Saturday, August 11, 2012

About that clean energy revolution

Michael Grunwald, a senior national correspondent for Time magazine, has a new piece in which he attempts to carry water for the Obama administration's program of clean energy subsidies. Unfortunately, he engages to a lot of nonsense and even lies by omission, which is pretty much par for the course when making economically indefensible arguments. Early on he discusses tax credits used to support wind energy:
Romney would say the tax-credit issue goes to Obama’s penchant for supporting goodies for specific industries, which isn’t really fair, since as Obama often says but reporters rarely repeat, Romney and his party support outrageous subsidies and tax breaks for the spectacularly wealthy oil industry.
Well, it might be hypocritical, but it's not unfair if it's true. As for those "outrageous" subsidies and tax breaks for oil companies (and, for the record, all subsidies and special tax breaks should be abolished), let's recall that ExxonMobil has paid over $1 trillion in taxes from 1999-2011 and $3 in taxes for every $1 dollar in profit it has earned. Highway robbery of the government treasury this is not. Indeed, for perspective note that the amount of subsidies given out by the federal government to oil and gas companies according to President Obama is $4 billion -- roughly what ExxonMobil alone pays in taxes every 2.5 weeks. 

Grunwald continues:
But it’s true that Obama has tried to support clean energy in general, and the results have been remarkable. For example, the generation of renewable electricity has doubled on Obama’s watch. The stimulus has financed the world’s largest wind farm, a half-dozen of the world’s largest solar farms, the nation’s first refineries for advanced biofuels, a new battery industry for electric vehicles, unprecedented investments in cleaner coal and a smarter electric grid and over 15,000 additional clean-energy projects. 
Fair enough, but why is any of this remarkable? Billions of dollars have been spent on clean energy, and more of it has resulted. What else would one expect to occur? Given sufficient expenditures, we could probably power thousands of homes with energy generated from hamster wheels, but that doesn't mean it makes sense.

Next up comes the really dishonest, ridiculous part:
Last year, the U.S. was the least dependent on foreign oil it’s been since 1995, and our greenhouse-gas emissions are dropping even though the economy is growing.
Note that Grunwald mentions this in the same paragraph highlighting the expansion of clean energy under Obama, in a seeming deliberate attempt to conflate the two and imply causal effect. Left unmentioned, however, is that one main reason for the drop in oil imports is a big increase in domestic production, while the chief driver behind the drop in greenhouse gas emissions is not a boom in clean energy, but rather natural gas:
Why are US carbon emissions plummeting back to 1990 levels? 
First and foremost are sharp reductions from electric power production, as a result of fuel switching from coal to gas, rising renewable energy production, and increasing efficiency. Yet, the shale gas revolution, and the low-priced gas that it has made a reality, is the key driver of falling carbon emissions, especially in the last 12 months. 
As of April, gas tied coal at 32% of the electric power generation market, nearly ending coal's 100 year reign on top of electricity markets. Let's remember the speed and extent of gas's rise and coal's drop: coal had 52% of the market in 2000 and 48% in 2008.
But that doesn't really fit the narrative, does it?

Moving along:
Wind and solar essentially were imaginary before Obama took office, but now they’re a real threat to the fossil-fuel status quo.
Laughable. Let's look at the numbers (click charts to enlarge):

As can be seen, in 2009 when President Obama took office, fossil fuels accounted for 83 percent of energy use. As of March 2012 it was at 81 percent. In other words, even with all the subsidies and other forms of government assistance, fossil fuel use has dropped a mere 2 percentage points while renewable energy has only increased by 1 percentage point. A revolution this is not.

Further note that even within the renewable energy sector that wind and solar combined only accounted for 10 percent of that entire category as of 2009 -- a figure that is unlikely to have dramatically shifted in the interim (even a tripling of wind and solar would only leave it at accounting for one-third of an energy category that provides less than 10 percent of US energy needs).

This is the big threat? This is what is supposed to keep oil and gas executives up at night? Absurd.

Grunwald continues:
That’s why their tax credits, which used to be renewed routinely with overwhelming bipartisan support, have become so controversial and why Romney would risk alienating voters in windy swing states to oppose it.
That's one possibility. Another is that Americans are waking up to the fact that it makes absolutely no sense to ladle subsidies upon an uncompetitive form of energy and the special interest groups that push for them, particularly at a time when the country is dealing with massive budget deficits. 

He concludes:
Ultimately, the argument over wind and other clean energy, like so many arguments in this campaign, is an argument about change.
It's not about change, it's about government's role in the economy and the advisability of charging it with picking winners and losers. Hopefully the American people will embrace change and put an end to this nonsense. 

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