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Posts Tagged ‘renewable energy business’

Chasing votes with ‘clean and green’
Sunday, April 18, 2010@ 4:40 PM
Author: Press

Chasing votes with ‘clean and green’

Despite the talk, ideology doesn’t translate to actual alternative energy

By JOHN HOFMEISTER

HOUSTON CHRONCLE
March 6, 2010, 4:00PM

I’m a backer of wind, solar and biofuels as new, high-technology future contributors to the energy supply of the nation. Facing the daunting demand forecasts of the medium- and long-term future, the nation will need all the energy it can produce from every available source. Today’s seeming abundance of energy is a recession-driven aberration from the continuing rise in postindustrial, electron-dominated energy requirements in this century. Companies, institutions, governments and homes are run by information systems and countless electrical devices. When transportation also demands electrons, watch your meter spin!

Yet public officials from the president and vice president to Cabinet and congressional leaders insult our intelligence by delivering scripted messages that the future of the new energy system in this country is clean renewable energy that will be delivered by countless so-called green jobs. The fake chimes of energy independence echo up and down Pennsylvania Avenue. Do headlines make truth, regardless of content? What is it about organizations like Repower America and the Center for American Progress, which provide ideology, not substance, to the administration and congressional leadership on the so-called new energy system? Why are their conclusions unchallenged? Is it ease of messaging, for who can be against clean and green? Is it to run away from hard choices about hydrocarbons and nuclear energy? No one’s against cleaner energy. But is it material? Is it affordable? Can it deliver commercial, ample new energy to the ever-aging existing energy system? Let’s be honest. It’s incremental and expensive.

The American people, if sometimes late, are eventually pragmatic about energy hype without substance. Wind and solar don’t reduce the electric bill; biofuels don’t reduce gas prices. Misinformation and disinformation lead to communications bankruptcy. I told Sen. Barack Obama he needed a hydrocarbon plank in his presidential energy platform to deliver affordable gasoline. He responded that, as president, he would do biofuels. I said I’m doing biofuels (at the time as Shell Oil’s president) but not materially by 2012, or even 2016. He said we’ll do biofuels. I asked, with what subsidy? End of conversation.

Clean and green, the energy system we aspire to, is subsidized like no other energy source in history. By whom? Us, and our progeny. All energy has historically received some type of public support to even out the volatility of high and low price cycles. The Energy Information Agency of the U.S. government’s Department of Energy reports that, for 2008, natural gas was subsidized 25 cents per megawatt hour of electricity produced, coal received 44 cents per megawatt hour, nuclear $1.59. Oil was not reported in these numbers since oil is hardly a factor in electricity production. However, oil benefits from a variety of tax subsidies for dry well expenses and royalty holidays dating from the $10-a-barrel oil days of the late 1990s, which the administration promises to rescind. At the same time in the same year, wind energy received public subsidy of $23.37 per megawatt hour; solar energy received $24.34. These numbers do not include the additional subsidies we taxpayers have been compelled to pay for wind, solar and biofuels through the stimulus plan, the 2010 budget and the 2011 framework budget. These subsidies help support 2 percent of today’s energy system. Their proponents promise to double and double again the amounts of subsidized supply from clean and green with no commitment to ending subsidies. That’s not a new energy system.

Frittering at the edges

Here’s the problem I have with what the administration and Congress are doing. They are frittering at the edges of the energy system, not even building a manufacturing base to sustain its growth, because it’s politically popular. Polls say bashing the energy industry gets votes. You don’t govern by promoting coal, oil, gas and nuclear when you just got elected berating them. Symbols trump substance. Meanwhile, our leaders ignore 93 percent of base energy — hydrocarbons and nuclear, which are aging rapidly and in need of major new investment — at their constituents’ peril. The nation needs its leaders to promote short-, medium- and long-term energy supplies from all sources and do what it takes to deliver. Beginning with the Nixon administration, we’ve had eight presidents and 18 Congresses who have promised energy independence and never delivered.

Recent announcements on tripling loan guarantees for future nuclear construction are little more than sleeves off the vest. Loan guarantees are useless for unaffordable new nuclear investments, which have also just lost their future source of nuclear waste disposal. The administration torched $20 billion of our money, announcing its determination to forever close Yucca Mountain, Nevada’s national nuclear waste repository. After decades of build-out, just as the site sought license approval, an eight-week-old administration pulled the budget plug.

It’s politics

Does anyone suspect the reason? Sen. Harry Reid of Nevada, the Senate majority leader, faces a tough re-election race in 2010; he is benefited by the energy secretary’s announcement, undoubtedly from orders on high, to shut down the nation’s only safe and reliable storage site. Now we’re appointing a blue ribbon panel to study what we studied decades ago and report out in two more years. Why not a blue ribbon panel to commoditize nuclear and reprocess waste to lower costs, so we can actually build more plants?

As for hydrocarbons, the administration is proposing a series of demonstration projects to evaluate carbon capture and sequestration by 2016. Never mind that new coal leasing is all but dead, stopped in its tracks by the EPA. They’re kicking the can down the alley, while making headlines as if they’re doing something.

