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The Natural Gas Threat to Renewables Motivates Its Opponents

The battle over natural gas is really a battle about renewables, says Dick Downey.  They’ve gotten the massive subsidies and have generated little to show for it, while natural gas has become the nation’s energy choice through a system of largely free-market initiatives and consumers who were free to choose.

More than half (56%) the households in the USA, a total of 62 million, are heated with natural gas. Pipeline networks like the proposed Constitution Pipeline, deliver cheap, plentiful, and clean(er) gas to cities transitioning from heating oil. Over the last four years, coal-fired electric generation has fallen one third, from 53% to 36% for the same reasons. These trends are resulting in the lowest CO2 emissions in 20 years. All this in a free market. No cap-and-trade; no crony capitalism.

So why are the uber-greenies fighting gas down to the last molecule?

It’s simple when you follow the money. Gas trumps renewables for the foreseeable future. Gas is an efficient, scaleable, flexible energy product selling at a bargain price. Renewables aren’t. Without huge taxpayer supported subsidies, renewables will be gone with the wind.

The Department of Energy reports the federal government doled out $37.16 billion in energy subsidies in 2010. These include ear-marked tax breaks, direct loans, loan guarantees, R&D, home heating assistance, special consumer programs, and on and on and on.  Interestingly, of the $37 billion in federal handouts, oil and gas combined only got about $3 billion. Nuclear and coal also fed at the public trough, but the bulk of the subsidies went to renewables.


Source: Energy Information Administration


Does the country get its bang for the taxpayer buck?

The Institute for Energy Research used Department of Energy data to determine the subsidy paid per megawatt of electricity. Oil, gas, and coal clocked in at 64 cents per megawatt; hydropower at 84 cents; nuclear at $3.14. Wind blew in at $56.29 per megawatt and solar topped off at a sky high $775.64. For every tax dollar spent supporting an oil or gas or coal company to produce a given amount of electricity, a wind company got $88 and solar (Solyndra, et al) got $1,212 for the same output.

Are renewables worth it?

Not in Realville. Aside from the extra costs to consumers and taxpayers, renewables fall short in the societal benefit of job creation. Promise 700,000 jobs; deliver 28,854 (Bloomberg’s Businessweek.)

But that doesn’t mean nobody makes money. Al Gore is doing fine, with a net worth of $100 million, thanks to $2.5 billion in loans, grants, and tax breaks in his save-the-earth businesses.  And, billionaire campaign contributions bundler George Kaiser continues to feed off the corpse of Solyndra with over $350 million worth of tax credits and tax-loss carry-forwards according to the Wall Street Journal. The Treasury took a bath for about half a billion dollars.  The Hoover Institute estimates 80% of the “green” companies receiving Department of Energy backing have been run or primarily owned by fat cat financiers with political connections.

With the threat of these kinds of subsidies and sweetheart deals disappearing, it’s no wonder the Barnums of Big Wind and Big Sun are hunkering down for the long haul. We‘re talking serious money here.

Some day renewables may replace significant amounts of carbon based energy. Federal dollars would be well spent on basic research to that end. However, it shouldn’t be spent on companies that haven’t figured out what customers want and can’t deliver a product at a profit without financial life support.  It shouldn’t be spent on the favored few who are guided through the bureaucratic regulatory maze to a Promised Land where start-up costs are covered, future sales are guaranteed, and competition is squelched. This kind of business model leads to complacency, obsolescence, and cynicism.

Deep Throat had it right. Follow the money. Big Wind and Big Solar aren’t going down without a fight. Hang on, folks, it’s going to be a bumpy ride.

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