesters outside an Obama fundraiser included Michael Kieschnick, co-founder of CREDO Mobile and Working Assets, which has donated $75 million to progressive causes; IT executive David desJardins; and Anna Hawken McKay, wife of Rob McKay, a wealthy philanthropist whose father founded Taco Bell.

The Democrats, who could have easily afforded the $5,000-a-plate Obama fundraiser, stood on the curb outside the W Hotel as Buell delivered a tough assessment of the president: “I don’t know where he stands on anything,” she said.

And, like magic, that was the end of Keystone:

Kieschnick said Buell’s decision to take an aggressive stance was pivotal to the eventual outcome – a White House announcement last month that the application for the pipeline from the Canadian province of Alberta to Texas refineries would be rejected.

“Before her involvement, the powers that be clearly dismissed our concerns” about the long-term environmental impacts of the pipeline, said Kieschnick, who has known Buell for 20 years. People inside the White House “clearly noticed,” he said. “Then they realized this was not only bad policy, this was bad politics.”

California Democratic Lt. Gov. Gavin Newsom, who has also won Buell’s political backing, said that on Keystone, “the White House had no choice but to pay attention” to her.

Some might argue that it’s inappropriate for one wealthy woman to determine the fate of 300 million Americans, but don’t worry, Ms. Buell is sympathetic to that argument also:

Buell said she often wishes that voters without big checkbooks could get the same attention. “They do it because I represent money. And that’s not right,” she said. “Isn’t it sad, that it’s all driven by money?”

“Sad” isn’t exactly the word I’d choose, but it’s certainly more printable.

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Categories:  Energy and Environment, U.S. Politics   |   Tags:

Steven F. Hayward

Energy fact of the week: What’s up with gasoline prices?

By Steven F. Hayward

February 16, 2012, 2:22 pm

The network TV news broadcasts this week are in a lather about the rising pump price of gasoline, which has been creeping up steadily for the last few weeks ahead of the usual seasonal surge. Already it appears we’re heading for record pump prices this summer—maybe reaching $5 a gallon in some high cost states. All of the usual reasons are in play: the price of oil stuck stubbornly around $100 a barrel or higher, uncertainty in the Middle East, sustained demand from China, and the recovering U.S. economy. But there is one aspect of this story that is still incongruous: gasoline consumption in the United States appears to be sharply lower over the last few months—at least if you go by the Energy Department figures on retail gasoline deliveries (a close proxy for overall gasoline consumption) shown in Figure 1. In fact, the trend of the last couple of years shows a sharp break with the relatively stable trend of the last 25 years. What’s going on?

You might think if demand is dropping the price would be flat or falling. Or perhaps the falling deliveries of gas is why prices are rising, except there’s no indication that gasoline supplies are tight right now, unless you buy one of the always-discredited conspiracy theories that the fossil fuel industry is manipulating the market. Higher fuel economy of the surface fleet (hybrids, Chevy Volts, etc) probably can’t explain the magnitude of this trend. A number of observers think it is possible that this sharply declining trend is another indicator that the economy is heading down again. (Charles Hugh Smith offers still more interesting analysis here.)

Figure 1: Retail Gasoline Deliveries, 1983 – Nov. 2011

Source: Energy Information Administration

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Jon Entine

Plastic wars: 5 reasons to be concerned about the federal crackdown on phthalates

By Jon Entine

February 16, 2012, 8:08 am

No, this is not a post about great deals on credit cards, although a lot of money hangs in the balance. It’s about plying on consumer fears. And it’s about science literacy—the danger of making public policy based on out-of-context facts and ideology.

Through Friday, the Consumer Product Safety Commission’s Chronic Hazard Advisory Panel (CHAP) is holding public meetings in preparation for issuing a final report on restricting phthalates and phthalate substitutes.

Here’s the background. Found in children’s products and tubing, phthalates are used to make plastics like polyvinyl chloride more flexible. In 2008, President Bush signed into law the Consumer Product Safety Improvement Act (CPSIA), which set stricter regulations, particularly on the elements used to make consumer products.

To date, based on the public hearings, the CHAP appears to be bumbling its way through the science. Here’s five things that government regulators should keep top of mind:

(1) Stick to science. Focus on health risk not fear. U.S. regulators rely on risk-based analysis—documenting actual health dangers. Yet CHAP seems to be edging towards a precautionary model, reacting to anti-plastic public fear campaigns now in high gear.

(2) Not all phthalates are created equal. So-called low-density phthalates—DEHP, BBP, DBP, and DIBP—widely used in children’s toys and medical tubing, are less stable and release outgasses. In contrast, high-density phthalates such as DINP, DIDP, and DPHP are tightly bound, more stable and resilient. They offer significant benefits for millions of uses, many with no safe or effective alternatives. Don’t confuse the types.

(3) Measure costs and benefits of potential alternatives. CHAP appears tempted to regulate in a world with no trade-offs. The profile of each phthalate must be compared to the potential risks, known and unknown, of a substitute. Reformulating products are costly, and the consumer pays in the end.

(4) Consider regulatory precedents. The panel has previously seemed to ignore reviews by other regulatory bodies. For example, the EU has classified low phthalates as reproductive toxicants, but does not regulate tightly bound high plasticizers such as DINP, DIDP, and DPHP, which are considered safe. Will CHAP take an anti-science “one size fits all” approach?

