by Richard W. Caperton

Take a deep breath, because what I’m about to tell you may be shocking: loan guarantees for energy have been successful, cost-effective investments.

That’s the message from Herb Allison, former national finance chairman for John McCain, who led a team of accountants and auditors in conducting an independent analysis of the Department of Energy’s Loan Guarantee Program.  Allison and his team found that, despite the hysteria around Solyndra, this program will cost $2 billion less than initially expected.

Today, the White House released Allison’s review.  It includes an analysis of every loan guarantee issued from DOE, as well as recommendations for managing this portfolio of guarantees going forward.  This independent review was requested by the White House in late 2011, to make sure that the DOE loan guarantee portfolio was cost-effective for taxpayers.

The Allison review confirms what we already know, thanks to the Congressional Research Service and Bloomberg Government.  Instead of looking at individual investments, CRS examined the entire DOE portfolio, and concluded that the overwhelming majority of the portfolio was in electrical generation projects, which DOE structured to have very low risk.  Bloomberg Government took that a step forward, and concluded that the media’s incessant focus on Solyndra was “not proportional to its impact.”

There are multiple reasons why the risks to taxpayers from this program are so low.  First, most of the guarantees went to support projects that have very secure contracts to sell their power to investment-grade rated utilities. Allison and his team of independent auditors endorsed the methodology that DOE initially used to evaluate these types of projects, writing, “The Independent Consultant used the same Nine Criteria as did DOE because, in the opinion of the Independent Consultant, they comprise the salient factors for evaluating the credits and are substantially similar to the criteria that would be employed by private sector credit analysts for these types of loans.”

Second, even in the event that something does go wrong with an investment, there is almost always someone willing to buy the project at a discount.  For example, Beacon Power declared bankruptcy after getting a loan guarantee for $43 million.  But, this wasn’t a $43 million loss for taxpayers, because Rockland Capital agreed to buy the project for $30.5 million.  Obviously, this is not the perfect outcome, but it helps to understand why Beacon’s bankruptcy won’t cost taxpayers the full amount of the guarantee.

Allison’s report includes two types of accounting methods.  One is the method mandated by the Federal Credit Reform Act of 1990, which instructs DOE to record these guarantees in the budget at their expected cost to the government.  The other is a method called “fair value” reporting, which would attempt to force guarantees to be recorded in the budget at the market value of these guarantees in the private market.  “Fair value” reporting of costs is simply an accounting gimmick designed to artificially – and arbitrarily – increase the cost of credit programs, which will have the effect of limiting the government’s ability to extend valuable loans and loan guarantees.

“Fair value” reporting is nothing more than a tool to limit the role that government plays in making higher education affordable for students, helping manufacturers export their goods, and keeping middle-class families in their homes.  DOE rightly calculated costs based on the methodology prescribed by the Federal Credit Reform Act, which has been the law of the land since 1990.  Doing anything else than following FCRA would have been not just a mistake, but also illegal.

Why the Loan Guarantee Program Exists

It’s important to remember why the Loan Guarantee Program exists.  Innovative companies—key to our future competitiveness and economic prosperity—risk getting caught in the “Valley of Death,” where nascent but promising companies often languish as they strive to accumulate the necessary funds. Bringing new clean energy technologies to commercial scale for the first time can require hundreds of millions, even billions, of dollars and private investors are either unable to fund projects that require this much capital, as is the case with many venture capitalists, or are unwilling to lend money to projects that use first-of-a-kind technology not fully proven at commercial scale, as is the case with most banks.  The Loan Guarantee Program brought companies across the “Valley of Death” by providing these businesses with loan guarantees that made it possible to raise the necessary capital and jumpstart the economy.

By fixing the “Valley of Death” problem, DOE has allowed extremely important projects to move forward, including the world’s largest wind farm, the first commercial cellulosic ethanol plant, and the country’s largest concentrating solar power project.  In total, the Program will support nearly 40 projects, which will employ 60,000 people.

The Loan Guarantee Program helped America compete in the global economy.  In 2011, the United States invested more in renewable energy than any other country in the world, helping us capture our share of this trillion dollar opportunity.  Why were we able to do this?  As Michael Liebreich, CEO of Bloomberg New Energy Finance, puts it: “The news that the US jumped back into the lead in clean energy investment last year will reassure those who worried that it was falling behind other countries. However before anyone in Washington celebrates too much, the US figure was achieved thanks in large part to support initiatives such as the federal loan guarantee programme and a Treasury grant programme which have now expired.”

