26 Feb 2012

Renewable energy: advocates need to raise their ‘game’ to match fossil energy interests

Written by Jim Pierobon

With the absence of an energy discussion in this year’s presidential race, one might think the U.S. faces few, if any, substantive energy problems, or opportunities for that matter. Most energy experts agree that is not the case. Yet what constitutes a problem or an opportunity, is subject to interpretation.

Rising gasoline prices, heightening unrest in the Middle East, China’s aggression in the clean energy sector, barbs over energy subsidies and the jobs being created by new shale oil and natural gas projects have clean energy in the cross-hairs of policy makers who are challenging, or at least having doubts about, its value proposition.

The American Enterprise Institute (AEI) teed up this debate Friday, February 24 in Washington, DC.

Known for its advocacy of policies enabling and promoting the private-sector’s ability to solve many of the nation’s challenges,  AEI engineered a colorful assessment of solar and wind energy in particular. After the rhetoric, some hard facts and lots of spin on U.S. energy data, the difference boiled down to job creation and economic development. Advantage this round: fossil fuels.

“Clean, Green, Renewable: What Could Go Wrong?” was the question posed by AEI resident scholar Kenneth Green. The roundtable paired visiting scholar and economist Benjamin Zycher with University of Wyoming economics professor Timothy Considine vis a vis counterpoints from Kate Gordon, head of energy policy at the Center for American Progress and Jimmy Glotfelty, co-founder and executive vice president at Houston-based Clean Line Energy.

Shale natural gas is widely viewed to be generating more jobs than any sector of the U.S. energy industries. CREDIT: The American magazine by the American Enterprise Institute

Considine assessed renewable energy through an economic lens including metrics such as state tax revenues and new jobs created. “We need to look at energy in economic terms. What can generate value?”

A major takeaway: pushing renewables into the marketplace before their time is counter-productive. This in part because shale oil and gas exploration and production is helping drive economic growth, even in states such as California. The Golden State might even build a new gas-fired plant in the near future to reduce the amount of electricity it needs from out-of-state via costly transmission lines that can be nearly impossible to site.

Zycher, the economist, pulled no punches. He asserted that wind and solar energy incur dramatically higher transmission costs to get their electrons to markets compared to nuclear and gas-fired plants. He also contended there is a lot more pollution than renewable energy developers are willing to include in their models. That’s because fossil fuel generating sources are needed to cycle on and off and on again to back their intermittent availability.

Drawing on his interpretation of data from the Energy Information Administration, Zycher jumped into the subsidy debate contending subsidies for solar outweigh those for natural gas and coal by a factor of roughly 1,500; wind by a factor of about 81. Ergo, he saw no no need to eliminate them.

Kate Gorton of the Center for American Progress countered there should be no subsidies for fossil fuels period because they are profitable and have been profitable for a long time. “The comparison doesn’t make sense,” she said. Wind and solar deserve subsidies just as fossil fuels received them a century or so ago to they could secure a useful role in America’s industrializing economy. She tried steering the debate without much success toward “the opportunity costs of continuing the status quo” with fossil fuels and nuclear.

Glotfelty said all one has to do is gauge how important wind energy is to governors or all political stripes who recognize wind’s value. “We have Republican governors (in Kansas, Iowa, Oklahoma and Texas) who are clamoring for wind in their states because of the jobs and the economic development associated with them . . . This is not necessarily a wind versus natural gas story. This is an economic development story.”

Many of the messages that scored points during President Obama’s first year in office about climate and jobs seem to falling flat today, or at least not resonating because of the worst recession since the Great Depression. This is still ever apparent as the AEI roundtable reflected. The growing supply of shale natural gas and the failure of a few high-profile solar and other renewables projects is drowning out the cleaner more sustainable potential of renewables.

The upshot from this writer’s perspective: the clean energy sector needs to sharpen its message, better quantify its value-add and be ready with more potent ammunition at events such as this one. The status quo has more ‘bazookas’ and money to keep them firing. Until the economy picks up, that inherent advantage will remain.

Although this contest doesn’t have finish line, the war or words is being won by those who can credibly claim they are creating the most jobs and the personal and corporate income tax payments that accompany them.

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