(5) Weigh the evidence. It is not clear whether CHAP is considering the weight of the evidence presented and “all relevant data.” According to last year’s  report from the Centers for Disease Control and Prevention, phthalates do not pose a health hazard in any usual way in which someone might be exposed to soft plastics. “Phthalates are metabolized and excreted quickly and do not accumulate in the body,” it concluded. That report endorsed the findings in 2004 and 2010 studies by the Children’s National Medical Center and George Washington University School of Medicine that showed no adverse effects in organ or sexual functioning in adolescent children exposed to phthalates as neonates. Another recent study has found that even high levels of DEHP have shown no effect on the genital development of marmosets—let alone humans.

In sum, no studies using oral doses (as humans are exposed) have found evidence that plasticizers are toxic or are likely to cause cancer or have strong estrogenic effects, as critics often allege. Federal regulators need be careful about demonizing proven safe chemicals, and replacing them with potentially risky substitutes that have not been tested. Will CHAP follow the science?

Jon Entine, visiting fellow at AEI, is senior research fellow at STATS and the Center for Health and Risk Communication at George Mason University.

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Categories:  Energy and Environment, Regulation   |   Tags: ,

Will rising gasoline prices sink Obama?

By James Pethokoukis

February 14, 2012, 9:53 am

From ABC News:

Gasoline prices could soon hit $4 a gallon, a threshold they haven’t flirted with since last spring. The average price paid by U.S. drivers for a gallon of regular now stands at $3.52, according to the U.S. Energy Information Administration, which released its latest figures this afternoon. That price represents an increase of 0.04 percent from a week ago and 0.38 percent from a year ago.

Experts expect prices to spike another 60 cents or more, with the $4 mark being touched—or exceeded—sometime this summer, probably by Memorial Day weekend, the peak of the summer driving season. The last time the U.S. saw $4 gasoline was back in the summer of 2008.

“I think it’s going to be a chaotic spring,” says Tom Kloza of the Oil Price Information Service. He expects average prices to peak at $4.05, though he and other industry trackers say prices could be sharply higher in some markets.

The link between gasoline prices and presidential approval ratings isn’t perfect, but it is strong, as the above chart (from Strategas Research) suggests. Interestingly, presidents seem to lose popularity when gas prices are high but don’t get credit when they are low. Here’s Larry Sabato:

On the one hand, it is clearly true that high gas prices often coincide with lower presidential approval ratings. As political scientists have long demonstrated, these approval ratings are a strong indicator of a president’s reelection chances. As we have seen, though, gas prices alone certainly are not a perfect predictor of approval ratings or, indirectly, reelection. While continually rising gas prices would likely weaken Obama’s reelection standing, it would be just one of many factors voters consider when evaluating his first term.

So let’s put together the pieces of the puzzle. Gas prices could be quite high, over $4 a gallon. At the same time, the economy, while better, will be hardly booming. The new Wall Street Journal economic survey pegs 2012 GDP growth at 2.5 percent, unemployment at 8 percent. Good enough for an Obama reelection? Maybe. For the U.S. economy? Hardly.

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Categories:  Economic Policy, Energy and Environment, U.S. Economy, U.S. Politics   |   Tags: ,

Kenneth P. Green

How’s that green job creation working?

By Kenneth P. Green

February 13, 2012, 2:44 pm

In today’s Examiner, Paul Taylor points out that President Obama’s “green jobs” plan isn’t working out quite the way they expected:

U.S. House of Representatives investigations have revealed the failed green jobs initiative in President Obama’s ambitious environmental agenda. With an initial government cost of one-half billion dollars, evidence proves that only about 10% of sponsored trainees were placed in green jobs.

As part of the Obama green energy program, the goal was to train 124,893 people, and place 79,854 (64%) in new green jobs. After 17 months, the results of the green jobs program indicate that only 52,762 were trained, and only 8,035 got green jobs – each job costs tax payers about $62,000.

Being interested in green jobs, I decided to dig into the data behind Taylor’s article. What I found is a veritable study in the difference between expectations and achievements:

Source: Employment and Training Administration

While I’ve written at length about the whole green-jobs debacle, this picture certainly paints more than a thousand words.

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Categories:  Economic Policy, Energy and Environment   |   Tags: ,

Kenneth P. Green

An electrifying video!

By Kenneth P. Green

February 10, 2012, 2:37 pm

For your weekend viewing pleasure, here’s a great video on the history, pros, and cons of electricity regulation by my friend (and former colleague) Professor Lynne Kiesling, one of the most knowledgeable people studying electricity regulation today.

The video is slightly long, but is very accessible to the lay viewer, and has some great historical graphics and context. If you’re interested in energy markets and policy, you’ll really enjoy this video—it’s well worth 8 minutes!

Lynne has also done some great work for AEI that you can read about here. Lynne’s blog, The Knowledge Problem, is also a great resource for those interested in economics, particularly of the free-market variety.

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Kenneth P. Green

Every green cloud has a black lining

By Kenneth P. Green

February 9, 2012, 4:02 pm

As I’ve noted in the past, one of the basic memes of environmental reporting holds that anything good that happens is actually bad: When nature turns out to be stunningly resilient in the face of human activity, it’s bad, because it empowers humans. When biologists find new species, it’s bad, because they’re threatened by development. If scientists ever find a lost valley full of dinosaurs, the headline will read “Dinosaurs Survive Untold Millennia! Now Threatened by Climate Change.”

