Talking Points for Thanksgiving Dinner

We all have one – a family member or friend who faithfully regurgitates the weird combination of fiction and paranoia dispensed by the US-based news channel that is anything but “fair and balanced”. The US Thanksgiving holiday is approaching, and perhaps you’ll be sitting next to this loved one for the traditional dinner feast. Here are useful talking points that will help you set the record straight about two hot Smart Grid topics.

  • Renewables like wind and solar shouldn’t get subsidies, all energy sources should operate from a level playing field. Vehemently agree that there should be a level playing field for all energy sources.   Then note that the oil and gas industries received $447 billion in subsidies and tax breaks from US taxpayers since 1918, and it continues on to this day. The average subsidization of these two extremely profitable and well-established industries is more than 13 times greater than what is available to the combined renewables industries today. Therefore, a level playing field really means that either fossil fuels cease to get their tax breaks, or renewables should enjoy the same subsidies as fossil fuels. The elimination of subsidies for fossil and nuclear industries would amount to about $111 billion saved for taxpayers over the next ten years.

Highlight the jobs creation numbers from the renewables sector too. The wind industry has about 75,000 permanent jobs ranging from US-based manufacturing and installation to maintenance, sales, and marketing. The solar industry employs about 100,000 Americans on a full time basis. Add in geothermal, biofuels, hydro, and green building sectors, and that’s over 1 million clean energy jobs in the US alone.

There’s another compelling value proposition for renewables over energy sources like oil and gas. Price and supply certainty. Oil and gas prices exhibit regular price volatility, and have been subject to many supply disruptions – some deliberately caused and others resulting from natural catastrophes. The sun and wind don’t have a history of colluding to throttle back supply and drive up prices.

  • Remember Solyndra! If the conversation shifts to the bankruptcies of companies that received money from the Department of Energy’s Loan Guarantee Program, you can again agree that it’s a shame that these companies failed. However, even the most successful venture capital firms have some stinkers in their investment portfolios. Two recent studies of VC investments revealed that 65% – 68% of their investments were money-losing deals. In contrast, the Loan Guarantee program, which helps new technology projects and companies cross the chasm from promising solution to commercial market deployment is now making money for taxpayers, with a 98% success rate. Tesla Motors repaid its $465 million dollar loan 9 years early. A bonus talking point is to note that this program, designed to provide low-cost financing for innovations, was created during the George W. Bush administration.

There’s a convenient website where many additional talking points can be obtained thanks to the American Council on Renewable Energy (ACORE).   Happy Thanksgiving to my American readers!


Could the NSA Reduce CO2 Emissions?

April Fools’ Day in the USA inspires pranks and hoaxes, and smart readers beware unusual news stories on that day.   Here are some fictional news headlines and stories that if real, would certainly accelerate Smart Grid and other infrastructure upgrades, as well as reduce CO2 emissions.

 1.  Congress Creates Green Bank Fund to Modernize American Infrastructure

In an unprecedented acknowledgement of the dire state of national electrical, water, gas, and transportation systems, bipartisan Congressional passage of the Green Bank Fund will result in the equivalent of a Marshall Plan to modernize vital American infrastructures.  A White House aide, speaking on conditions of anonymity, revealed that the President and Congressional leaders worked behind the scenes to hammer out this agreement.  The Green Bank Fund takes money Congress previously allocated to weapons programs that the Pentagon didn’t want, like the Abrams tank, and makes it available as a source of seed capital to state-based Green Banks.  “Leaders from both parties realized that our economic and national security rests on a strong and resilient infrastructure.  The Green Bank Fund will help capitalize infrastructure upgrades and create the foundation for a secure economic future going forward,” said the aide, adding that “the latest ASCE report card scared the hell out of political leaders.”

All kidding aside, Green Banks are one of the latest innovations in finance that have positive impacts on Smart Grid progress.  Green banks provide low-cost sources of capital for state-wide projects that meet their criteria.  Green Banks leverage public and private sector funds and eliminate gaps in financial supply chains that often confront projects that use innovative technologies like renewable generation.  While the situation is improving for utility-scale projects, projects at the individual home or building scale languish without funding.  Connecticut first initiated a green bank in 2011, with other states now planning similar financial programs to align infrastructure and policy goals with newly available public and private capital.

