Archive for the ‘Environmental policy’ Category

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The “100 mpg prize” and other energy stories

February 3, 2012

Michael Giberson

Speed blogging a few stories:

“The ’100 mpg prize’: An idea whose time has passed?” by Ken Paulman

Earlier this week, California GOP Rep. Dan Lungren introduced a bill that would offer a $1 billion prize to the first automaker than can put 60,000 cars achieving 100 mpg on the road. Only requirement – the cars have to run on gasoline.

The bill is intended as an alternative to further government investment in electric and hybrid cars. And once you get past the irony that the party that excoriates “picking winners and losers” wants to predetermine what kind of fuel we’ll all be using in the future, it’s hard to argue with an effort to develop more efficient gasoline cars. After all, even by the rosiest of projections, the majority of cars on the road 20 years from now will still run on gas.

So can government bounties for innovation work?

Paulman takes a long at the 18th century history of The Longitude Prize. I wonder if the various X Prizes would be a better, since more recent, analog.

“Revolt Brews as Tepco Seeks Higher Rates” by Phred Dvorak and Mitsuru Obe in the Wall Street Journal. (Sub.)

TOKYO—Tokyo Electric Power Co. and other utilities are starting to see revolt by some of their biggest customers, as rising fuel costs and the shutdown of nuclear reactors push Japan’s already-steep electricity costs even higher.

A handful of companies, such as Tokyo Steel Co. and cosmetics maker Kose Corp., have said they are considering switching electricity providers if Tepco, Japan’s biggest utility, boosts corporate rates around 17% as proposed in January. Other customers have complained privately, Tepco said.

It is possible for large consumers to switch power providers in Japan, but complicated, and the tight supply market is making a switch even harder to arrange. I wonder if the challenges will push Japan toward a more regimented market or a more liberalized power market?

ALSO: Energy secretary backs natural gas exports at least for now, though the logic is a bit convoluted. (“The low price of natural gas is hurting domestic job growth” and “Exporting natural gas means wealth comes into the United States.” Okay, Mr. Secretary, so do you think the high price of oil is good for domestic job growth? Does importing oil mean wealth leaves the United States?

AND: Sierra Club took $26M from gas industry to fight coal-fired plants. So is this like one bootlegger funding a baptist campaign against the other bootleggers? The Sierra Club decided to stop taking the money in 2010 (mostly from Chesapeake Energy’s CEO Aubrey McClendon) after deciding it didn’t want money from fracked natural gas wealth.

FINALLY: Gasland‘s Josh Fox arrested at U.S. House hearing on fracking. Apparently his request to film was declined because his crew didn’t have Capitol media clearance, and he took his crew to the hearing anyway. The linked report says he knew there was a chance he’d be arrested, and it is likely the case that the arrest will be much more valuable to him than actually filming the hearing would have been. (Here is the House Science Committee subsequent statement on media coverage of the hearing; it mentions that the event was webcast and is now archived on the committee’s website. See link on this page. Unfortunately, all the fun happened before the meeting begun.)

Posted in Electricity, Energy markets, Environmental policy, Film, Politics | Leave a Comment »

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Minnesota biomass projects squeezed by low natural gas prices, leaves some hoping for higher gas prices

January 30, 2012

Michael Giberson

The Minneapolis Star Tribune reports that low natural gas prices are putting the squeeze on biomass-based energy projects in Minnesota, in some cases including biomass projects supported by direct taxpayer or ratepayer subsidies. One example, an ethanol plant once gained about 20 percent of its heat from a $20 million biomass gasification system. The system has been idle for a year while the plant relies on cheaper natural gas.

The article notes that the biomass investment was initiated in 2008, a year when gas prices topped $13/mmbtu and before it was clear what the shale gas boost was going to do to gas prices. (Current gas prices are below $3/mmbtu.)

More:

The operators of two recent biomass projects — at the University of Minnesota Morris and Rahr Malting Co. in Shakopee — say they probably would be saving money if they had stayed with natural gas. Neither had decided to abandon biomass, however.

“We are stuck in a situation where I start wishing for the price of natural gas to go up, which is not good for everyone else,” said Stacy Cook, vice president of operations for Koda Energy, a $60 million privately financed joint venture of Rahr and the Shakopee Mdewakanton Dakota Community.