Lest you think I was exaggerating, check out this article, on the discovery of the world’s longest-living organism:

Australian scientists sequenced the DNA of samples of the giant seagrass, Posidonia oceanic, from 40 underwater meadows in an area spanning more than 2,000 miles, from Spain to Cyprus.

The analysis, published in the journal PLos ONE, found the seagrass was between 12,000 and 200,000 years old and was most likely to be at least 100,000 years old. This is far older than the current known oldest species, a Tasmanian plant that is believed to be 43,000 years old.

Very cool, right? It’s old, and it’s huge (6,000 tons spread over 10 miles!). But!

But Prof Duarte said that while the seagrass is one of the world’s most resilient organisms, it has begun to decline due to coastal development and global warming.

“If climate change continues, the outlook for this species is very bad,” he said. “The seagrass in the Mediterranean is already in clear decline due to shoreline construction and declining water quality and this decline has been exacerbated by climate change. As the water warms, the organisms move slowly to higher altitudes. The Mediterranean is locked to the north by the European continent. “They cannot move. The outlook is very bad.”

This grass has lived 100,000 years. It is arguably as old as modern humanity. It has seen ice ages and warm periods. It has seen the passing of mastodons and sabre-toothed cats, and now, suddenly, it’s endangered by climate change unless humanity repents its evil energy-consuming ways. What rubbish.

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Steven F. Hayward

Energy fact of the week: Comparing royalty rates

By Steven F. Hayward

February 7, 2012, 4:00 pm

The Government Accountability Office (GAO) roiled the waters of the oil and gas world back in 2008 with a report that concluded that the U.S. government was not collecting as much in royalties from oil and gas production on public lands and waters as it should. The implication was that the government was being a patsy to the oil industry, as several studies have found the industry to enjoy a rate of profitability higher than the average for other industries (at least in good times). When oil prices spiked to $147 a barrel in 2008, many nations rushed to grab a share of the windfall by raising royalties or nationalizing leases. The United States was an outlier in not joining the stampede. Hence, there have been frequent calls for the United States to increase its royalty rates.

The GAO calculated that the U.S. government ranked 93rd lowest out of 104 fiscal systems surveyed around the world, losing out between $21 and $53 billion in potential revenue, depending on oil and gas prices. In 2007, for example, oil and gas companies received $75 billion in revenue from production in the Gulf of Mexico; the U.S. government received $9 billion in royalties—about 12 percent of revenues. The nominal royalty rate for Gulf of Mexico production is 18.75 percent of revenues, but in the mid-1990s, when oil prices were low, Congress enacted a royalty relief system, as the 18.75 percent rate rendered some leases unprofitable in periods of low oil and gas prices.

The “lack of flexibility” in the U.S. royalty system results in a low “government take” (the phrase actually used) from oil and gas. The “flexibility” the GAO recommended was thought necessary because of the high volatility of oil prices over the last decade. When the price swings up, oil companies tend to enjoy surging profits, but the government’s “take” from royalties don’t rise commensurately. However, the government does increase its “take” from higher corporate income taxes, which are separate and on top of lease royalties. And here’s where the story starts to get even more complicated: if the government raises the royalty rate, its take from corporate income taxes will go down, especially from marginally profitable leases.

The Department of the Interior vigorously disagreed with the GAO’s 40-page analysis, and has just recently released a 300-page study of the subject it commissioned from IHS-CERA. It becomes quickly apparent from the IHS-CERA report that the GAO’s analysis of this extremely complicated arena was superficial and inadequate, and that the government makes out quite well, no matter how you define the “fair share” that is supposed to be the guide of fiscal policy. In fact, if you consider the government take as a proportion of the cash flow from oil and gas projects, the government typically nets more than the oil or gas-producing company does. The IHS-CERA study finds that on average the federal government captures 64 percent of the cash flow from Gulf of Mexico deepwater oil leases. Large differences from field to field, both onshore and offshore, produce a wide variance, but in no case does the government receive less than half of the cash flow. Figure 2 from the report below shows how it works with gas leases in Wyoming, with the “government take” ranging from a low of 50 percent to a high of 73 percent.

Moreover, when oil prices do spike as they did in 2008, the government typically sees a huge spike in “signature bonuses,” in which companies buy the rights to a lease in advance. Figure 3 from the IHS-CERA report shows how federal government revenue soared in 2008.

IHS-CERA’s conclusion is that, when compared properly with the royalty and tax systems of 29 other nations, only Venezuela extracts a higher take from oil and gas production than the United States.

This study ought to be a blockbuster, but surely won’t be on account of its complexity, and because it runs counter to the narrative. There’s been no media mention of it at all. To the contrary, about the only news story that bears on the subject at all is from Bloomberg: “Oil Royalty Raise on U.S. Lands ‘Not Imminent,’ Agency Says.”

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Kenneth P. Green

Scientists should avoid topics outside their expertise

By Kenneth P. Green

February 7, 2012, 3:15 pm

This letter was sent to the Wall Street Journal on February 1, in response to an opinion column entitled “Check With Climate Scientists for Views on Climate.”

Editor -

You recently published a letter by climate scientist Kevin Trenberth et al., who argued that only specialists in climate policy, and only those comfortably in the bosom of the self-proclaimed “scientific consensus” have the right to speak out about possible misrepresentations of climate science.

I disagree with their exclusionism, but it would be a fair point if, that is, they want to be fair. But they don’t. Almost the entirety of the last paragraph of their letter is, in fact, about politics, demographics, economics, technological prediction, and public policy—it is nothing about science.

