Larry Bell, Contributor
I write about climate, energy, environmental and space policy issues.
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You thought Solyndra's green energy taxpayer rip-off was something? Well there are plenty more equally colorful crony catastrophes where that came from. I'll mention just a few that haven't gotten much attention.
Of the stimulus grants so far, more than 80 percent have gone to wind farms (covering up to 30% of all project costs). A Meadow Lake wind development project in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant.
When it comes to breezy U.S. wind shenanigans, Robert Bryce, a senior fellow at the Manhattan Institute, believes that General Electric's Shepherd Flat project in northern Oregon is worst in blowing lots of taxpayer resources. Not only did the Energy Department give GE and their partners a $1.6 billion loan guarantee, but as soon as the turbines start running, the Treasury Department will ante up an additional $490 million cash grant.
According to plan, an important intent of this charity is to create 35 permanent new "green energy jobs". Focusing upon just the $490 million cash grant alone, some skeptics may question whether the taxpayer cost of $16.3 million for each of those jobs might be just a little bit steep.
The Shepherd Flat deal is so lucrative for investors that even some of President Obama's top advisors including former energy policy czar Carol Browning and economic advisor Larry Summers thought it was lousy. Their October 2010 memo observed that the project backers had "little skin in the game" while the government would be providing "a significant subsidy (65+ percent)." The memo went on to say that while the sponsor's contribution amounted to only about 11 percent of the total cost, they would receive an "estimated return on equity of 30 percent." It also explained that the carbon dioxide reductions associated with the project ""¦would have to be valued at $130 per ton for CO2 for the climate benefits to equal the subsidies"¦more than six times the primary estimate used by the government in evaluating rules."
Here's another one for our Left Coast friends. Idaho Winds LLC which represents eight wind farms has hatched a plan to take advantage of California's carbon cap-and-trade lunacy. They have petitioned the Federal Energy Regulatory Commission to approve the sale of renewable energy credits to a third party. Idaho Winds would then immediately buy the power back, leaving just the credits which the third party would sell to a California utility. So in essence, no energy would actually be sold"¦just California credits for wind power sold in another state.
The shell game is driven by laws in California and other western states requiring that renewable sources provide a certain percentage of the state's energy use, and providing that each unit a utility buys or produces receives credit. A loopy loophole allows California utilities to "unbundle" the energy and energy credits following an initial purchase, and then just buy the credits. Idaho doesn't have such a law, so its utilities don't need the credits. If allowed by FERC, it will enable Idaho to literally create energy credits out of thin air and sell them to California utilities that pass on those costs to their unlucky customers.
Our U.S. Navy is spending lots of our green to go green too. They recently committed $12 million to purchase 450,000 gallons of biofuel at about $26.75 per gallon in order to offset requirements for standard JP-5 aircraft jet fuel that costs less than $3 per gallon. The good news is that the total fuel price will be only about five times more (rather than 9 times) after it is mixed with the standard stuff.
But then again, the real cost to American taxpayers is more than that. The biofuel is being produced through a contract with Dynamic Fuels, a partnership of three firms including Solazyme which previously received $27.7 million from the American Recovery and Reinvestment Act (stimulus money) to build its biorefinery. Coincidentally, T.J. Glauthier, a Solazyme strategic advisor, served on the Obama White House transition team where he focused on Recovery Act energy issues.
And get this"¦that green fuel purchased with green tax money will be consumed in naval air exercises near Hawaii next summer by"¦now get ready for this"¦the "Great Green Fleet Carrier Strike Force".
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Pr. Bell,
If I may summarize your blog, the US Army, Navy, giant corporations, and the Federal Government are all investing heavily in “green energy”. Fellow Forbes blogger Amy Westervelt had a piece called “Why the Military Hates Fossil Fuels”.
http://www.forbes.com/sites/amywestervelt/2012/02/02/why-the-military-hates-fossil-fuels-and-you-should-too-part-one-inefficiency/
Perhaps they know something that you do not. Oil is running out and the country needs to plan for a post-petroleum world.
What military officers know is that all promotions above O-6 are essentially hand-picked by the executive branch. They also know that overpaying for energy will not hurt them.
——–” Our U.S. Navy is spending lots of our green to go green too. They recently committed $12 million to purchase 450,000 gallons of biofuel at about $26.75 per gallon in order to offset requirements for standard JP-5 aircraft jet fuel that costs less than $3 per gallon.”——
When I buy salad dressing, I’ve always thought it was a good idea to try a small bottle first to see if I like it before I buy the Jumbo Giant Economy Size.
Yup, $26.75 a gallon is a lot to pay for jet fuel that costs $4 a gallon(Riga and I passed Chevron truck stop this morning—diesel fuel is $4.10/gallon today, basically the same stuff as JP5)
But, let’s look at things from another POV. How much is a $148 million F18 worth if it is sitting on a flight deck out of fuel? How much are 70, $148 million F18s worth sitting on a flight deck out of fuel?
Go to war with Iran and let them sink a few oil tankers in the Straights of Hormuz and we can find out how much they are worth. Half of the world’s oil supply passes through the Straights of Hormuz. And Iran can sink a supertanker with a cruise missile in less than one minute from their own shore there.
And a supertanker can not pass through the Suez Canal. Too big. And still within range of cruise missiles.
When it comes to oil and war—we are sitting ducks. And the ducks are sitting in cold tar.