Cook said the Rahr family and the Dakota community are committed to the combined heat and power plant that burns agricultural byproducts, wood or energy crops. It supplies electricity to Xcel and process heat to the malt plant.

“They are looking at a 30-year picture,” Cook said of the plant’s owners. “If you start looking too short-term, it gets too depressing.”

The article then tries to offer a bit of hope to the biomass investor in the way of citing, without almost no context, the highest price projection out of the Energy Information Administration’s study of the effects of natural gas exports on price.  (Namely, the 54 percent price increase by 2018. As discussed here before, the 54 percent outcome is just one of many export and production scenarios that EIA tested with their economic models. It isn’t the most likely scenario by any stretch of the imagination.)

Here is how the Star Tribune cast the possibility: “Natural gas prices may not stay low. Last week, the U.S. Energy Department projected that gas prices could rise 54 percent by 2018 if liquefied natural gas becomes a major export commodity.”

The owner of biomass-producing or consuming assets can wish, but I wouldn’t put my money on it.

Posted in Electricity, Energy markets, Environmental policy | Tagged , | 1 Comment »

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Was federal government support critical to the shale gas breakthrough?

January 26, 2012

Michael Giberson

In the State of the Union address, President Obama invoked a little federal government research history and then jumped to the kind of logical non sequitur so common to those who see the world through politically-colored glasses:

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. And by the way, it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock – reminding us that Government support is critical in helping businesses get new energy ideas off the ground.

Reminds me of the old saying, “Success has many fathers.” It is true that the federal government supported research into technologies used to extract gas from shale, but it is a politician’s self-serving leap to then suggest it means “Government support is critical in helping businesses get new energy ideas off the ground.”

The President’s comment echoes a claim advanced by the Breakthrough Institute last month (as they were happy to point out after the speech), namely that credit for the shale gas boom ought to go to the federal government. I commented on the Breakthrough Institute’s claim in December (see here and here), and the Master Resource blog has republished the first of those posts this morning.

If the federal government were responsible for the shale gas boom, wouldn’t we have expected to see shale gas resources on federal government land developed before privately-owned resources were explored? Instead what we have is the President, in the same State of the Union speech, announcing disclosure requirements for companies that want to use hydraulic fracturing on federal lands – meaning, given the way policy gets developed, that sometime soon a regulatory proposal on the issue will be initiated and in several months, or maybe a year or two, a rule will be in place.

There is nothing wrong with the checks and balances in the policy making process, even though they cause the federal government to sometimes move at a glacial pace. But anyone with the least familiarity with running a business will know that this isn’t the way breakthroughs get made in the private sector.

I certainly would recommend the interested reader check out the Breakthrough Institute’s work on the issue. In addition to the Washington Post op-ed linked above, on their blog they have a summary of their message, interviews with former Mitchell Energy geologist Dan Steward and Penn State University geologist and fracking expert Terry Englander, and other supporting information. The basic reporting presented is quite good. Just be ready to form your own conclusions.

 

 

Posted in Energy markets, Environmental policy, Politics, Regulation | Tagged , | 1 Comment »

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The SOTU energy policy extract

January 25, 2012

Michael Giberson

For your convenience, the energy policy parts from last night’s State of the Union address. Be aware that I’ve dropped some non-energy words, phrases or even short sentences without indicating where such edits happened in order to make this extract relatively clean. In some cases I kept non-energy bits that seemed useful as context for the energy discussion.

Think about the America within our reach: A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world.

I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last – an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

Innovation demands basic research. Don’t let other countries win the race for the future. Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.

Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, American oil production is the highest that it’s been in eight years. That’s right – eight years. Not only that – last year, we relied less on foreign oil than in any of the past sixteen years.

But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy – a strategy that’s cleaner, cheaper, and full of new jobs.

We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk.

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. And by the way, it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock – reminding us that Government support is critical in helping businesses get new energy ideas off the ground.

What’s true for natural gas is true for clean energy. In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled. And thousands of Americans have jobs because of it.

When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance. But he found work at Energetx, a wind turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts.