We looked up the authors and found that the educational background of 37/38 of them is almost-purely scientific. Only one of them (Yohe) is an economist. Anther (Kiehl) holds a (second) Masters in psychology. Collectively, they have little or no expertise in the non-science fields above.

They say: “It would be an act of recklessness for any political leader to disregard the weight of evidence and ignore the enormous risks that climate change clearly poses. In addition, there is very clear evidence that investing in the transition to a low-carbon economy will not only allow the world to avoid the worst risks of climate change, but could also drive decades of economic growth. Just what the doctor ordered.”

Let’s break that down. The first sentence is a purely political statement. Science has nothing to say about how a political leader should value one policy option over another. Politicians may well decide there are greater risks that need their attention.

The second sentence above is also dubious: the scientists can no more predict the future impact of adopting “low-carbon” technologies than could any soothsayer at a carnival. They can make assumptions about adoption, and more assumptions about the impacts of adoption, but that’s all they can do: make and model assumptions. That’s not normal science, that’s computerized astrology.

The final clause in the 2nd sentence is purely economics.

And the last sentence is silly: I don’t know about you, but I don’t ask my doctor about how to structure my household budget.

When it comes to straying outside their expertise, these scientists need to remove the beams from their own eyes before looking for the specks in others.

(For the record, my degrees are in general and molecular biology, with a policy-centric doctorate in environmental science and engineering (D.Env., UCLA, 1994.))

Kenneth P. Green is a Resident Scholar at the American Enterprise Institute.

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Roger Bate

China bucks against EU green tax

By Roger Bate

February 6, 2012, 9:55 am

China says it will not allow its airlines to pay Europe’s green airline tax.

I suggested last fall that the attempt by the British government to raise revenue with airline taxes, while pretending it was for the good of the planet, was going to conflict with U.S. airlines. But it appears that the Chinese have reacted first and most aggressively to the EU-wide scheme. The last thing the EU (or United States) needs is a green trade war with China, but that is the direction we’re heading.

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Kenneth P. Green

Defending Sierra Club (really!)

By Kenneth P. Green

February 3, 2012, 3:30 pm

So it turns out that Sierra Club took a heap of money ($26 million) from natural gas giant Chesapeake, and proceeded to use that money to slag coal power.

My guess is that people on the right, and those who oppose the aims of the environmental movement, are going to latch onto this and use it to impugn the reputation of the Sierra Club. Now, I find Sierra Club’s policy advocacy pretty horrific: I view them as largely anti-capitalist, anti-individualist, anti-technological, anti-development, and basically anti-humanist. But I’d encourage would-be critics of this funding flap to think about this more clearly before opening fire, lest they shoot at themselves by mistake.

What Sierra Club is saying is:

1.    They had an independently-developed belief that natural gas was an environmentally friendly fuel at the time;

2.    They had an independently-developed belief that coal power was environmentally unfriendly;

3.    They saw no ethical reason not to take money from gas-power companies and use it to assail coal power; but

4.    When they independently came to the conclusion that they didn’t like natural-gas power either, they stopped taking the money.

This is a perfectly reasonable position—In fact, I’ve argued that this is how robust policy-shops (think-tanks, NGOs, etc) work: They hire analysts who hold a set of fundamental values and principles developed long before entering the policy-shop world. Such values are formed in childhood, during collegiate studies, or through experience in some managerial, regulatory, governance, or oversight position. The people involved usually have a preexisting track record of effectively publishing, defending, and disseminating their views. Individuals, donor foundations, companies, industries, and others that find the world-view of such people and organizations attractive (for whatever reasons) follow along and donate to them. Others don’t. The policy-shops use such donations to expand their activities or their outreach, but rarely stray far from the core values and principles which are part of their brand: It’s why they can be “labeled” as conservative, liberal, libertarian, pro/anti-trade, pro/anti-industry, pro/anti-technology, whatever. To build on a thought by John Maynard Keynes, when the facts change, they might change their positions, but their values and principles remain.

So, I’m with Sierra Club on this one, with one proviso: If they mean what they’re saying, they’ll stop accusing those who hold different values of being driven only by monetary considerations.

Of course, I’m not going to hold my breath on that one.

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Kenneth P. Green

Who supports Keystone?

By Kenneth P. Green

February 2, 2012, 2:41 pm

The question of whether the Keystone XL pipeline, to bring oil-sand oil down from Western Canada to the Gulf Coast, rests on politics, which, often enough, rests on public opinion polls.

And here’s some recent polling data:

Source: www.energyvisually.com

It’s hard to believe, looking at a poll like this, that President Obama’s going to win a lot of support for his decision to red-light the Keystone pipeline. It also suggests that Republicans aren’t going to let go of the issue any time soon.

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Kenneth P. Green

Energy fact of the week: Four charts about Gulf Coast oil production

By Kenneth P. Green

February 1, 2012, 3:22 pm

Thanks to the people at the New Orleans Regional Economic Alliance, one can cut through all the claims about how oil drilling in the United States is back to normal since the Gulf oil spill.

The figures below show the trends in both shallow- and deep-water drilling permit approvals in the gulf of Mexico since the Deepwater Horizon oil spill. As can be seen, the Obama administration did not let that crisis go to waste, it used it to implement another plank in its anti-fossil fuel agenda.