In short, the DOE Loan Guarantee Program is helping to move our country forward, and it’s doing it by responsibly managing taxpayer money.  When DOE issued these guarantees, they expected that they would cost the government more than $5 billion.  At their most recent internal analysis, DOE concluded that the loans were performing better than expected, and that they would not cost less than $3 billion.  Allison and his team of independent consultants found that even DOE’s most recent project was too high, and that the guarantees would only cost $2.7 billion.

To put that in perspective, the fossil fuel industry got a whopping $70 billion in government subsidies from 2002 to 2008.  Many of these subsidies have been in place for nearly 100 years.  The nuclear industry, too, has benefitted from billions of dollars in subsidies – including loan guarantees – over the last half-century.

While the Loan Guarantee Program has undoubtedly been cost-effective for taxpayers, it would be a shame not to learn any lessons about the program’s management.  Allison and his team of independent consultants recommend several actions, such as refining oversight boards and filling certain job vacancies.  Congress should act on these lessons when creating a Clean Energy Deployment Administration, which would also be a cost-effective investment program.  In fact, CEDA would be a stronger program than the DOE Loan Guarantee Program, with more independence from the political process, a fuller set of financial tools at its disposal, and the ability to view its investments as a comprehensive portfolio.

Allison’s independent review tells us everything we need to know about the DOE Loan Guarantee Program: It’s a good deal for taxpayers, and DOE staff have avoided exposing taxpayers to unacceptable risks.  Now, Congress should focus on finding new ways to replicate the success of this program to put Americans back to work.

– Richard W. Caperton is director of clean energy investment at the Center for American Progress.

Speaking at the Conservative Political Action Conference yesterday, Colorado Republican Congressman Cory Gardner explained to attendees that was just what his party was determined to do.

When a questioner asked how Republicans can stop taxpayer dollars going to climate research and other programs to reduce carbon emissions, the panelists chuckled. Then Rep. Gardner answered the question, explaining that many GOP leaders are committed to “get that money out that’s been feeding the industry.”

Think Progress Green has the video. (Also for another CPAC “best of,” check out TP Green’s post: Santorum Froths At CPAC About ‘Facade Of Man-Made Global Warming’).

QUESTIONER: Since climate science is now all settled, Republicans and Democrats can agree that it’s all settled” the DOE budget is going to roll out, can we stop spending taxpayer’s money on climate science and ways and means of limiting carbon emissions.

GARDNER: Those amendments were all added to the Republican past budgets and appropriations bills, stripped out of course by the Senate, so I think there have been attempts to get that money out of research that’s feeding the industry.

Rep. Cory Gardner was one of 34 members of Congress who voted three times in a row last March to against an amendment recognizing that “climate change is happening and human beings are a major reason for it.”

Related Post:

• Santorum Froths At CPAC About ‘Facade Of Man-Made Global Warming’

In 2011, green builds in the residential sector made up 17% of construction, totaling $17 billion in economic activity. And the value of the residential green building market is expected to grow five-fold by 2016, taking up to 38% of the market and representing $87 billion – $114 billion.

McGraw Hill defines green building as “one built to LEED standards, an equivalent green building certification program, or one that incorporates numerous green building elements across five category areas: energy efficiency, water efficiency, resource efficiency, responsible site management and improved indoor air quality.”

According to figures released by McGraw Hill, 46% of “conventional” homebuilders say that providing green design services makes it easier to find new work. And 71% of firms working exclusively in the green building space say that these services help set themselves apart in a struggling construction market.

Many factors are driving the green homes market, with “higher quality” and “increases in energy costs” topping the list, indicating that today’s green homebuyer is not just a green consumer. Buyers recognize that green homes have lower bills due to higher building performance. The reported costs of building a green home have also gone down significantly. Builders report that the cost to go green is now 7%, as compared to 10% in 2008 and 11% in 2006.

While green is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest’s northern region, west of the Mississippi, is second highest; and New England ranks third.

The green remodeling market performed even better than new construction in 2011, with 62% of firms saying green services helped them increase work last year. Just over one third of remodelers say they’ll be doing mostly green work by 2016.

This mirrors trends in the commercial sector, where LEED-certified retrofits surpassed new builds for the first time ever in 2011.

All this green building activity translates into new jobs and new skills for existing workers. McGraw Hill reported in October that one third of architects, engineers and contractors in the U.S. — around 660,000 people — say they have “green” jobs. That number may climb to more than 900,000 jobs by 2015.

Related Posts:

• Green Jobs Make Up 35% of Design and Construction Industry: “People Will Never Go Back to Building Inefficient Buildings”
• Retrofits Surpass New Builds in LEED-Certified Green Buildings
• Top 10 Residential Green Building Trends to Watch in 2012

A bulldozer flattens out coastal sand dunes to make way for Donald Trump's golf course in Aberdeenshire, Scotland. Trump says the Scottish First Minister is "hellbent on destroying the Scottish coastline."