Our experience with shale gas shows us that the payoffs on these public investments don’t always come right away. Some technologies don’t pan out; some companies fail. But I will not walk away from the promise of clean energy. I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising. Pass clean energy tax credits and create these jobs.

We can also spur energy innovation with new incentives. The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. But there’s no reason why Congress shouldn’t at least set a clean energy standard that creates a market for innovation. So far, you haven’t acted. Well tonight, I will. I’m directing my Administration to allow the development of clean energy on enough public land to power three million homes. And I’m proud to announce that the Department of Defense, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history – with the Navy purchasing enough capacity to power a quarter of a million homes a year.

Of course, the easiest way to save money is to waste less energy. So here’s another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings. Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them. Send me a bill that creates these jobs.

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got a power grid that wastes too much energy.

I recognize that people watching tonight have differing views about energy. But no matter what party they belong to, I bet most Americans are thinking the same thing right now: Nothing will get done this year, or next year, or maybe even the year after that, because Washington is broken.

I’m a Democrat. But I believe what Republican Abraham Lincoln believed: That Government should do for people only what they cannot do better by themselves, and no more.

On the other hand, even my Republican friends who complain the most about Government spending have supported clean energy projects for the folks back home.

The last four paragraphs fell outside the main energy portion of the speech, but since energy was mentioned I’ve included them here.

The full speech clocked in just under 7000 words, while this extract is a bit over 900 words. The word energy appeared 23 times in the speech.

The Hill‘s E2 Wire blogged the energy content of the speech. See:

For another view, here is a report from CNN.

Can anyone name a major energy policy initiative that emerged from any prior State of the Union address? That is to say, any reason to expect any of this to matter beyond a week from now?

My natural inclination is to say these things don’t matter, but the 2006 State of the Union address lauded the promise of cellulosic ethanol and the following year the Renewable Fuels Standard was implemented.

Posted in Energy markets, Environmental policy, Politics, Regulation | Tagged | 2 Comments »

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Michael Graetz’s “The End of Energy” surveys 40 years of energy policy making. It isn’t pretty.

January 16, 2012

Michael Giberson

Michael J. Graetz, "The End of Energy." (Book cover)

Michael J. Graetz, "The End of Energy," MIT Press, 2011.

Michael Graetz’s The End of Energy is a fascinating run through 40 years of U.S. energy policy making. Engaging and at times even entertaining if you are at all interested in energy issues. In Graetz’s telling it is mostly a story of 40 years of failure, though he notes a few successes along the way.

I absolutely loved that the first chapter began with President Nixon’s decision to impose wage and price controls on August 15, 1971. If you think that wasn’t energy-policy relevant, then read that chapter (the publisher will let you read it free). Just note that the Arab oil embargo just over two years later caused barely a hiccup in U.S. oil imports; the gas lines and shortages were mostly due to the remaining Nixon oil price regulations. (Yet, 40 years later we still blame OPEC!)

Graetz proceeds to pull us through the swamp of 1970′s energy policy. President Ford joined Congress in giving us automobile fuel economy regulations. President Carter pushed an astounding range of proposals, succeeded on some but failed on others,  and lectured Americans for their supposed consumerist excesses. The book does a good job of surveying the problems created by interstate natural gas price regulation and the difficult politics of casting off that burden.

Reagan’s presidency doesn’t get much attention. Oil and gas price decontrol seemed to work, but these policies were initiated by Carter. After Reagan comes a decade and a half of relatively low energy prices, but for the spike around the Iraqi invasion of Kuwait in 1990. Not much to report, Graetz suggests, as the urge for new energy policy rises and falls with energy prices.

Energy prices pick up again in the mid-2000s, and after a few words on the Energy Policy Act of 1992 we find ourselves in the middle of climate change discussions and the massive difficulties that come with finding reasonable policy. Graetz devotes a late chapter to Congress and the attempted making of a cap-and-trade law. It is enough, perhaps, to turn the most die hard advocate of cap-and-trade into a carbon tax proponent (excepting that, had Waxman-Markey pushed a carbon tax, then a look into the sausage factory likely would have produced the opposite impulse). The book winds down contemplating the BP oil spill in the Gulf of Mexico and the Obama administration’s efforts in response.