Regardless of the Obama administration’s claims that they aren’t hindering oil exploration and development in the Gulf, a few minutes of looking at their own data tells the real story: they’re both cutting it down, and stretching it out.

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Kenneth P. Green

If at first you don’t succeed, double down on dumb!

By Kenneth P. Green

February 1, 2012, 10:11 am

Over at RealClear Markets, I point out that California is re-running their (failed!) electric-car mandate from the 1990s:

Once again, the regulators in California have decided to lead the nation in terms of vehicle emission standards, proposing to 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.

In case you’re wondering why this all sounds familiar, it’s because California is re-running the same delusional program that it ran in 1990 (Yes, 22 years ago) when “Specifically, the Air Resources Board (ARB) required that at least 2 percent, 5 percent and 10 percent of new car sales be zero-emitting by 1998, 2001 and 2003 respectively.”

As I explain, this didn’t work out so well the first time, despite subsidies transferring wealth from the less-well-off to the more well-off:

Malcolm Currie, former CEO of Hughes Aircraft Company, which created the EV-1 technologies (and where, amusingly enough, I did my doctoral internship while he was CEO), argued “In addition to encouraging the development of new technologies, the mandate … will have a significant impact on our economy and jobs in the years ahead … Project California anticipates that as many as 70,000 of these [new jobs] can be in EV-related industrial clusters, as a result of building on the large anchor market in our state.”

We know how that worked out: currently, 98 percent of advanced battery production is in Asia.

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Kenneth P. Green

The green-energy climbdown continues

By Kenneth P. Green

January 30, 2012, 10:41 am

The rain in Spain may stay mainly on the plain, but it won’t be falling on giant solar panel arrays for very long: Spain is in full retreat on its ill-advised renewable push. That won’t come as a surprise to AEI readers, since I’ve been writing about Spain’s failing and corrupt renewables regime (along with the rest of Europe) for a good year now.

As I wrote last year:

Spain has also found its foray into renewable energy unsustainable. As Bloomberg BusinessWeek reports, Spain has slashed subsidies for new solar power plants. Analyst Andrew McKillop observes in The Energy Tribune:

In Spain, where subsidies to the country’s massive windfarms and their dependent industries is estimated to have attained as much as 12 billion Euros in 2009, either directly or through “feed-in tariff” subsidy for power sales, government proposals target at least a 30% cut in subsidies. Major wind energy producer firms, such as Gamesa, have begun cutting their workforces, while trying to find sales outside Europe, helped by a weaker Euro. In addition and due to Spain’s highly exposed deficit finance status, making it a target for market speculators betting its bond rates must rise, the Spanish government is also likely to cut financial backing to existing renewable energy power plants, built with an expectation of guaranteed prices and government subsidies for 25 years.

Well, Bloomberg has an update:

Spain halted subsidies for renewable energy projects to help curb its budget deficit and rein in power-system borrowings backed by the state that reached 24 billion euros ($31 billion) at the end of 2011.

“What is today an energy problem could become a financial problem,” Industry Minister Jose Manuel Soria said in Madrid. The government passed a decree today stopping subsidies for new wind, solar, co-generation or waste incineration plants.

The system’s debts were racked up as revenue from state- controlled prices failed to cover the cost of delivering power. Costs have swollen in the past five years because of an increase in regulated payments for the power grid, support for Spanish coal mines and subsidies for renewable energy plants.

Watch for the same pull-back in other countries that foolishly believed the wind- and solar-hucksters, and threw their national fortunes behind these not-ready-for-prime-time technologies, including here in the good ol’ US of A. Given our political pig-headedness, and our slightly greater distance from the fiscal abyss, it’ll take us a little longer, but, I suspect, not a lot longer.

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Kenneth P. Green

Obama’s green kiss of death

By Kenneth P. Green

January 27, 2012, 2:28 pm

The drumbeat of government-funded green-tech bankruptcies continues:

Ener1, an electric car battery company that the Obama administration awarded a $118 million stimulus grant to expand its operations, filed for Chapter 11 bankruptcy protection Thursday after being unable to repay pressing debts. The news comes one year after Vice President Biden visited the company’s new battery plant in Indiana to highlight its progress with federal funds. Ener1 is the third company to seek bankruptcy protection among those the Energy Department backed as part of the president’s signature program to invest in clean energy. Solyndra, a California solar-panel maker, and Beacon Power, a Massachusetts energy-storage firm, entered bankruptcy court proceedings in the fall, after having received taxpayer-guaranteed loans of $535 million and $43 million, respectively.

Apparently, one is best off avoiding presidential attention, or, as another blogger puts it, avoiding Obama’s [green] kiss of death.

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Clean energy: the race to waste

By Benjamin Zycher

January 25, 2012, 4:09 pm

Mr. Bryan Ritterby is proud. Proud “to be working in the industry of the future.” And President Barack Obama is proud. Proud to have given Ritterby the opportunity to be proud to be working in the industry of the future. Proud of the federal “investments” that have nearly doubled the use of “renewable energy.” And proud of the “thousands of Americans [who] have jobs because of it.”

On the other hand, Obama presumably is not proud of a few details left unmentioned in his State of the Union address. The Solyndra debacle, to pick one example among many, and the many billions of dollars of costs heaped upon the taxpayers. The more-general reality that “renewable” electricity accounts for less than 4 percent of U.S. power generation despite massive subsidies, oops, “investments” that dwarf those given other energy sources, and despite guaranteed market shares in 30 states. The fact that in 2010, subsidies per megawatt-hour were 63 cents for natural gas, 64 cents for coal, over $52 for wind power, and $968 for solar generation. That’s a level playing field that Obama really does believe in.