Regarding other hydrocarbons, EPA regulation of fracking is being proposed, which will add time and cost to developing tight gas reserves. Offshore leasing for drilling is as stalled as it was when congressional and presidential moratoria precluded it for 30 years.

But “clean and green” it is: the simplistic formula to make it look like we’re serious about producing more energy. It will produce votes, not material energy. It’s not enough and never will be. We’re headed for an energy abyss.

Hofmeister, the former president of Shell Oil, is founder and CEO of Citizens for Affordable Energy. He also is the author of the book Why We Hate the Oil Companies: Straight Talk From an Energy Insider (Palgrave Macmillan, $27).

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The U.S. Needs an Industrial Policy
Sunday, April 18, 2010@ 3:38 PM
Author: Press

The U.S. Needs an Industrial Policy

The rest of the world actively promotes its core industries. It’s time we did too.

By JOHN HOFMEISTER

Much is being said about the terrible financial returns and lack of economic growth in the “lost” decade that began the 21st century. Why should anyone be surprised?

As a nation we’ve been driving toward this no-growth plateau for several decades. As manufacturing has shrunk, we’ve honored the gods of “rationalization,” “restructuring,” and the almightiest of all, “globalization.” Core industry after industry has orchestrated its own decline, facilitated by short-term managerial reward systems.

The next decade could see negative growth thanks to our foolhardy fondness for “free market” philosophies that tell us it’s OK to export all our jobs. The U.S. is down to four world leading industries: entertainment, out of Los Angeles (heavily indebted to Democrats); information technology, out of the Bay Area (likewise); energy, out of Houston (heavily indebted to Republicans); and financial services, out of New York (indebted to both parties). That’s it, folks. We’re otherwise second- or third-rung suppliers across the range of manufactured products—except for biotech, a small industry—and we can still (mostly) feed ourselves. Even aerospace has suffered.

Let’s acknowledge the parasitic legal industry’s role in eroding America’s manufacturing strength. Some argue that the U.S. leads in innovation and entrepreneurship. If so, where are the jobs and value creation?
It wasn’t always this way. For the first three decades after World War II, the U.S. led the world in manufacturing. From mining to materials to mechanical, electrical and electronic products, from textiles to footwear, autos to airplanes, furniture to food, U.S. manufacturing filled our households with self-made products and elevated the standard of living for most to unpretentious comfort.

Services grew out of the successful manufacturing base because we had it. Prosperity seemed endless until we started “rationalizing,” shipping jobs overseas to build supply chains that enlarged growth prospects everywhere but the country of origin.

And while the U.S. worshipped the free market, especially unrestrained freedoms to cut labor, the rest of the world didn’t. Other countries saw the wisdom of protecting jobs and people. They erected barriers and social programs that hardly exist in the U.S., while adding government-sponsored manufacturing incentives.

Services are just as vulnerable to the free labor market, only it’s called “outsourcing.” America needs manufacturing jobs for skilled, semi-skilled and low-skilled citizens. We need their wages circulating in the economy for sustained growth.

As we look ahead, the current Democratic majority is locking the government’s incisors into the neck of two of our four industries: energy and financial services. The antihydrocarbon and antinuclear crowds are making it virtually impossible for the producers of 93% of the nation’s core energy to expand or grow (coal, oil, gas and nuclear) while helping venture capital friends in Silicon Valley expand 2%-3% of our energy base (wind, solar and biofuels) with virtually free taxpayer money.

How long Houston can hang onto world energy leadership is being actively discussed in, yes, Houston. The financial services industry, in the aftermath of its inexcusable greed and manipulation of trust, is about to get regulated in ways that will drive it to impotence, sending the core strength of yet another historic U.S. industry elsewhere. Where? Probably not Europe, or Japan. More likely it’s China.

So then there will be two. Two world-leading industries in the U.S., entertainment and information technology. For how long? Entertainment is ever more virtual and universal. China, Korea, India and Japan are after Silicon Valley’s infotech dominance day after relentless day. And those countries create the government policies that help and protect those efforts.

The administration is worried about jobs in the runup to the fall elections. Every incumbent should be. Where to stimulate job creation should be as obvious as the cosmetic smile on an elected official’s face: manufacturing. Go where we’ve been.

Since government is involved anyway, let’s shift it from disablement to enablement. Create manufacturing incentives like other governments do. Lower repressive corporate tax structures, accelerate depreciation, defer income and inventory taxes, tax abate existing and new jobs, pay for worker training, incentivize new, and the conversion of former, manufacturing sites.

We’ve never systematically used government incentives to help U.S. industry compete across the board. It’s time we did, like everyone else. Use the unspent hundreds of stimulus billions to create millions of competitively priced manufacturing jobs in America. We’ve never had more people available, ready and willing to work. Let’s practice the “globalization” we taught everyone else.

Mr. Hofmeister, former president of Shell Oil Company, is founder and CEO of Citizens for Affordable Energy, and author of “Why We Hate the Oil Companies: Straight Talk from an Energy Insider,” due out in May by Palgrave Macmillan.

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