The book mostly covers domestic federal coal, oil and gas, environmental and some nuclear power issues. Relatively little attention goes to electric power beyond nuclear or to  international issues, except when discussing climate change politics. Not much on ethanol and just a little on solar and wind power. Still – coal, oil and gas, the environment – these are where the big money is and so that is where the politics have focused. One lesson of the book seems to be that lobbying expenditure is a product of policymaker ambition and the size of government, and not the other way around.

The hazard of writing a current events-type book is that the book must end even as events continue. So Graetz laments that 40 years of energy policy making hasn’t put a dent in our “energy dependence,” and practically at the same time we have begun importing less oil for the first time in decades. Domestic oil and gas production is up in recent years, and what is more, it is a development that has come about mostly without the attention of federal energy policy makers. (Or perhaps in part due to their lack of attention, even admitting some federal R&D support for oil and gas drilling technology.)

Well, we can’t blame Graetz because history continued after his book ended. It is a strength of his book that is gives us some idea of what to expect of the next few years, as the politicians and regulators in Washington DC begin to take notice of this domestic energy development. I wouldn’t score all of the wins and losses quite the way he does, and I’m not sure where his interest in more grand energy policy comes from given the fairly damning assessment of the federal energy policy system. Still, the book offers its readers a fair view of and deeper insight into the last 40 years of federal energy policy.

Posted in Economic history, Energy markets, Environmental policy, Politics, Regulation | 2 Comments »

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Bad news for the natural gas suppliers, but good news for natural gas consumers

January 13, 2012

Michael Giberson

I’ve been meaning to remark on natural gas prices for several days, especially since a regular reader pointed out that natural gas prices have reached their lowest levels in a decade. But now, in what may be a first, I’ll just outsource the discussion by favorably linking to a post on the Climate Progress blog.

By the way, note that the prices shown in the post’s graphic (from EIA) are average prices over 2011. Current prices for natural gas are about $1 below what is shown there. (In January, typically peak demand time for natural gas!)

In the post Stephen Lacey worries about the effects of low natural gas prices on renewable power, and it is a problem if you want to roll out more renewable power capacity anytime soon, but for consumers it is a win-win. Low gas prices push down now on (non-transportation) energy prices, particularly power prices. The delay in new installations of renewable power means that, when natural gas prices recover in a few years, the power plants built will have better technology than exists today. Meanwhile, the subsidies avoided will have a very small but beneficial effect on the federal government budget.

And if your primary concern is greenhouse gas emissions, note that natural gas-fuels power plants will continue to displace coal-fired power even as the additions of renewable power plants are slowed.

Posted in Electricity, Energy markets, Environmental policy | Tagged , , | 5 Comments »

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EPA fines companies for not doing the impossible

January 11, 2012

Michael Giberson

If you read Jonathan Adler’s post at the Volokh Conspiracy (and reposted at PERC’s Percolator blog), it makes the EPA seem a little silly for insisting on fining companies when it would be impossible for companies to comply with the law.

But don’t blame the EPA, which is just implementing a law that Congress passed and President G. W. Bush signed, the Energy Independence and Security Act of 2007. Here is Bush at the signing ceremony:

The bill I sign today takes a significant step because it will require fuel producers to use at least 36 billion gallons of biofuel in 2022. This is nearly a fivefold increase over current levels. It will help us diversify our energy supplies and reduce our dependence on oil. It’s an important part of this legislation, and I thank the members of Congress for your wisdom. (Applause.)

Blame the younger Bush president, blame the members of Congress for their wisdom – or more precisely, for their failed insights in trying to drive the path of technological progress at consumer and taxpayer expense AND, a special note for anyone involving themselves in electioneering this year, failing to sweep this destructive nonsense out of the law any time in the last four years – but the EPA is only the messenger of this madness.

More from the former President:

The legislation I’m about to sign should say to the American people that we can find common ground on critical issues. And there’s more we can accomplish together. New technologies will bring about a new era of energy. So I appreciate the fact that Congress, in the omnibus spending bill that I’m going to sign later on, recognizes that new technologies will help usher in a better quality of life for our citizens. And so we’re going to spend money on new research for alternative feedstocks for ethanol. I mean, we understand the hog growers are getting nervous because the price of corn is up. But we also believe strongly that research will enable us to use wood chips and switchgrass and biomass to be able to develop the ethanol necessary to help us realize the vision outlined in this bill.

