The Attack on Green Energy

<p>Conservative critics of the Obama administration’s move to promote renewable energy typically make the argument that government is ill-equipped to “pick winners” and invest in or subsidize new businesses. In his recent <em>New York Times</em> column, <a href=”” target=”_hplink”>David Brooks</a> acknowledges the climate problem and advocates a carbon tax, but devotes most of his piece to an attack on Obama’s renewable energy program and the difficulties faced by this emerging industry. According to Brooks: <br /></p><blockquote>The federal agencies invested in many winners, but they also invested in some spectacular losers, from Solyndra to the battery maker A123 Systems, which just filed for bankruptcy protection. Private investors can shake off bad investments. But when a political entity like the federal government makes a bad investment, the nasty publicity tarnishes the whole program. The U.S. government wasn’t the only one investing in renewables. Governments around the world were also doing it, and the result has been gigantic oversupply, a green tech bubble… The biggest blow to green tech has come from the marketplace itself. Fossil fuel technology has advanced more quickly than renewables technology. People used to worry that the world would soon run out of oil, but few worry about that now. Shale gas, meanwhile, has become the current hot, revolutionary fuel of the future.</blockquote>

<p>Brooks is correct in identifying the challenges of the renewable energy industry, but the unstated implication of his piece is to question efforts to promote renewable energy without presenting a viable alternative. He surely knows that the anti-tax crowd in Congress will never agree to a carbon tax. He must also know that any new area of business faces the type of challenges faced by the renewable energy industry. Even established businesses, such as natural gas today, can lose money through financial manipulation and a supply that increased so quickly that prices collapsed. The energy business is complicated. Demand continues to increase, but supply and demand are difficult to balance, speculation runs rampant, and these factors can have an immediate and dramatic impact on price. All of the recent discoveries of American natural gas have convinced many people that fossil fuels are not really finite. They are. </p>

<p>A deeper analysis might argue that the real problem with this stage of renewable energy development is the premature effort to look to the private marketplace as a source of resources to create this critical new industry. By delegitimizing government and its capacities, conservatives have made it impossible to conduct a serious analysis of the role of government in developing renewables and the conditions under which private sector participation might make sense. While I am grateful that Mr. Brooks acknowledges the reality of climate science, most conservatives do not. However, even if we ignore the climate problem, fossil fuels create a number of economic and environmental problems that need to be addressed.</p>

<p>It is true that no one really knows how much oil, gas and coal are buried beneath the earth’s crust. However we do know that the process of extracting that fuel damages ecosystems that humans depend on for water and food. Most of the seven billion people on the planet do not have access to the energy that we take for granted here in the U.S. They do not have cars, climate control, refrigerators, cable TV, computers or access to the Internet. But they all want it, and eventually they will get it. If the entire world used fossil fuels at the rate that we do, the resulting scale of environmental destruction would almost certainly poison our water and food supply. Moreover, fossil fuels will eventually lose the cost competition with renewables. The fuel itself may be subject to boom and bust cycles, but in the long run, supply will diminish and prices will rise. In addition, the capital, operation and maintenance costs of mining and transporting fossil fuels will tend to grow, while the costs of renewable energy technology will tend to shrink. A technology that utilizes a cost-free base resource like the sun and wind could be subject to the same expense dynamics as computing power and communications. The price of computing power and phone calls has come down, as utilization and technology has increased. Renewable energy should be subject to the same price dynamics. </p>

<p>Of course, all fossil fuels are not created equal. Some are easier to mine than others, and some pollute more when they are burned than others. There is little question that in the short term, we will be mining and burning more fossil fuels in the future than we do today. There is also an issue of perspective, or what is the definition of short term? In Sunday’s <em>New York Times</em>, energy investment banker <a href=”” target=”_hplink”>Ralph Eads</a>, referring to some shale gas deposits observed: “These shale assets are forever… They are going to produce for a hundred years.” Here’s the bad news, Mr. Eads: A hundred years is not quite forever. Advances in gas extraction technology can help smooth the transition to renewable forms of energy, but the transition cannot be avoided.</p>

<p>While nuclear power is often presented as a way out of this problem, it creates difficult waste and security issues and in the words of the late, great Barry Commoner, “is a hell of a complicated way to boil water.” It is also a highly centralized and capital-intensive technology, and my sense is we should be looking for power sources that are cheaper, less risky and decentralized. </p>

<p>Which brings us back to renewable energy. When the dust settles from this nasty and disgusting political season, perhaps we could figure out some way to create and fund that “moon-shot” type program to develop commercially viable renewable energy. No single technology is more vital for humanity’s future. The mistrust of government must be overcome if we are to do this, but America’s research universities and scientists must be given the resources needed to take on this mission. And it must be approached like the great national projects of the past: </p>

<p>• The land grant colleges, agricultural extension and the development of the American food industry;<br />
• The transcontinental railroad; <br />
• The mobilization of American industry and society for War II; The education and housing of World War II Veterans with the GI Bill along with the financial and tax policies that transformed America from a nation of renters to a nation of homeowners;<br />
• The development of the interstate highway system; <br />
• And oh yeah, JFK’s goal of a moon landing in less than a decade. </p>

<p>We used to think of government as a way to help solve problems but conservatives continue to define government as the source of our problems. This idea has become an accepted truism. Even people who ought to know better talk about government like it is some kind of disease. The private sector has no monopoly on competence and the public sector succeeds far more often than it fails. When I call 911, I don’t expect to see Bain Capital come to my rescue, I look for the NYPD or the FDNY. Government, like the private sector, is a tool to achieve our goals. Some goals are more easily achieved by the private sector and some goals are best pursued by the nonprofit sector. But some goals are so massive, important and difficult that they require government leadership, resources and authority. It’s time to stop pretending we don’t need government and its really time to stop apologizing for its failures. The attack on green energy is ideologically driven, but it is extremely dangerous. The move to a sustainable economy requires that we generate far more energy tomorrow than we generate today. We do not know how to do that safely, but we need to learn. </p>

<p>If we leave green energy to the private sector alone, it will eventually come, but it will probably come too late to preserve our ecosystems. It will follow the typical boom and bust cycle we all experience at the gas pump. Government must take the lead. It must work with all of us to develop a vision of a sustainable economy and then must invest the resources needed to achieve that vision.</p>

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