I couldn’t read past page one. Your article is well-documented and well-written.
It just makes me sick to read of all the waste, overlap, ignorance, fraud and corruption that is going on in this administration.
I heartily oppose any new taxes for this very reason: The economic issues are not revenue problems, they are waste, overlap, ignorance, fraud and corruption problems.
——–” Of the stimulus grants so far, more than 80 percent have gone to wind farms (covering up to 30% of all project costs). A Meadow Lake wind development project in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant.”———-
Well, Obama TOLD you that if we do not lead the way in creating industry and jobs in the renewable energy sector that those jobs would go elsewhere.
Are you mad because the jobs went elsewhere, or because Obama was right about it?
Since you don’t seem to mind that over 1/2 of our oil is imported from foreign sources, some of which are far more unfriendly to us than Denmark and Portugal—–I can only conclude you are unhappy that Obama was right.
You could add to the wasteful projects on your list virtually any photovoltaic project in the northern half of the county. I’ll be surprised if any of them achieves even a 15% annual capacity factor. Between federal, state, and utility (above-market contract) subsidies, power from these projects costs on the order of ten times wholesale market prices, and the jobs “created” cost on the order of $200k/yr per job. There are a couple of 10MW PV sites on the east coast (NJ and DE, I think) that have started up recently.
I’d also be curious (and probably appalled) to know the unsubsidized economics of the solar street lights installed in grid-served locations.
Hi Larry,
I’m not a supporter of subsidies in general, but I do think electric is the future. To compare, the Prius only sold about 10,000 cars it’s first year. Today it’s selling about 250,000 a year.
If you want to see a government grant gone awry, check A123 the battery company with it’s “made in the USA” label. It appears to have lost out big on a contract with Fiskar (who is going bankrupt) and now has a Korean supplier for it’s US made product dumping it’s product via Chinese distributors. This situation highlights everything that is wrong with design on shore, build off shore using a 250 million dollar Federal grant.
I don’t think the Volt is going in the right direction (twice the maintenance at three times the price), but sooner or later $30 in electricity a month to commute is going to look at lot better than $300 a month in gas. The question is how to get us there before we crash the economy with the high price of gas.
azjimwoody:
Let's assume that Volt fits a legitimate niche market, primarily as an urban, short-range 2nd vehicle. But also, let's not confuse it with a hybrid, such as Prius, which meets many basic family car needs because it offers good fuel economy without being limited by battery driving range. It is selling because a significant free market segment sees utility value.
Journalism research is definitely going down the tube…Dynamic Fuels is a partnership between TSN and SYNM soley. SZYM is NOT NOT NOT or in any way affiliated with Dynamic Fuels other than being a customer that needs fuel refined.
Part of the reason of the extra cost of the fuel is due to the fact that Dynamic Fuels needs to send renewable diesel to Texas for further refinement into jet fuel. Another reason is it is basically an R & D testing project. $12 million dollars is a drop in the bucket for the US Navy, and the United States.
What’s really funny to me with all these “journalists” going after research and development into 2nd generation, sustainable and renewable just fuels that are providing fuels without jeopardizing food supply. Another thing “journalists” fail to mention or fail to do research on is economies of scale. They ALL fail to mention how similar aviation paraffinic biofuels have dropped from over $40 dollar per gallon from just 3 years ago. OBVIOUSLY the economies of scale are still working, when Dynamic Fuels installs the capability to do all the refining in-house which management said is pretty expensive to do, the price will continue to plummet. Another thing “journalists” fail to mention is that Dynamic Fuels renewable diesel is already cost competitive to normal diesel fuels.
I agree with everything this article had to say with wind and other alternative energies which are not yet remotely efficient or cost effective…however Forbes is irresponsive for allowing this “journalist” to write MISINFORMATION that was just copied from some rag website, and by not doing enough research to even find out why the jet fuel right now might cost more, and even acknowledge the price plummets. That whole section made the ENTIRE article a joke to me.
Wow, just wow, a university professor at a major university and brags about doing extensive research, and he can’t even get the joint venture partnership of Dynamic Fuels right…they have a website, you could’ve just went to it. That section was basically a copy from the conservativeoptimist.com in different words, except at least The Conservative Optimist didn’t have a glaring and incredibly lazy inaccuracy.
Clarification:
Matthew Roberts fairly pointed out that Louisiana-based Dynamic Fuels's position in their partnership with Solazyme and two other firms is in the role of customer, not co-producer. Whereas I never indicated otherwise, it is a valid elaboration.
My article states that: The biofuel is being produced through a contract with Dynamic Fuels, a partnership of three firms including Solazyme which previously received $27.7 million from the American Recovery and Reinvestment Act (stimulus money) to build its biorefinery." The intent was not to represent or imply that Dynamic Fuels received stimulus money awarded to Solazyme.
As Mr. Roberts stated "Dynamic Fuels is a partnership between TSN and SYNM soley. SZYM is NOTNOTNOT in any way affiliated with Dynamic Fuels other than being a customer that needs fuel refined."
Mr. Roberts also stated ""¦when Dynamic Fuels installs the capability to do all the refining in-house which management said is pretty expensive to do, the price will continue to plummet. Another thing "?journalists' fail to mention is that Dynamic Fuels renewable diesel is already cost competitive to normal diesel fuels."
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