The ChamberPost

Wind Projects at a Standstill

by Brad Peck

The impact of economic and regulatory uncertainty on offshore wind projects, from the Washington Post:

Just last month, Interior Secretary Ken Salazar distributed leases to explore five possible wind farm sites off Delaware and New Jersey on the outer continental shelf. The leases were the first ever, and Salazar proclaimed "a new day for energy production in the United States." But that day may be years in the dawning...

This week, oilman T. Boone Pickens backed off of his plans to build the world's largest wind farm in the Texas Panhandle, citing tight credit markets and lower natural gas prices...Pickens could not find financing to pay for the transmission lines that would hook up his wind farm to the Texas grid. Offshore developers face a similar problem. They need to find customers to buy their power and must do so before they can get financing to build. They must also navigate an untested federal permit process that was scheduled to take effect late last month, putting projects many years away from completion. Construction on even the most promising projects in Rhode Island, along with those in Delaware and New Jersey, won't begin for at least four years.

"I guess I would say there's a lot of uncertainty out there in the industry," said Matthew Kaplan, a senior wind analyst at Emerging Energy Research...

Fierce opposition has all but consumed a plan to build a wind farm in Nantucket Sound that was proposed in 2001 and has since become the subject of legal challenges and a multimillion-dollar lobbying campaign.

Cape Wind Associates is still awaiting federal approval to move forward with its $1 billion-plus plan to build 130 turbines -- each as high as 440 feet from sea level -- six miles off Cape Cod, Mass. Renewed legal challenges, however, could further delay the project. Kaplan said Cape Wind's troubles send bad signals to an industry attempting to grow out of infancy.

"That in itself makes investors cringe, when they see the first offshore wind project has taken this long and is still not over the hurdles," Kaplan said.

Ah, Cape Wind, the green tape gift which keeps on not giving.

Getting Back in the Nuclear Game

by Brad Peck

It is hard for me to take seriously the most rabid "rapid and total destruction of all living things" climate crowd when they ignore the one existing technology which could be deployed quickly and in quantity. Thus I would like to share this piece today from Senator Lamar Alexander appearing in the American Spectator.  In he lays out the destination, which few disagree with, and then the path:

None of these goals are met by the current Waxman-Markey Bill. What started out as an effort to address climate change by reducing carbon emissions has ended up as a huge tax burden on the economy, a $100 billion a year job-killing national energy tax that will create a new utility bill for every American family...This tax burden is relieved only by the vague hope that all this can be overcome by mandating increased use of a few alternative energy sources defined as "renewable." Renewable energies such as wind and solar and biomass are intriguing and promising as a supplement to America's energy requirements. Yet the Waxman-Markey Bill proves once again that one of government's biggest mistakes is taking a good idea and expanding it until it doesn't work anymore...

There's a better option. Let's take another long, hard look at nuclear power. Nuclear is already out best source for large amounts of cheap, reliable clean energy. It provides only 20 percent of our nation's electricity but 70 percent of our carbon-free, pollution-free electricity. It is already far and away our best defense against climate change. So why not build 100 new nuclear power plants during the next 20 years? We built 100 reactors between 1970 and 1990 with no assistance from the government. Why can't we do it again? Other countries are already forging ahead of us. France gets 80 percent of its electricity from 50 reactors and has among the cheapest electricity rates and the lowest carbon emissions in Europe to show for it. Japan is building reactors from start to finish in four years. China is planning 60 new reactors while Russia is selling its nuclear technology all over the world. President Obama has even said Iran has the right to use nuclear power for energy. We invented this technology. Isn't it time we got back in the game?...

We can't wait any longer to start building our future of clean, reliable, affordable energy. The time has come for action. We can achieve all three goals of reducing carbon emissions, avoiding energy sprawl and reviving America's industrial and hi-tech economy with the technology we already have at hand. The only requirement is that we open our minds to the possibilities and potential of nuclear power.

