Posts tagged energy

A LOT OF GAS

Like almost anything that the Republican candidates can manage to agree on, the Obama Administration gas-price-hike conspiracy theory is nearly a hundred-per-cent hokum. The fakery begins with the theory’s premise: that the President could, if he wanted to, reduce the price of oil. Oil, as it is well known, is a global commodity traded on a global market. Gasoline prices have risen—they are up roughly fifteen per cent since the start of the year—mostly because demand is climbing in countries like China and because instability in the Middle East has prompted worries about supply. (Since sabre rattling on Iran tends to increase those worries, candidates like Santorum, who calls the Administration’s policies toward Iran “appeasement,” are almost certainly aggravating the very situation they decry.)

But an idea doesn’t have to be true, or even especially convincing, to be politically effective, and nowadays it’s the most rational policy options that seem to have the hardest time getting heard. When it comes to gas prices, it’s been clear for, well, let’s just say forever that the cost of gasoline in America is actually too low. Cheap gas generates sprawl and traffic. It discourages the use of mass transit and the development of alternative fuels. It contributes to regional smog and to global climate change. The easiest and most obvious solution has long been to raise the federal gasoline tax, which now stands at only 18.4 cents a gallon. Among economists, there’s widespread support for this idea, including from Greg Mankiw, a Harvard professor who happens to be a top adviser to Romney. Writing in the Times earlier this year, Mankiw observed, “Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense.” He went on, “By taxing bad things more, we could tax good things less.”

What the country needs—and has always needed—is an energy policy that, instead of pandering to Americans’ sense of entitlement, would compel us finally to change our ways. In addition to a phased-in increase in the gas tax, it would include a comprehensive, economy-wide tax on carbon, or, alternatively, a cap-and-trade system. As it turns out, Mankiw isn’t the only senior person in a Republican campaign to see the importance of a new policy. When Romney was governor of Massachusetts, he presided over the introduction of one of the country’s first cap-and-trade programs, for the six largest power plants in the state. And in his book “No Apology” he wrote that “higher energy prices would encourage energy efficiency.” Perhaps, once he secures the nomination, he can Etch A Sketch his way back to reality, and challenge Obama to do the same.

The Military Goes All In With Energy Innovation

In the interest of national security, the military is pursuing advanced batteries and novel biofuels for the battlefield and energy-efficient buildings and energy-independent bases for the home front. The Armed Forces are investing and enabling green technologies independently, through its own research (e.g., DARPA) and procurement (e.g., the Army’s new Energy Initiatives Office) processes, as well is in cooperation with the Department of Energy.
 
“We in Defense must innovate to protect the country. Our technology is second only to the quality of the people we have in uniform in what makes our military the best in the world,” said Deputy Secretary of Defense Ashton Carter. “We’re all in with the Department of Energy (DOE). It makes sense and it is good for the taxpayer. We’re all in with ARPA-E. We look forward to working with [the DOE] well into the future. Just like DARPA has been around for 50 years, I dare say ARPA-E will be around for decades as well.”

The DOD is committed to greentech for the long term.  Unlike venture capitalists, the military doesn’t invest from 10-year funds. Unlike the DOE, the Armed Forces are relatively insulated from changing political winds.
 
“We, unlike many in the economy, take the long view,” said Carter. “National defense is going to be around for a long time. We are prepared to make investments that are sure to pay off, but won’t pay off for 10 years, whereas [investors] in the economy with high discount rates can’t afford to place those kinds of bets. But we’re prepared [to do so because] it is in the national interest, the taxpayers’ interest and the interest of national defense.”
 
But what if Republicans take control of the White House or both houses of Congress? Might the military’s interest in green technology be politicized, much as the Obama administration’s investments and loan guarantees have come under fire?

“The military has bought in to alternative energy. It is their idea now. That makes a big difference,” said Perry.  “It was my experience when I was Secretary [of Defense] that whenever you get military buy-in, you have a much greater chance to [accomplish] whatever it was you were trying to do. That has happened now in the case of alternative energy and the military. I don’t think it is dependent on an administration. I think it is going to be there for a long-time to come.”

Why the Clean Tech Boom Went Bust

There was another factor driving down the cost of conventional photovoltaics. In recent years, China has worked aggressively to develop its domestic solar production capacity. National banks have given credit lines that dwarf the federal loans US firms enjoyed; local and provincial governments have provided tax incentives as well as land at below-market rates; and the national government recently established a so-called feed-in tariff, which compels utilities to buy electricity from solar developers at above-market rates to offset their production costs.

Understandably, American firms have struggled to remain competitive. In 1995, more than 40 percent of all silicon-based solar modules worldwide were made in the US; now it’s 6 percent. 

Government coffers have been compensating for a number of market challenges solar faces, including the incumbency advantage of the fossil fuel industry and private investors’ distaste for capital-intensive enterprises that will take years to deliver a return. And in 2012, the solar industry may face a sudden reduction in these subsidies, as the post-Solyndra political climate grows less and less receptive to investments in clean energy. Despite the fact that renewable energy received only a quarter of the subsidies that fossil-fuel-based electricity received between 2002 and 2007, it’s wind and solar that are on the chopping block.Wind Power: Plummeting natural gas prices now make this option comparatively expensive.