…

With these steps, particularly in the bill I’m about to sign, we’re going to help American consumers a lot. We’ll help them by diversifying our supplies, which will help lower energy prices. We’ll strengthen our security by helping to break our dependence on foreign oil. We’ll do our duty to future generations by addressing climate change.

And so I thank the members of Congress. I appreciate the fact that we’ve worked together, that we can show what’s possible in addressing the big issues facing our nation. This is a good bill and I’m pleased to sign it.

(The bill was signed.) (Applause.)

Ah, yes, “we also believe strongly that research will enable us to use wood chips and switchgrass and biomass to be able to develop the ethanol necessary to help us realize the vision outlined.” Turns out that the “vision” was a bit off.

By the way, yes it was the Energy Independence and Security Act of 2007 that gave us the standards blocking the sale of 100 MW 100 W incandescent light bulbs, beginning in 2012. Also, coincidentally, the EISA bill was signed in December 2007 and later the business cycle folks at the National Bureau of Economic Research identified December 2007 at the end of a 73-month long economic expansion and the beginning of the recession.

SEE ALSO: Kenneth Green’s post at AEI’s Enterprise Blog, Fill ‘er up with rainbows and unicorn sweat!, and the Matthew Wald New York Times article cited by both Green and Adler.

[EDIT: As a commenter hints, the reference to 100 MW light bulbs was in error. -MG]

Posted in Energy markets, Environmental policy, Politics, Regulation | Tagged , | 5 Comments »

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Giberson calls for one-year moratorium on hospital admissions pending analysis of risks associated with nosocomial infection

January 11, 2012

Michael Giberson

I read recently that as many as 99,000 deaths per year in the United States are linked to nosocomial infection (also known as hospital-acquired infection).

I’m outraged, obviously, and relying on the precautionary principle I am calling for a minimum one-year moratorium on hospital admissions so the healthcare industry can bring an end to nosocomial-linked deaths and engage in further scientific study. Answers to the questions about the human and ecosystem health impacts involved will only come from scientific research.

The following statement is made available to news and media outlets:

“When it comes to hospital admissions,” Giberson said, “our guiding principle for public policy should be the same as the one used by physicians: ‘First, do no harm.’ There is a need for scientific and epidemiologic information on the health impacts of hospital admissions. Frankly, no one should admit even one more more patient before we have the scientific facts. There are health care needs in our communities that must be met safely. The reality is that the healthcare industry has not done nearly enough to finance the needed research effort.”

[Yes, I am mocking this announcement, see news story here. N.B., I'm not mocking their concerns for potential health issues, I'm mocking the idiotic recommendations. -MG]

Posted in Energy markets, Environmental policy, Humor, Regulation | Tagged , , | 12 Comments »

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Loss of ethanol subsidy boosts gasoline prices a little, E85 prices a lot

January 10, 2012

Michael Giberson

The basic math is pretty simple: most gasoline in the U.S. has about 10 percent ethanol, so the the 45 cents/gallon VEETC subsidy reduced the price of gasoline about 4.5 cents. The subsidy expired at the end of 2011, so one reason gasoline prices have gone up a few cents since New Year’s Day comes from the loss of the subsidy. (World crude oil prices are up a bit, too.)

Normally, a subsidy would be shared by producers and consumers, so the loss of a subsidy would be shared. But the Renewable Fuels Standard quantity mandate protects producers from taking a hit. The main effect here is that the consumers’ mandated purchases of ethanol will no longer be subsidized by taxpayers, and therefore the price rises.

But lest you gasoline consumers feel too bad, consider the plight of the drivers relying on E85, a blend of 85 percent ethanol and only 15 percent gasoline. The math here is simple, too: 85 percent of 45 cents meant that E85 was receiving about a 38 cents/gallon subsidy, and now that subsidy is gone.

The Minneapolis, MN Star Tribune reports, “The Road for E85 Just got Rougher“:

The high-ethanol fuel known as E85 has gained a small foothold in Minnesota in recent years, thanks in part to a subsidized price advantage and the presence of major producers and blenders in the state.

