“Instead of the fear-baiting warnings that the U.S. is being outspent on renewables [by China], a better question might be: what are we getting for our money?”
– Loren Steffy, “Scrubbing the Data on Clean Energy Investment,” Houston Chronicle, March 27, 2010.
Loren Steffy is the most read and respected voice at the Houston Chronicle on business and related policy issues, the paper’s editorial board notwithstanding. And on energy, he smells a rat with the ‘clean energy’ mantra that comes on high.
Steffy has documented the role of Enron in the government-created Texas wind power boom. He deconstructed the all pain-no gain nature of the House-passed Waxman-Markey cap-and-trade bill before the rest of the country caught on. And most recently, he has called out the non sequitur of a new study, “Who’s Winning the Clean Energy Race,” recently released by the Pew Charitable Trusts via the Pew Environmental Group.
The Pew study tries to shame the U.S. (us) into throwing good money after bad by further subsidizing uneconomic, unreliable wind and solar–the very energies that the marketplace cannot support without the heavy hand of government. The exception is off-grid solar, indicating that renewables are more of a bridge fuel to nonrenewables than the other way around.
Some Hard Questions
The Pew Environmental Group is dedicated to one-sided climate alarmism. It is thus part of a one-two punch with the Pew Center on Global Climate Change, which has been of long interest here at MasterResource.
The Pew Center has admitted that “settled science” is a misnomer in the physical-science climate debate. But they have never commissioned a study critical of climate alarmism despite momentum toward the “skeptics” side in recent years. Eileen Claussen, the head of the Pew Center, has recognized that binding targets are a nonstarter in the developing world. (Adaptation, anyone?)
But with the bits of good here and there come something much different–such as the Pew Charitable Trusts. Here are some questions I have to add’s to those of Loren Steffy (reprinted below).
If the argument is that the U.S. should follow the leader, then why didn’t the study mention the “greenest” U.S. company of them all–Enron? Ken Lay’s company rescued the domestic wind industry and aggressively invested in solar (assets since taken over by GE and BP, respectively). Enron’s shenanigans also involved its “‘green” energy efficiency services, which were unprofitable except for accounting tricks. The experience of Enron Energy Services is important to question the silver bullet of energy efficiency as a government strategy for a low-carbon energy future.
Secondly, why didn’t Pew consider that China’s central energy planners are hurting their people with their green imaging? China’s new investment is predominantly coal, which is the right way to go, considering the need for a developing country to maximize its energy sector relative to unfulfilled demand.
Here is another question–and one I pose to the study authors: For every person that receives (intermittent?) energy from wind turbines or solar panels, how many more people could receive reliable power from a diesel generator or a coal plant? In an opportunity cost perspective, wind and solar produces not only energy but phantom energy–foregone or lost energy per dollar spent.
Pew Center: Time to Disband?
The Pew Charitable Trusts is increasing their bet on climate alarmism, not decreasing it as merited by intellectual and political developments. I believe that the trend should be just the opposite where the Pew Environmental Group trues up its mission and reports on non-alarmist studies as well as alarmist studies. And then there is the Pew Center on Global Climate Change.
Should time be up for the Pew Center after a 12-year run? (Enron was an early member of this collective, by the way.) Should the board of the Pew Charitable Trusts continue to fund this safe harbor for corporate rent-seekers?
To Pew, is the highest form of capitalism political capitalism? Is corporate welfare the way to go in public policy in general and climate policy in particular?
And what about donor intent? Would Joseph N. Pew and wife Mary Anderson Pew, who founded the philanthropy in 1948, approve of what is being done in the areas of energy and climate policy, particularly in light of recent developments on a variety of intellectual and political fronts?
What could the Pew charities do–what is the ‘opportunity cost’–of the several-million-dollar annual budget of the Pew Center on Global Climate Change? What human needs in America or abroad are not being met because of this open spigot for climate alarmism?
Sadly, the Pew Center’s activities mean that other donors (including those that fund my Institute for Energy Research) must spend money to counter their propaganda, which doubles the loss to real philanthropy and/or the savings and investment that fuels increased productivity and economic growth.
Loren Steffy’s Column
Back to Loren Steffy (his blog is here). I reprint his column in full for posterity–and with the (faint) hope that the Pew Charitable Trusts will end their futile crusade for climate alarmism and climate policy that–by the alarmists’ own math–will not appreciably affect climate.
Here is Steffy’s Scrubbing the Data on Clean Energy Investment:
A new study shows the U.S. is falling behind China in its investment in clean energy technology. Our investment in wind, solar and other feel-good energy initiatives totaled $18.6 billion last year, dropping us to a distant number two behind China’s $34.6 billion, according to the study by the Pew Charitable Trust.
The study has been bandied about the Internet and supported by inflammatory quotes like this from CNN:
“The United States’ competitive position is at risk in the emerging clean energy economy,” Phyllis Cuttino, director of the Pew Environment Group’s Global Warming Campaign, said in a statement.