U.S. Action Alone Will Not Impact CO2 Levels

by Brad Peck

The EPA via The Foundry via The Chilling Effect:

The Senate Environment and Public Works Committee began their hearings on the 1,500 page Waxman-Markey cap-and-trade legislation Tuesday, and ranking member Senator James Inhofe (R-OK) won a startling admission from Environmental Protection Agency administrator Lisa Jackson. Inhofe produced an EPA chart generated last year during the Senate’s debate of the Lieberman-Warner cap-and-trade legislation. The chart showed that the carbon reductions under that bill would not materially effect global carbon concentrations in the atmosphere. Inhofe then asked Jackson if she agreed with the chart’s conclusions. Jackson replied: "I believe that essential parts of the chart are that the U.S. action alone will not impact CO2 levels."

The post also looks at the impact of this non-impact on the U.S. economy. So, it's almost as if a global accord to reduce emissions of greenhouse gases is the best way to tackle this global issue and unconditional domestic legislation without an international agreement would put domestic industries at a competitive disadvantage.  If only someone had told the House that.

Health Reform, Climate Change, a Rock and a Hard Place

by David Chavern
 
It should not be a surprise to anyone that health care reform and energy/carbon legislation are running into significant political headwinds on the Hill.  A recent piece by Michael Barone makes the case that Americans are getting "cold feet" over major legislation in these areas.  I think it is more accurate to say that the public is "waking-up" to the real impact of this legislation – since, to date, they have been sold a bill of goods by politicians who have been flatly unwilling to talk about costs and trade-offs of complex reform.

Here is what the public has consistently been told about health care: (i) everyone can "keep what they have" (since 83% of people with insurance are satisfied with it), (ii) tens of millions of additional people will be given comprehensive health coverage, (iii) there will be no "rationing", so everyone will get access to everything all the time, and (iv) it won't cost you anything – in fact your cost of insurance should go down.  Oh yes, and as the Director of OMB noted, the health care reform legislation will be "budget neutral."  The bad guys in this fantasy story are insurance companies, pharmaceutical companies and business generally.

How about energy/carbon legislation?  Here the story has been: (i) there is an immediate global crisis that requires massive action, (ii) there are readily available energy alternatives, and (iii) moving to these alternatives won't cost you an extra dime. In fact, we need to "bring down" the cost of gasoline.  The bad guys here are oil companies, electric utilities and, oh yes, business generally.

With these arguments being repeatedly spewed forth by the political class in town, one shouldn't be surprised that the public gets "cold feet" when the rubber hits the legislative road and people start to realize that there is no free lunch. None of these promised components of reform can be delivered by the Hill – and all of it would cost the American public (and their children and grandchildren, etc.) many trillions of borrowed dollars.  Hopefully, the nasty counter-reaction from the public will serve to stop the current health care and energy/carbon reform efforts in their tracks. While business would certainly get blamed for such an outcome, the truth is that the real bad guys would be the politicians who have been unwilling to be clear and honest about what real reform means.

But there would, unfortunately, also be a major downside to any delay in reform.  America really, really needs smart health care reform (that actually does expand coverage and reduce costs) and energy legislation (that lowers energy costs, expands security and addresses carbon). Kicking the can once again won't improve the competitiveness of our economy. What we need is a giant political Reset Button with the public where we take the discussion back to an honest discussion of costs and benefits, and a clear understanding that business isn't the problem.  In fact, it has to be a very large part of the solution.

The "High Risk" of California Leadership

by Brad Peck

The Wall Street Journal took a look Friday at California's climate-change leadership. The article fairly defines the state:

• Compromising their ability to deliver adequate power
• A harbinger of problems to come in other states
• Likely to miss the goal by five years or more
• Identified problems with constructing sufficient transmission capacity
• Find itself uncomfortably tight on power by 2011 if problems continue to pile up
• One way or another...consumers will bear those costs
• Regulations are putting existing power plants under pressure
• Near term...power shortages.
• It could cost $114 billion or more to meet the 33% mandate
• A possible energy shortfall in certain places if the economy rebounds any time soon

If one must find a silver lining I guess it is that their non-competitive policies will most likely mitigate that last one.