Now, the federal tax credit that boosted the industry is gone, raising questions about the fuel’s future.

Without the 38-cent-per-gallon subsidy that went away Jan. 1, E85 prices are moving up. It’s still cheaper than gasoline, but the shrinking difference may not be enough to compensate drivers who get fewer miles per gallon because of the fuel’s lower energy content.

[Recall that ethanol has a lower energy density than gasoline, so drivers get fewer miles per gallon with E85.]

The post-subsidy era also brings tough choices for owners of flexible-fuel vehicles, including the state of Minnesota, which has more than 3,000 vehicles capable of burning E85, and in 2010 used 963,000 gallons of it.

They must decide whether to support a fuel that is 85 percent home-grown ethanol even it it’s no longer competitively priced. Minnesota is the nation’s fourth-largest ethanol producer, and leads the nation with 364 retailers selling E85.

[...]

Last week in the Twin Cities, E85 was 16 cents to 40 cents lower than regular gasoline, which also rose in price. That’s as little as a 5 percent price difference. E85′s price advantage has sometimes been more than four times better and averaged 17 percent last year, according to the state Commerce Department.

At Lerum Auto, the only E85 dealer in Richfield, owner Dean Lerum had another 1,000 gallons of E85 delivered on Wednesday — at the new, unsubsidized price.

“I am going to let the market decide,” said Lerum, for whom E85 once represented 25 percent of fuel sales, but now accounts for 5 to 7 percent. “If it drops a whole lot more, I will get rid of it.”

Two more related stories from around the web

Kevin Drum at Mother Jones makes the call: “Ethanol Subsidies: Not Gone, Just Hidden a Little Better“

As the Congressional Budget Office wrote back in 2010, ”In the future, the scheduled increase in mandated volumes would require biofuels to be produced in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included.” [Italics mine. -KD] In other words, the mandates have grown so large that the tax credits barely made a difference anymore. Demand for ethanol is driven by the mandates, not by the tax credit. When you take away the tax credit, nothing happens: Demand stays high because the law says so, corn prices go up accordingly, and corn farmers stay rich. The subsidies were a nice little fillip on top of that, but at this point it’s basically chump change.

The RFS mandates are the real reason that buffoons can ramble on about the history-making public policy magnanimity of the ethanol lobby. Drum cites Aaron Smith, of UC-Davis, writing in the American Enterprise Institute’s American.com: “Children of the Corn: The Renewable Fuels Disaster“

[W]hy did the powerful corn ethanol lobby let [the subsidy] expire without an apparent fight? The answer lies in legislation known as the Renewable Fuel Standard (RFS), which creates government-guaranteed demand that keeps corn prices high and generates massive farm profits. Removing the tax credit but keeping the RFS is like scraping a little frosting from the ethanol-boondoggle cake.

And Smith is just getting started, so if want more reasons to hate ethanol policy then read the whole thing.

ADDED, Here is a more complete analysis of the relationship between the Renewable Fuels Standard mandates and the (now expired) tax credit, and also see the list of readings at the end of the commentary: de Gorter and Just, “The Forgotten Flaw in Biofuels Policy: How Tax Credits in the Presence of Mandates Subsidize Oil Consumption,” RFF Weekly Policy Commentary (June 9, 2008).

Posted in Energy markets, Environmental policy, Politics | Tagged , , | 1 Comment »

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Marc Gunther on the brewing solar PV trade wars

January 10, 2012

Michael Giberson

Marc Gunther asks, “Should we worry about Chinese government subsidies to its solar industry? Or send the Chinese a thank-you note?“ The issue is a “dumping” complaint filed by several U.S. based manufacturers with the U.S. International Trade Commission alleging China so subsidizes its solar PV production that the PV panels are being sold here at a loss.

As Gunther notes, “it takes chutzpah (that’s a technical term in economics) for US solar manufacturers to complain about subsidies in China since they, too, benefit from … [long list of subsidies provided by U.S. federal and state policies].”

ASIDE: Elements of the wind power industry have taken inspiration, as a few weeks ago four U.S.-based manufacturers of wind turbine towers filed a complaint with the ITC against Chinese and Vietnamese wind turbine tower manufacturers.

[HT to AltEnergyStocks.com, where Gunther's column was republished.]

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