Obama presumably is proud of the definitional sleight of hand under which those “thousands” of jobs include bus drivers and other occupations that are “green” only in the minds of Beltway central planners. He is proud of the new mandate for the Defense Department to purchase renewable electricity, no matter the massive costs; thus will the cuts to the defense budget look smaller than the reality, with the reduced outlays buying less actual defense than advertised. And the president is proud to enter the race with China and Germany to see who can waste more resources on “clean energy,” programs that are not clean and that will yield little actual energy or employment. Obama will be proud to win that contest, as the Europeans and, indeed, the Chinese already have tired of the massive costs and poor economic outcomes yielded by clean energy subsidies, and so are pulling away from such endeavors even as Obama urges the United States to plunge ever deeper into the “renewables” swampland.

The 1978 National Energy Act. The 1980 Synthetic Fuels Corporation Act. The 1992 Energy Policy Act. The 2010 Job Creation Act. And many more: ad infinitum. All enacted in pursuit of independence, sustainability, environmental quality, employment, efficiency, and motherhood and apple pie. All the products of the smartest guys in the room. All failures. All expensive. All wasteful. All hopelessly at odds with market forces. And now we await the forthcoming proposals from the smartest guys in the Obama White House. And so let it be said: We Americans are not quitters. We should be proud.

Benjamin Zycher’s book examining “clean energy” myths, Renewable Electricity Generation, was released this month.

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Kenneth P. Green

Five energy errors from the State of the Union address

By Kenneth P. Green

January 25, 2012, 11:54 am

The Institute for Energy Research (IER) has a great post up today detailing the … let’s call them errors … regarding energy in President Obama’s State of the Union address last night.

Here’s a summary, cribbed shamelessly from the IER post:

1) The president implicitly claimed credit for the fact that oil imports are down 1.1 million barrels per day since he took office. IER points out that yes, prolonging a recession and jacking up gasoline prices will reduce oil imports, and that the growth in domestic oil production has happened on state and private land, not on federal lands, where oil production has actually declined during Obama’s term in office.

2) The president also implicitly claimed credit for the fact that domestic crude oil production in 2010 equalled its peak in 2003. IER points out (again) that virtually all of this increase has been due to increased production on state and private lands, while oil production on federal lands has been declining.

3) The president made similar claims for natural gas, pointing out that the U.S. natural gas production is at a 30-year high. Again, he failed to point out that this growth has been on state and private lands, not land subject to federal control, and production on federal lands has been declining. He also neglected to mention that his Environmental Protection Agency is on a crusade to kill hydraulic fracturing, the technology that is producing all this gas.

4) The president claimed that, on his watch, the U.S. has become a net energy exporter. IER points out that this claim is a whopper: according to the Energy Information Administration, in 2010 “the U.S. had net imports of 21 quadrillion Btus of energy of the 98 quadrillion btus used.”

5) The president claims that his 5-year drilling plan will make 75 percent of America’s offshore oil and gas reserves available for exploration and production. What he fails to point out is that when he took office, 100% of offshore lands were open to exploration and production. He also ignores the fact that many liberally-governed states have blocked such activities regardless of federal permission.

Abundant, affordable, reliable energy is too important to the U.S. economy to be treated with such a cavalier disregard for the truth.

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Kenneth P. Green

California: save the green-feathered rent-seeker!

By Kenneth P. Green

January 24, 2012, 2:57 pm

Platts has an interesting article about the response of California regulators to a court decision that suspended the implementation of new low-carbon fuel standards. The California Air Resources Board (CARB) is asking another court to overturn the first court’s decision in order to protect the (unfortunately not) endangered Green-Feathered Rent-Seeker.

Referring to investments made by companies that were predicated on having the California government create a false market for their products, CARB argues:

“In the absence of a stay, fuel producers that have invested in lower carbon fuels are unable to recoup those investments,” CARB said in the motion, which was sent to reporters on Saturday.

“For example, a biodiesel plant in Washington State anticipated selling 45 million gallons of its low-carbon biodiesel in California in 2012 under the low carbon fuel standard,” CARB said. The state’s fuel standard, which aims to cut greenhouse gas emissions by ranking fuels based on their carbon intensity, “was a major component of the justification for this company’s investment,” the motion said.

And it’s not just domestic “investors,” that CARB worries about:

Elsewhere, CARB said that the court’s orders are “jeopardizing investment in the construction of a renewable diesel facility in Illinois… [and] two foreign cellulosic ethanol producers invested substantial time and resources preparing to enter California’s market under the LCFS and now see those investments in jeopardy.”

In the normal world of free enterprise, a company takes a chance, when making investments, that the market might move away from their product and they might lose their investment. That concern serves (usually) to rein in flights of fancy, or the picking and choosing of technologies that the market has already rejected as being too costly, or performing too poorly. For those companies who give in to fancy, well, bankruptcy court awaits.

But that’s not how it works in rent-seeking world. In that world, companies looking to make a profit off new regulatory regimes that create artificial demand for their product work hand-in-glove with regulators to create a profitable, government-guaranteed safe market, and if things don’t work out, the government tries to make sure that the would-be “investor” doesn’t take a loss. And that’s the ecosystem CARB wants to protect.