Thomas Friedman is Wrong

by Brad Peck

And it isn't often that my computer types those words, but resignation is not revolution:

There is much in the House cap-and-trade energy bill that just passed that I absolutely hate. It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess. I detest it. Now let’s get it passed in the Senate and make it law.

Why? Because, for all its flaws, this bill is the first comprehensive attempt by America to mitigate climate change by putting a price on carbon emissions.

The other option of course would have been to create a better bill and not force a vote on a bad one. So what is the goal:

More important, my gut tells me that if the U.S. government puts a price on carbon, even a weak one, it will usher in a new mind-set among consumers, investors, farmers, innovators and entrepreneurs that in time will make a big difference...[Obama] is going to have to mobilize the whole country to pressure the Senate — by educating Americans, with speech after speech, about the opportunities and necessities of a serious climate/energy bill.

Or in the absence of a serious bill, this one apparently. Friedman is correct that we need to create a mind-set among all Americans in order to effectively reduce emissions of greenhouse gases. Indeed the Administration needs to mobilize the country to decide our climate/energy future, but trying to force through a "weak...complicated...appalling...mess" is not the way to do so. It is truly "pathetic that we couldn't do better;" but even more pathetic is the notion that we can't do better.  We can, and we must, have legislation which provides the energy we need and doesn't kick an already down economy.

Old Problems for New Energy

by Brad Peck

The Sun newspaper, serving Inland Empire in California (unemployment 13% and rising) identifies, then for some bizarro reason endorses, the "green tape" phenomena haunting the creation of "green jobs":

Western governors, animated by President Obama's goal of doubling renewable energy production in the U.S. within three years, have identified dozens of areas rich in "new energy" sources. However, they're now facing some of the same "old energy" obstacles to getting the projects moving. Their challenge risks creating a contradiction in which building environmentally friendly new-energy plants tramples sensitive natural areas...

As The Wall Street Journal reported, hundreds of applications to build solar plants in the arid West are being delayed by the regulatory process. The Bureau of Land Management, already busy reviewing traditional energy applications on public lands, has more than 200 solar proposals on its to-do list. The BLM is required to take into account environmental impacts and impacts on endangered species. Reviews are lengthy...

We're embarking on a promising new era. But our leaders must take every reasonable consideration to ensure that the harnessing of new energy is done properly.

No one objects to "reasonable considerations," it is the un-reasonable ones which are killing us. Unless we streamline the permitting process and set hard timelines for appeals by environmental activists our new energy future will always be just that, in the future.

The Climate Change Crowd

by Brad Peck

The "most important environmental and energy legislation in our nation's history," passed Friday by a margin of point zero zero nine percent -- no one's definition of consensus (see the 'Yeas'). Despite the best intentions of its sponsors and backers, it is a seriously flawed piece of legislation.  Some quotes:

"The Waxman-Markey bill is undeniably less than perfect, but it's still necessary." (ENN)

"Few aspects of the Waxman-Markey cap-and-trade bill matter more than the insufficient degree to which it applies future revenue to clean energy innovation." (Brookings)

"However, key provisions of Waxman-Markey resemble earlier European efforts, and Europe's experience raises serious questions about the ability of this legislation to adequately cut emissions or fund green solutions." (LA Times)

"At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there...I think there may be other ways of doing it than with a tariff approach. (President Obama)

"Symbolically, today's vote is a breakthrough victory. Substantively, if implemented as written, it could delay real climate protection for more than a decade"  (Bill Shireman)

A little on symbolism and identity, from Elias Canetti's description of his theory of "national crowd symbols":

Its components are an unshakeable belief in the superiority of this one nation; prophetic visions of unique greatness, and a peculiar mixture of moral and feral pretensions...

