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Columns

July 28, 2012

Renewable energy vs. the real world

A fractivist ended a recent Otsego County Natural Gas Advisory Committee's meeting by intoning "a dollar spent on natural gas is one less dollar spent on renewables."

Deep, man, but what does this mean? It's probably about subsidies so let's scroll back to Economics 101.

In free markets, demand determines where money is spent. In command-and-control societies, the money goes where the kings and commissars (the elites) deem it best.

Our society is a little of both, but thankfully, still more of the former. So, in spite of loan guarantees, tax credits, state-supported rebates, state mandates and quotas, direct subsidies and grants, and manipulated tariffs, renewables still fail to make the market.

Take solar-heated homes. After decades of popularization and righteous approval, and with tons and tons of subsidies, solar heated homes are still marginal.

According to the 2010 Census, there are only 68,000 in the entire country. In contrast, there are 52,000,000 homes heated with gas. Why? Gas is cheaper, more reliable, more adaptable to a mass market (i.e., scaleable) and more builder-friendly. In other words, people like it.

This holds true for wind, biomass, hydro, wave, geothermal and other forms of renewable energy.

Renewables gobble up massive subsidies and yet are nowhere near fossil-fuel pricing. Competitive? Not even with the pork barrel.

But, hey, that doesn't mean people can't make a buck on them. Massive subsidies attract the wheeler/dealers and the crony capitalists. Never mind that the business won't fly. When Uncle Sam picks up the tab, roll 'em, Pete! Let it ride! More money where that came from, baby!

Solyndra, anyone? Or Evergreen Solar? One-third of the companies in the renewable segment underwritten by Stimulus #1 are flirting with bankruptcy. No problemo! Uncle Sam picks up the tab.

And get this. When First Solar was found by the government to be unable to "meet requirements in time," the company experienced production drops and a stock market slide. That didn't prevent First Solar from picking up new guaranteed loans while selling off solar farms to Excelon and General Electric. Now blue chip Excelon and General Electric are on the renewable dole. Go figure!

There's a better way for government support for renewables, a way that takes the government out of the venture-capitalist game of picking winners and losers, a game it has never played well. Perhaps fodder for a future column.

In the meantime, there's gas. If folks could pull themselves away from the Josh Foxed press and actually go to the raw data and statistics coming out of the states (and countries) with shale production, they'd see an economic uptick, with acceptable risk, in oil and gas production, in baseload electricity, in manufacturing, and in chemicals. In other words, they'd see economic growth … and jobs. Gas will also play an increasing role in transportation as infrastructure expands. Witness Otsego County's recent decisions on gas-fueled vehicles. Also witness the opposition, driven by ideology over economics.

Renewable purists can always buy a mule, card wool for clothing, cook over a campfire, and walk the trails to town. (Yeah, road tar and asphalt are hydrocarbon products.) That way the can signal their moral support to the renewables mentioned at the Natural Gas Advisory Committee while making sure their dollars don't go to a gas company.

Any takers?

Dick Downey is an Otego resident and a member of the Unatego Area Landowners Association.

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