2.   Congress Kills Fossil Fuel Subsidies

In an unprecedented overhaul of the tax code, the permanent tax breaks for fossil fuel companies were eliminated today, over vociferous objections from representatives from oil-producing states.  The resulting annual $4B in savings will be redirected to residential and small business weatherization projects in all 50 states.  The projected results include local economic growth through increased employment as well as savings in energy bills and improved comfort for many Americans. 

Without a doubt, clean renewable energy sources are given second class tax status through temporary measures that can expire every few years and thereby cause significant trepidation in investor communities.  Immensely profitable multinational fossil fuel companies receive permanent breaks written into the US tax code.   It’s blatant tax code policy discrimination that picks winners (fossil fuels) and losers (clean renewables).  Today’s situation is anything but a level playing field, although there are valiant efforts in Congress to offer renewables one tax treatment that is only available for fossil fuel companies today.  The bipartisan Master Limited Partnerships Parity Act does exactly that.

Equally important, a redirection of the $4B annually saved by eliminating unnecessary tax breaks to well-established fossil fuel companies would have powerful payoffs to communities, ratepayers, and taxpayers.  A 2010 Oak Ridge National Laboratory study stated that for every $1 invested in weatherization, there’s a $2.51 benefit to households and society.  Each weatherization household gets $1.80 back in reduced energy bills, money which can then go towards food, healthcare, or education.  An additional 71 cents is returned to communities in increased local employment, reductions in uncollected energy bills, and reductions in weather-related deaths in dwellings.


 3.  CO2 Emissions Reduced Thanks to NSA Anti-spam Initiative


The NSA, maligned for spy activities around the world, achieved heroic status today.  Using its sophisticated technologies to ferret out spammers, they shut down their operations, dismantled their networks and financial operations, and identified perpetrators to local law enforcement agencies.  “Spam email constitutes about one fifth of a typical business’s email traffic in a year.  Eliminating this traffic not only improves the productivity of everyone with an email account, it also reduces the demands for electricity at every stage of the spam lifecycle,” said an NSA resource who requested anonymity.  “We’re proud to do our part to combat human-caused climate change.”

Yes, it costs electricity to create, transmit, distribute, filter, display, and delete spam.  Thus spam email contributes to greenhouse gas emissions.  A study commissioned by McAfee identified a total of 62 trillion spam emails were sent globally in 2008, consuming 33 billion kWh and producing 17 million metric tons of CO2.  That translates into enough electricity to power 2.4 million homes in the USA and the amount of CO2 produced by 3.1 million internal combustion engine vehicles.  Sadly, the most recent numbers for 2010 indicate that email spam climbed to 95 trillion messages.  


The sections of this article in italics are fictional stories today. Which headline do you think is most plausible and may come true?



Why A Realistic Energy Policy Must Eliminate Fossil Fuel Subsidies

Now that the presidential election is over, perhaps we’ll see some reality injected into our energy policy.  The existing energy policy professes to encourage “energy independence”.  That policy in action embeds permanent subsidies, tax credits, and tax breaks in the US federal tax code for highly profitable fossil fuel industries.

Have these favorable treatments given us energy independence?  No, and that’s because reliance on fossil fuels is at odds with price stability or economic security.  We don’t get price stability with fossil fuels.  Some readers will remember the price shocks and economic fallout from the first oil embargo in the 1970s; and others may recall the historical volatility of natural gas prices.  And the future could be much more expensive than the rosy projections of today. No one in the energy business today thinks that natural gas will always be as cheap as it is now – for the reasons noted by Vice Admiral Dennis McGinn (USN, ret.) in my previous article.  Fossil fuel prices are inherently unstable because they are subject to global economic and political forces.

Capitalism dictates that commodities will flow to the highest prices, onshore or off.  There’s no guarantee that any oil or natural gas extracted within the borders of the USA will stay here.  There’s no guarantee that any oil transported via a Keystone pipeline from Canada to Houston will stay in the USA either. Building a policy of energy independence on assumptions that these commodities will remain inexpensive and onshore is shortsighted and wishful thinking.

And here’s the question we should pose to everyone that expresses concerns about subsidies for renewables.  Why complain about subsidies for renewables and remain silent on the subsidies for fossil fuels?

There’s a great story relayed in Matthew and Luke in the Bible’s New Testament in about people who focus on removing the motes in their neighbors’ eyes when they are utterly ignorant of the planks in their own eyes.  For the renewable subsidies critics, it’s time to remove your planks. If you are upset about the subsidies for renewables, then you should be apoplectic about the permanent subsidies for fossil fuel businesses – which have always dwarfed the temporary subsidies for renewables. This website offers an interesting visual on fossil fuel subsidies.