Replace "nation" with "movement" and I believe we have an accurate description of the hard-core climate crowd. Which isn't to say that the issue doesn't need to be addressed; far from the cementing the status quo we strongly support comprehensive legislation to reduce emissions of greenhouse gases. But we are not interested in symbolic and Pyrrhic victories; we are interested in long-term, economically sustainable solutions. Solutions which

...must balance environmental objectives with the need for economic growth and job creation; promote technology development and deployment; reduce barriers to the development of climate-friendly energy sources; promote energy efficiency; and implement appropriate steps to address the international nature of global emissions.

Time marches on, so today we are farther down the road to the future than on Friday, but we are still without a guidepost. And the brand new public art at the side of the road, two vast and trunkless legs of stone, is expensive and gaudy.

Renewable Energy - Do the Responsible Thing

by Brad Peck

A few weeks ago we posted on an agreement for a new wind farm near San Diego (good) and predictable opposition to it (not good). The San Diego Union Tribune got many letters in favor of the project:

Renewable energy generation is possible here and now and has my support. (George Coladonato)

With strong local commitment to making it happen, East County could be the leading region in Southern California, and even the Southwestern United States, in renewable energy development. It is encouraging to see another project that will produce clean energy and also help stimulate the economy. (John Gibson)

and recognition of the barriers to progress:

No matter how much merit the wind farm project has, no matter how earth friendly it will be, as San Diegans we should expect there to be some opposition from the usual suspects. (Bill Kalthoff)

Renewable energy is our future. Now it's especially important that regulators and potential opponents to the project do the responsible thing and consider the positive aspects of this project before searching for some minor flaw. (Sue Young)

This is a trend we've seen nationwide — radical environmentalists and their Not In My Back Yard allies. That's why the U.S. Chamber of Commerce created ProjectNoProject, an interactive Web site that seeks to tell the story of NIMBY and its damaging impact on jobs, infrastructure and economic prosperity. (Bill Kovacs)

and hope:

We are hopeful that the residents of our region continue to understand how important it is to develop our own sources of renewable energy. (John Gibson)

So are we John, it's time to make this current vision of California a thing of the past.

Waxman-Markey Passes, House Fails

by Brad Peck

As previously posted the Chamber strongly supports comprehensive legislation to reduce emissions of greenhouse gases while providing for a strong American economy -- instead we got an unrealistic approach that could further harm the economy and shed American jobs. The National Black Chamber of Commerce estimates that the bill could result in annual drops in gross domestic product (GDP) of $170 billion in 2015, $350 billion in 2030, and $730 billion in 2050, and a net jobs loss of 2.3 million to 3 million—a figure that includes all the "green” jobs created. Our experts weigh in on the passage of the "American Clean Energy and Security Act of 2009" (H.R. 2454)

Bill Kovacs:

The last thing this country needs is fourteen hundred new job-killing regulations and mandates. The Chamber hopes, at some point, that Congress will find a way to balance the need for a strong U.S. economy while still addressing global climate change (our suggestions). Unfortunately, Congress has fallen short with this bill. Despite the good intentions of this bill's drafters to transition the U.S. to a 'clean, green economy,' H.R. 2454 still suffers from a large number of flaws. It fails to ensure that enough renewable or alternative energy sources, which include not only wind and solar but also nuclear and coal with carbon capture and sequestration, will be brought online to compensate for the fossil energy that will be de-selected by the bill's aggressive caps.  The Chamber's website, projectnoproject.com, shows that it's just as hard to get a permit to build a renewable energy facility as it is to build a fossil fuel-fired power plant.

Karen Harbert:

The American public deserves a robust, transparent debate on this legislation, which will raise fuel and electricity costs and have a negative impact on every family's budget. Re-writing legislation in the middle of the night and then forcing a vote on it the next day is certainly not the right way to tackle this complicated issue. There is a tremendous opportunity for America to enact sound energy policy that will promote economic growth and help transition to a low carbon future. Unfortunately, the legislation considered by the House misses the mark.  Instead, the bill passed by the House mandates a complicated regulatory scheme that has failed in Europe and will result in fewer jobs, higher prices for consumers, and will place the U.S. at a competitive disadvantage internationally.