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Steven F. Hayward

Energy fact of the week: German solar subsidies top 100 billion euro mark

By Steven F. Hayward

January 24, 2012, 2:06 pm

I thought it would be a tall order to have a greater energy folly than our ethanol scam, which has cost taxpayers billions in direct and indirect subsidies over the last decade or two, but it turns out the Germans have figured out how to do it—through solar power. Der Spiegel online has a devastating article out last week on Germany’s manic obsession with solar power, whose price tag has now topped $100 billion (see the figure below). For this massive amount of money, solar power only provides about 3 percent of Germany’s total electricity. That is the equivalent of the power output of about two of Germany’s nuclear power plants (which they want to shut down), and even expensive nuclear plants are a bargain compared to the power yield of 100 billion euros’ worth of solar.

Some of Der Spiegel’s story could have come straight from Monty Python:

The only thing that’s missing at the moment is sunshine. For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity. The days are short, the weather is bad and the sky is overcast.

Germany has announced that it is going to have to scale back its lavish solar subsidies, and guess what? Share prices for solar power companies are collapsing. As one knowledgeable blogger on the scene put it:

The scale of the [solar subsidies] is of unprecedented stupidity, a folly that will certainly go down in German history textbooks. The backpedaling away from solar subsidies in Germany is now happening so fast that it’s making people’s heads spin. Call it the reverse energy supply transition – one from fantasy back to reality.

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Kenneth P. Green

The Keystone divide

By Kenneth P. Green

January 23, 2012, 12:09 pm

Over at Politico, Darren Goode covers the increasing schism that President Obama’s rejection of the Keystone XL pipeline is causing among his formerly unified union supporters:

Unions representing construction workers that would directly benefit from building the pipeline feel stabbed in the back by unions that joined environmental groups to congratulate Obama for killing the project. “People are pissed,” said one U.S. labor official who supports the proposed TransCanada pipeline. “The emotions are really, really raw right now. This is a big deal.” “It’s repulsive, it’s disgusting and we’re not going to stand idly by,” Laborers’ International Union of North America General President Terry O’Sullivan told POLITICO. “The rules have changed. So we’ll react accordingly.” O’Sullivan said the first move will be to pull his union out of the BlueGreen Alliance — a coalition of environmental groups and labor unions that represented nearly all of the groups that signed a joint statement backing Obama.

But what’s amazing about the article is how blatantly political the other unions are: their focus is clearly not on their workers, it’s on supporting Obama [emphasis added]:

But the unions who signed the joint statement said it was the right thing to do and was necessary to help Obama fend off Republican attacks over his jobs record.“We’ve worked with Sierra [Club] and the others for a long time and we raised the issues about the hypocrisy of the Republicans in our statement,” Communications Workers of America spokeswoman Candice Johnson said. “That’s what we believe and … we thought it was very important to lay out exactly what was happening.” “It was kind of not explicitly about the president’s decision [on the pipeline] but the main issue was to rally around the president when the issue of jobs was being taken over by the GOP,” said Sean Sweeney, director of the Global Labor Institute at Cornell University, who helped the effort.

Best quote from the story?

“It’s the equivalent of us stepping in when they were doing the bailout of General Motors and saying ‘this is bullsh—,’” a pro-pipeline labor official said. “Nobody wants to step up to help us. Or just stay silent and let us fight our battles.”

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Kenneth P. Green

A hopeful note!

By Kenneth P. Green

January 20, 2012, 1:52 pm

While I’m not likely to be known anytime soon as a booster of alternative energy technologies, I have, for some time, seen a lot of promise in algae biofuels. Algae has natural characteristics that make it a particularly good candidate as a source of plug-in hydrocarbon fuels. As seaweed, it’s also particularly tasty in miso soup (Yes, seaweed is algae).

Some good news on that front is, apparently, in a forthcoming issue of Science magazine (I’ll have more to say when I see the article after the farshtunken embargo is over and I can get at it online).

A team with Bio Architecture Lab (BAL), a company based in Berkeley, Calif. announced it has found a way to extract the major sugars in seaweed and convert them into affordable renewable fuels. Its work is featured on the cover of the Jan. 20th edition of Science magazine.

“About 60% of the dry biomass of seaweed are fermentable carbohydrates, and approximately half of those are locked in a single carbohydrate – alginate,” company CEO Daniel Trunfio said in announcing the research. His scientists have engineered an enzyme to degrade the alginate and a pathway to metabolize it.

They describe seaweed as an ideal feedstock for making biofuels, because it has a high sugar content, does not require arable land or freshwater to grow and is environmentally friendly. BAL has four farms in Chile that can grow seaweed in economically viable quantities.

The company’s press release (always to be taken with a grain of salt), says:

Seaweed is an ideal global feedstock for the commercial production of biofuels and renewable chemicals because in addition to its high sugar content it has no lignin, it does not require arable land or freshwater to grow, and it is environmentally friendly. Globally, less than 3 percent of the coastal waters can produce seaweed capable of replacing over 60 billion gallons of fossil fuel. Today, in many parts of the world, seaweed is already grown at commercial scale.

For context, the U.S. consumes about 300 billion gallons of oil per year. Not bad, but not a total replacement, yet, even if it pans out. Still, there’s hope.