But a key question is being overlooked: So what?
China’s energy consumption is growing faster than any other country on earth. If it has any hope of keeping up with that demand, it’s going to have to outspend every other country on the planet, both in renewables and in conventional energy.
In other words, the numbers don’t address the scale of the investment. Despite it’s increased spending on renewables, coal remains China’s fuel of choice, and it’s spending far more on coal development than anything else. For example, in late 2008, China announced a plan to invest more just on new railroads to transport coal from the northern Shanxi province than the U.S. last year invested in renewable fuels.
The Pew study doesn’t account for government research grants or corporate research and development spending. In the U.S., that number is about $7 billion. It’s not clear what the corresponding number is for China. But we know that the Chinese government is willing to throw money around regardless of whether projects make economic sense.
It provided huge subsidies to solar panel manufacturers as part of a program to generate 20,000 megawatts from solar sources by 2020. That, as the New York Times pointed out last year, is less than half the capacity of coal-fired plants that China builds each year.
In other words, just because China is spending more doesn’t mean it’s actually getting any lasting benefit.
But perhaps most important, despite all the dire warnings that the U.S. is falling behind, the Pew study is rather selective in its data. It doesn’t include investments in natural gas, a clean fuel that’s affordable and abundant in the U.S.
Instead of the fear-baiting warnings that the U.S. is being outspent on renewables, a better question might be: what are we getting for our money?
How many times do we have to see this movie (government mandates and investment without regard to results or economic benefit) before people begin to realize that the incentives that drive government behavior do not align with reality?
Sadly, most large charitable organizations prefer to spend money in pursuit of grand illusions (maybe their incentives are much like government’s) that get good publicity. There are no metrics to measure their output or effectiveness. Wouldn’t a prudent man agree that providing less developed nations with goods like clean water, mosquito nets and immunizations has a much greater impact than another study about how the sky is falling?
Rob could have also mentioned how wind and solar technologies hinge on rare earth elements obtainable almost exclusively in China. Which fact largely explains why the Chinese are rapidly becoming a dominant manufacturer and exporter of wind turbines and solar panels. He could have mentioned as well the Sino-Russian agreement that will soon bring large supplies of Russia’s natural gas to China. And he could have pointed out China’s increasing yen for nuclear.
There is also the redoubtable Three Gorges dam, which represents China’s real commitment to renewables, although the deleterious environmental effects will be felt for generations.
Yes, the PEW Center gush for wind is bad enough. But I’d like these questions addressed on this forum, for the answers to them will likely get closer to the truth behind the wind mess in this country:
Why aren’t utilities in general, and regulatory agencies and grid controllers in particular, being held accountable for what they’re doing to ratepayers by supporting generation that must destabilize the electricity supply/transmission system?
To what extent are corporations that are heavily involved with coal, natural gas, and oil also involved with wind? Outfits like GE, FP&L, AES, BP, and Siemens, among others.
The bipartisan dive to the bottom now enabling the wind scam is worthy of much investigation.
Depressing
http://eureferendum.blogspot.com/2010/03/depressing.html
……….it seemed as if we had the warmists on the run.
……..a more realistic appraisal might suggest that we have not even dented the underlying agenda.
Miliband is paving the way to get the Kyoto treaty protocols back on track for agreement in Mexico later this year, as part of an international treaty. And he wants to pull in developing countries into the treaty maw, with them offering some “commitments” of their own – more cosmetic than real – in order to cement in the developed (or “Annex 1”) countries into the deal.
This move comes alongside a meeting between Gordon Brown and “billionaire financier” George Soros, Obama’s economic adviser Larry Summers, economist Lord Nicholas Stern and other finance ministers. In parallel, they were working on stitching up the financial package which is so central to the real agenda.
Their headline goal is to raise $30bn (£20bn) a year immediately and $100bn a year by 2020, ostensibly “to enable developing countries to adapt to climate change.”
Whatever mechanisms are eventually agreed, however, of one thing there can be absolute certainty. Very little of the money allocated to this cause will ever reach its stated destination. As with the current aid programme, most of it will be soaked up by banks, finance houses, investors and brokers, in fees and commissions. Huge amounts will line the pockets of governments in the recipient countries, and NGOs will grow fat and rich.
Britain brandishes olive branch to restart global climate change talks
http://www.guardian.co.uk/environment/2010/mar/31/ed-miliband-restart-climate-change-talks
I am inclined to lean towards the Jon Boone position on this issue. When reading news reports of this the other day, my first thought was that this would allow the Chinese to sell wind and solar generating units to the rest of the world, while at the same time allowing them to put their hands on their hearts and say that they truly support the notion of deriving energy via these sources.
It would look slightly hypocritical if the Chinese just manufactured and sold these units to the rest of the world, and then did not use them for generating their own energy, as that would betray the fact they have no faith in the AGW theory.
