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Andrew Morriss Talks Green Energy on MSNBC

PERC’s Andrew Morriss appeared on MSNBC last week to discuss green energy and Solyndra with Dylan Ratigan:

Vodpod videos no longer available.

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I told you so!

A useful principle in business is not to throw good money after bad trying to salvage a mistake. Evergreen Solar has pulled its own plug, filing for bankruptcy. The company had been seen as a shining example of the new industry that would emerge to produce clean energy (although there is nothing clean about the production of solar panels), but it could not make it.

The company fired its employees and moved production to China. 800 “green jobs” gone—another blow to the planned economy the Obama Administration promises will restore prosperity. The company owes creditors about a half-billion dollars. It took benefits from Massachusetts that the state claims total $58 million.

The demand for solar panels has fallen as assorted governments have cut subsidies. They are required for most installations, unless you live off-the-grid in the hills of New Mexico.

In our book, The False Promise of Green Energy, my coauthors and I point out the horrible economics of most of the highly-touted “clean” energy sources. They collapse without on-going direct subsidies, as with Evergreen Solar, or indirect subsidies in the form of forced purchase of their output by electricity producers. Similar things are happening in Europe as the cash crunch is making governments back away from their state-imposed green energy boondoggles that run up prices, punish consumers, and drive away businesses.

Gloating accomplished, let me note that this is no different than all the other central planners and their schemes of economic progress based on corporate welfare. The conservative saint of the day, Governor Rick Perry from my state of Texas, has been involved in this foolishness like most other governors.

The scheme means taxing citizens and existing businesses to hand out gifts to newbies in the guise of “economic development.” One little bundle was given to Cabela’s, the big sporting goods store, so we might enjoy its presence in DFW. No doubt it otherwise would have bypassed this market of 6 million consumers. Some years ago, the good governor handed millions to WaMu so it might grace the state with its presence. Was there a shortage of banks in Texas? Did we need a major bad-loan operator to enter the state due to a mortgage shortage?

The Evergreen Solar fiasco is just one of many such bits of foolishness. When politicians plan economic development, “green” or not, we get what they force us to pay for.

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Is clean water for fracking the next cleantech opportunity?

Lynne Kiesling at Knowledge Problem has an interesting post that might be of interest to enviropreneurs. She picks up on a recent article that suggests clean water for fracking is the next hot cleantech sector:

“In an interview this week with VantagePoint Capital Partner and Founder Alan Salzman, he told me that he sees technology that can help solve the clean water issue for fracking as an upcoming hot area for investment. “We think the limiting factor for gas fracking is water. We’re not gas people, and we’re not oil people. But we are water people,” said Salzman…

A company called ABSMaterials has been working on the problem of cleaning liquids involved with fracking. The company uses sand-like particles to absorb chemicals, and the company says it can remove 99 percent of oil and grease from water in fracking fluid, and another 90 percent of the toxic chemicals like benzene and xylenes.”

This video shows one of their products in action. As Lynne notes, this project and others are being funded in part by the Department of Energy. Her concluding discussion asks good questions:

“If fracking really is here to stay and growing, as Mike has discussed extensively, are these research subsidies necessary to induce innovation in water cleaning technologies? If so, on what basis? Is there a Coase problem here — does legal precedent fail to define legal liability sufficiently to clarify the profits attached to the water cleaning? Or, if that’s not the case, is the water cleaning insufficiently valuable to be worth doing? That hypothesis is consistent with the argument that fracking does not actually create a lot of water supply damage. But if that’s the case, then why subsidize the research — isn’t that a waste of taxpayer funding on research that isn’t likely to be valuable enough to be worth pursuing?”

Mike Giberson, also at Knowledge Problem, has been providing diligent and extensive analysis of fracking and energy markets more broadly from a market perspective, much of which can be found here.

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The Regional Cap-and-Trade Collapse

Cap and trade, a favorite of statists and even many economists who otherwise are not statists, continues to be touted as a great scheme to combat climate change/global warming. Governor Chris Christie has attempted to pull Bruce Springsteen’s home state out of the Regional Greenhouse Gas Initiative (RGGI). That compact of ten Northeastern states uses a cap-and-trade auction for carbon emissions. The good governor appears to comprehend that things such as RGGI contribute to the dreadful rankings New Jersey gets for its tax and regulatory structure.

Christie stated that “RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernable or measurable impact upon our environment.” As such, RGGI was “a failure.”