The Big Five oil companies alone – Exxon, BP, Chevron, Shell, and AmocoPhillips – get $2.4 Billion USD annually in tax deductions.   In our current fiscal situation, why should American taxpayers be this generous to hugely profitable multi-national corporations when we do not get energy independence in return?

If renewable subsidies critics really want a level playing field for energy, if they truly want economic and energy security via energy independence, then they need to strenuously advocate for the elimination of every tax break, investment credit, and loophole for fossil fuels.   They should consider doing likewise for the subsidies going to the nuclear industry.

Should we give serious credence to criticism of temporary governmental subsidies for renewable energies while the permanent fossil fuel energy subsidies exist?  No.  That criticism is akin to focusing on the mote instead of the plank.

We’re modernizing the electric grid into a Smart Grid that can take advantage of all the benefits of clean, domestic, and renewable energy sources.  Renewable energy sources do not suffer from price instability like natural gas or gasoline.  Armies don’t need to be deployed to protect the sun, wind, or tide, like they are for fossil fuel supply lanes.  A realistic energy policy that eliminates fossil fuel subsidies in favor of these domestic and clean renewable energy sources helps us gain the short and long-term benefits of the Smart Grid, and true energy independence too.


A National Energy Security Policy Needs A Rational Tax Code and Budget

The integration of renewable energy sources like wind and solar into the nation’s electricity supply is an important Smart Grid capability.   Solar and wind are intermittent energy sources that need energy storage to guarantee electricity when needed, but the sun will continue to shine, and the wind continue to blow, regardless of politics.  Increased electricity production using clean renewable energy sources will also enable an infrastructure that supports electric vehicles (EVs).  That means the decreased reliance on oil for our national transportation needs.  The political turmoil roiling the Middle East and Northern Africa are potent reminders of the volatility of the supply and price of oil, and the negative impacts these have to our economy.   And the integration of renewable energy sources to the grid and the electrification of transportation have the added benefit of reducing CO2 emissions.   

There’s much irrationality in the recently passed HR 1, including cuts totaling $899M in Energy Efficiency and Renewable Energy and $49M in Electricity Delivery and Energy Reliability.  There was one small ray of hope about sustaining some semblance of a forward-looking Federal energy policy in an amendment to HR 1, but much more to cheer if HR 601, the End Big Oil Tax Subsidies Act of 2011 wins passage. 

Amendment 31 to the recently passed HR 1 spared ARPA-E from being defunded.  ARPA-E, the Advanced Research Projects Agency – Energy provides much needed funding for “transformational energy research” in new energy technologies such as energy storage solutions.  ARPA-E is part of the Department of Energy, and Secretary Steven Chu has been a strong supporter of energy research in technologies that expand use of renewable energy sources into the nation’s electrical grid.  These investments will result in increased national energy security and global climate security by reducing reliance on fossil fuels.   Votes to eliminate funding are really votes to maintain the status quo – reliance on volatile oil markets and decreased energy and economic security. 

HR 601 would put some rationality back into our tax code as well as encourage sensible energy policies that build our domestic energy security.  It would repeal 10 of the biggest taxpayer giveaways to large multinational fossil fuel companies.  These provisions would not apply to small, independent companies unless they make over $50M in the tax year. 

The multiple subsidies for fossil fuels have been written as permanent provisions in the tax code.  In contrast, subsidies for renewable energy are time-limited.  This means they come up for support again and again, and deny these new (and ultimately, much more secure domestic sources of energy) the market certainty that the investment community wants to see.  Other fossil fuel subsidies are in the form of direct spending to aid R&D. Some estimates indicate that between 2002 and 2008, tax breaks and funding to aid fossil fuel companies has totaled over $70.2B.  Us long-suffering taxpayers can’t afford this sort of generosity, especially considering that over the past decade, the five biggest oil companies – BP, Chevron, ConocoPhillips, ExxonMobil, and Shell – have enjoyed profits of almost one trillion dollars.  We would be much better served to see these subsidies recovered as revenue and invest at least some of it on the domestic energy sources and Smart Grid technologies of the future.  HR 601 is a great start to restore some rationality to the nation’s tax code and budget, and can help redirect our focus to building a national energy security policy for the future.