So, I see it as a marketing exercise by the Chinese and nothing else. However, if we were to respond to this marketing exercise by way of trying to ‘beat’ the Chinese in a renewable race, then that would truly prove we have lost a grasp on rational thought.
Re comment #2:
Yes Jon–I should have mentioned the rare earth issue and linked this recent MasterResource piece by Ken Maize:
http://www.masterresource.org/2010/03/rare-earth-and-lithium-supplies-cloud-renewables/
Robert – not only did you fail to mention China’s real clean energy investments, but so did your readers. China is led by a large group of engineering trained people who can do math and understand that choking is not living. That is why they have again redoubled their planned build out of nuclear power plants.
http://www.reuters.com/article/idUSTRE62L13J20100322
Their future is not in coal combustion, but in uranium fission. By 2020, just ten years from now, they plan to have an additional 80 GWe of nuclear capacity, which would lead to about 600 BILLION kilowatt hours per year of generation. Their construction rate of nuclear plants for the next decade will essentially match what the US did in the period from 1963-1973. I predict that the difference will be manifestly visible in 2025 or 2030 when the rest of the world figures out that China will not put on the brakes at that point like we did. They will look at their progress and see just how beneficial it has been in reducing the stress on their rail infrastructure and the cleanliness of their air. They will keep on building and putting fossil fuel producers out of business because fission is cleaner and requires far less physical resources.
They even have a plan for all of the relatively new steam plants that they have built in cookie cutter fashion with coal fired boilers. They have two new high temperature reactors (HTR-PM) under construction that are ideally suited to be boiler replacements. Those reactors are being built using the technology from a very successful demonstration plant called HTR-10 at Tsingua University. You can watch a fascinating video about that reactor produced by the Australian Broadcasting Corporation’s Catalyst program. (Link below.)
The really sinister part of the video is near the end where the smiling Chinese scientist tells the Australian visitors not to get involved in nuclear power – just keep selling their uranium to China and they will do the “hard” work of building and operating reactors.
http://www.abc.net.au/catalyst/stories/s1854362.htm
Rod, I did mention the Chinese yen for nuclear, which is second only to Russia these days. Moreover, Charles, the new natural gas deal with Russia will allow China to run their showpiece wind projects for the West, hoping to gin up sales of their wind manufacturing plants and, at the same time, reduce the need for so much present wind curtailment, which has been at 50% of production.
But none should ignore my larger points. Yes, China is playing footsie with renewables for its own purposes. But it is only symptomatic of the larger problem. Why are American-based companies like GE, AES, FP&L pushing wind so hard? Why is FERC bizarrely pushing an “affirmative action” plan for wind, applying remedies not to address historic injustice that injured the performance of a class by reducing its potential but rather to give the pigs of wind some flight feathers, hoping the public will see only a bird.
The United States is fouling its own nest. Before we go off on a tangent about China, let’s get real down home.
Jon – China’s plans for nuclear are second to no nation – Russia does not plan on 70-80 GWe by 2020.
With regard to your question about the US government’s support for wind – it is a huge mistake that gives enormous benefits to companies like GE, AES, and FPL without threatening the profitability of the investments being made by ExxonMobile, Shell, Anadarko, and Chevron. A huge investment in wind almost automatically results in increased consumption of natural gas by the effect of the opportunity cost effect. Money wasted building wind turbines cannot be spent building nuclear plants, yet the demand for electricity that the wind turbines were supposed to supply will not disappear.
When the wind does not blow as much as the promoters predict – as it inevitably will not – the only alternative that will be available will be to burn more gas in cheap turbines. We will not have the reliable, low marginal cost nuclear plants to take up the slack.
There is a good reason why wind is politically popular, but it has nothing to do with the right decisions that should be made or the decisions that would be made by engineers.
Rod:
Don’t federal loan guarantees tell one and all that nuclear is not a competitive technology for electric generation where there are carbon-based energies?
Nuclear is a backstop technology for another decade or even century in the United States. Maybe by then the waste disposal issue can be solved.
@Robert – Federal loan guarantees are nothing new – I received one when I bought my first house. That program existed not because people like me were bad credit risks, but because we were folks that banks did not understand very well. You see, I did not have much of a history – I was fresh out of college. The government, however, knew that I was probably good for the money since I was serving as an active duty Naval officer and qualified for a VA loan.
In an analogous way on a completely different scale, the federal government and its employed technology/accounting experts at the DOE and OMB are doing due diligence on the loans that will be guaranteed. The program will be a net revenue generator to the US Treasury. You can tell than by looking at the Presidential Budget tables under “loan guarantee program” to see that there are NEGATIVE numbers in the budget expenditure lines predicted for the next 5 years.
The Congress recognized that nuclear energy is already competitive in operation, it just needed some kickstarting to get the construction process started again after a 30 year hiatus.