When Christie pulled the plug, the RGGI auction was suspended due to a lack of bidders to keep the price above the official price floor. The majority of carbon-spewing permits were unsold.

The New Jersey legislature, ever vigilant against any move to make the state a more attractive place for business, passed a bill to revoke the governor’s revocation. It is presumed he will veto the bill that revokes his revocation of New Jersey’s participation. So the matter is unresolved.

Now, the law firm Smith Valliere and the Competitive Enterprise Institute have filed suit in New York court contesting the authority of the state’s governor (now Andrew Cuomo) to put New York into the RGGI without legislative approval. The scheme has generated over $320 million in revenue for the state in three years. That revenue is supposed to go for “green initiatives,” ha ha.

The suit alleges that a disguised tax has been unconstitutionally imposed on the citizens of New York without approval of the legislature. Shockingly, even in New York, which constantly challenges California to lead the nation in taxes, the governor cannot enact taxes by fiat. Hence, RGGI’s cap-and-trade is “taxation without representation.”

As New York continues to make itself ever-less friendly to live in, let alone run a business in, it remains to be seen if the legislature will hope the courts uphold the tax so it does not have to vote directly on the matter. Better to pontificate about being “green” without attaching a specific price tag to alleged green policies.

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Radio Interview: Roger Meiners on Green Energy

Today, Roger Meiners discussed The False Promise of Green Energy on the Mark Davis Show in Dallas, Texas. You can listen here.
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A Midweek PERC Roundup

A midweek roundup from PERC fellows:

1. Roger Meiners writes that Colorado’s attempts to legislate its way towards green energy will harm the state’s economy by making energy more expensive and less reliable.

2. Andrew P. Morriss says the U.S. can’t afford to scrap nuclear power.

3. Laura Huggins answers the question: has the age of environmentalism really has brought us closer to nature?

4. Terry Anderson recently delivered a series of lectures while he was in Prague. Two of the lectures are now online:

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The False Promise of Green Energy

A new book from PERC scholars Roger E. Meiners and Andrew P. Morriss, and co-authors William T. Bogart and Andrew D. Dorchak:

Available in hardcover book or digital eBook. See a review from Master Resource.

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Unleash the Entrepreneur

We don’t need to go back to the failed Nixon-Ford-Carter energy and economic policies. We need to nurture an economy in which entrepreneurs are able to compete to create new technologies, jobs, and wealth, without political interference.

That’s how Andrew P. Morriss and I conclude our essay in the Boston Review’s forum on full employment. We express our skepticism over the ability of special interest groups and government officials to revive the economy or deliver meaningful environmental benefits through expensive green-energy schemes. The essay can be found online here.

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Talking Green in Yellowstone

by Laura Huggins

Following on the heels of Joe Biden’s recent visit to Yellowstone touting green jobs, PERC senior fellow Roger Meiners exposes the folly in much of the “green” stimulus spending in today’s Wall Street Journal.

Not far down the road from Bozeman is the village of Ennis, home to the U.S. Fish and Wildlife Service’s Ennis National Fish Hatchery. The hatchery received $179,000 in stimulus money for solar panels, its share of last year’s American Recovery and Reinvestment Act.

The fish hatchery uses about 34,000 kilowatt hours (kwh) of electricity annually. At 10 cents per kwh, that means a bill of $3,400. The solar panels, we are assured, will generate 75% of the hatchery’s electricity, at zero cents per kwh. Assuming so, the annual electric bill will fall by $2,550. Applying that sum to the cost, the recovery period for the solar panels (ignoring interest rates) is 70 years.

Solar panel experts say that panels have about a 25-year life, but the latest models, which no doubt are used in Ennis, may have a 40-year life. Taking that estimate, the panels leave us in the financial dark by 30 years. The rate of return looks like Las Vegas housing the past couple years.

But since the feds are footing the bill, no one will walk away from this turkey. Nevertheless, we will pay for it. Or, more accurately, our great grandchildren will pay for it, since this piddly little project is part of the trillion-dollar deficit that we are unloading on future generations. There is no reason to think that other stimulus money is spent better than the money at the Ennis National Fish Hatchery.

That’s the problem with stimulus spending for green jobs: It’s a financial loser. The $179,000 spent on the solar panels means that some people at a panel factory got paid, as did the folks who installed the panels. But the bang for those bucks is less than the bang you get for your buck. When you spend your money, you choose what you want. When politicos spend your money, or your grandchildren’s, there is less value.

Read the rest of Roger’s excellent piece here.