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Kenneth P. Green

Obama’s Orwellian overture

By Kenneth P. Green

January 19, 2012, 4:16 pm

Yesterday, after the president shoved a thumb in both the Canadian and American people’s eyes by gratuitously and politically rejecting the Keystone XL oil pipeline, I opined that it was possible the president thinks that people won’t care because he intends to simply lie about the whole thing:

On the other hand, this president has a history of doubling- and tripling-down on his more absurd energy policies, and isn’t afraid of over-the-top Orwellian speaking.

I’d like to thank the president for helping me make my point. On the same day as he rejected the Keystone XL pipeline, the Obama campaign has released a YouTube video that basically claims up is down, black is white, Solyndra was a major success, the green-energy jobs thing really is working, and that the Obama administration is as ethically pure as the driven snow. Watch it here.

This is truly an ingenious ad, partly because it is so blatantly misleading. Rather than rebut the Solyndra debacle, they quote a liberal newspaper which debunked a political ad by a rival regarding Solyndra. Choice stuff here.

My favorite lines?

“And America’s clean energy industry? 2.7 million jobs and expanding rapidly.”

For this, the ad cites a Brookings Institute study on the green economy, and misrepresents it utterly. First of all, the Brookings study looked at all jobs they could define as “green jobs,” which were overwhelmingly not jobs in the clean energy industry, and included about 350,000 bus drivers, and another 380,000 trash collectors.

As I observed when the Brookings report came out, the Brookings conclusions are not what the green-job boosters claim they are.

Brookings concludes that,

For one thing, the data counsel against excessive hopes for large-scale, near-term job-creation from the sector. After all, the U.S. clean economy remains small where it is fast growing, and relatively slow-growing on balance, as defined here.

To rephrase that, the parts of the “clean” economy that boosters point to as having rapid growth are the smallest sections of Brookings’s re-defined clean economy.

“For the first time in 13 years, our dependence on foreign oil is below 50 percent.”

The folks at the Oil Drum blog have already debunked this, in response to a Mortimer Zuckerman article in U.S. News:

Exhibit 1 shows the data behind oil and petroleum product imports, and it appears that he has done a bit of mixing-and-matching to arrive at the percentages that he cites. It is true that crude oil & petroleum products represented 60% of 2005 U.S. imports compared to consumption. The reduction in imports to 47% in 2010, however, is the percentage of crude oil alone compared to consumption for that year. When we examine comparable categories, it is clear that crude oil imports – relative to total consumption of crude oil and products – were only 2% lower in 2010 than in 2005, and that the big change that he alludes to was mostly in petroleum product imports.

Orwell starts with an O. So does Obama. Coincidence? Apparently not.

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Kenneth P. Green

Warm winter OMG! Climate change!

By Kenneth P. Green

January 18, 2012, 11:39 am

For those who are hearing people say that the warm winters around the lower 48 are due to climate change, a breath of fresh air from (of all places) the Washington Post:

There have been many mild winters before, noted Steve Zubrick, a meteorologist with the National Weather Service. Zubrick has run the numbers on Washington winters going back to 1872. He looked at the first half of meteorological winter, from Dec. 1 to Jan. 15. This year’s average temperature, 43.5 degrees, was the seventh-mildest on record — warm, but not as warm as (starting with the warmest ever) 1889, 2006, 1931, 1949, 1982 or 1971.

As for the lack of snow, that’s not so strange, Zubrick said. There are 16 half-winters on record with no measurable snow in Washington.

This article only refers to the DC area, of course, but points out that the same phenomenon (dynamics of the jet stream) is the cause of warmth across the lower 48 states.

There’s hope for you snow-lovers in the article, however:

There are tentative signs, Robinson said, that the North Atlantic Oscillation’s positive phase could be tipping back toward the negative, which means Greenland would go into jet-stream-diverting mode again and the February weather in North America would be more traditionally wintry.

Having lived in Canada for three years, and had the dubious pleasure of travelling across the country each January, I have to say… “No offense, but I hope you’re disappointed, eh?”

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Kenneth P. Green

Electric cars are perfect urban vehicles—or not

By Kenneth P. Green

January 17, 2012, 2:35 pm

Electric car proponents have often sold them as the perfect commuter vehicle for heavily urbanized environments. After all, the commute is short, so range anxiety shouldn’t be a problem, there are plenty of places to plug in at origin and destination, the smaller size should aid in finding parking and making better use of available parking space, and so on and so forth. European cities, with their dense planning patterns should, in theory, be ideal for electric vehicles.

Unfortunately, even the Brits aren’t really buying it:

Sales of electric cars have slumped so badly that there are now more charging points than vehicles on the road. Just 2,149 electric cars have been sold since 2006, despite a government scheme last year offering customers up to £5,000 [~USD 7,700] towards the cost of a vehicle. The Department for Transport says that around 2,500 charging points have been installed, although their precise location is not known.

With typical British understatement, “A spokesman for the DFT [Department for Transport] told The Sunday Times: ‘It’s fair to say that there hasn’t been a huge take-up over the past year.’”

So despite selling only 2,149 electric cars since 2006 and giving out $7,000 subsidies a pop, the UK has installed 2,500 charging stations (though, apparently, nobody quite knows where; one presumes they do know who owns the cars).

And, apparently, the British have their own kind of range anxiety: “’You have to think about usage and plan what you are going to do. You can’t wake up and decide to drive to Scotland.’” (That would be a show-stopper for me as well, as when I visited Britain, I often had sudden urges to drive to Scotland.)

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