Real estate mogul and former Republican presidential candidate Donald Trump has outdone himself this time.

After starting construction on a 1,235 acre coastal golf course on rural land in Scotland that will feature two golf courses, 950 houses and a luxury hotel, Trump is now complaining that the Scottish Minister is “hell-bent on destroying Scotland’s coastline” with offshore wind projects.

Last summer, Trump vowed to fight an 11-turbine offshore wind project proposed for waters 1.5 miles away from his sprawling complex where bulldozers have been ripping up untouched grasses and flattening coastal sand dunes to make way for an artificial golf course.

In a letter to Scottish First Minister Alex Salmond sent this week, Trump hilariously says he will try to “save Scotland” (yes, really) from the plight of wind turbines being proposed for the country’s coastline:

“With the reckless installation of these monsters, you will single-handedly have done more damage to Scotland than virtually any event in Scottish history.”

Trump also said he would never be “on board” with the project, which he called “insanity”.

He added: “As a matter of fact, I have just authorised my staff to allocate a substantial amount of money to launch an international campaign to fight your plan to surround Scotland’s coast with many thousands of wind turbines.”

He added: “Please understand that I am doing this to save Scotland.”

One Scottish politician called Trump’s comments “desperate” and “embarrassing” — perhaps two of the biggest understatements of the year so far.

Trump’s letter comes after a multi-year battle with local landowners who don’t want to be forced from their property to make way for the golf course. In one case, Trump built a fence around a local homeowner’s property he deemed “ugly” and then billed him for half the costs!

Yes, this is coming from a man who ran for U.S. president, and who now sees himself as a serious candidate for Secretary of State in order to “be in a position to negotiate against some of these countries.”

Trump has not signaled what his negotiating strategy would be. But if history is any guide, it will likely involve sending hypocritical letters to countries threatening his pet projects.

Canada PM vows to ensure key oil pipeline is built

Canada’s prime minister on Friday made his strongest comments yet in support of a proposed pipeline from oil-rich Alberta to the Pacific coast, saying his government was committed to ensuring the controversial project went ahead.

Enbridge Inc’s Northern Gateway pipeline, which is strongly opposed by green groups and some aboriginal bands, would allow Canada to send tankers of crude to China and reduce reliance on the U.S. market.

An independent energy regulator — which could in theory reject the project — last month started two years of hearings into the pipeline.

In remarks that appeared to cast some doubt on the regulator’s eventual findings, Prime Minister Stephen Harper said it had become “increasingly clear that it is in Canada’s national interest to diversify our energy markets”.

He continued: “To this end, our government is committed to ensuring that Canada has the infrastructure necessary to move our energy resources to those diversified markets.”

Rio+20 shows little sign of living up to original Earth summit

It is easy to be cynical. Back in 1992, more than 100 world leaders, including George H.W. Bush, showed up for the Earth Summit in Rio de Janeiro. It was a two-week mega-event that attracted huge attention, highlighted by the signing of two groundbreaking treaties on climate change and biodiversity and grand declarations about creating a future green and equitable world.

To put it mildly, the subsequent two decades have not lived up to the promises. George W. Bush effectively broke the climate treaty signed by his father, refusing to sign up to the Kyoto Protocol. Emissions have soared, resource plundering has intensified, nature is still on the retreat, the world has become less equitable, and climate change has gone from distant prospect to frightening reality. While the population bomb may be being defused, the consumption bomb is primed to destroy us all.

The 1992 Rio summit’s aspirations were left in the hands of a new body: the UN Commission on Sustainable Development (UNCSD). You have probably never heard of it. That’s not a good sign, since the commission is now in charge of a new event, Rio+20, which is being billed as the next step in making the planet fit for future generations.

Wind-energy credit could be extended

Members of the Colorado congressional delegation are calling to extend the wind-energy production tax credit as part of the payroll tax extension.

Eight members of the delegation, including Democratic Sens. Mark Udall and Michael Bennett, as well as Democratic Reps. Diana DeGette, Ed Perlmutter and Jared Polis signed a letter to the chairmen of the conference committee.

Also included are Republican Reps. Cory Gardner, Scott Tipton and Mike Coffman. Coffman joined the other members of the delegation late Tuesday in their letter. The wind-energy production tax credit gives wind-energy farms a 2.2 cents-per-kilowatt credit on their taxes each year for the first 10 years and will expire at the end of the year.

In January Vestas Wind Systems, the largest wind turbine manufacturer, threatened to lay off 1,600 people if the tax credit is not extended. It has four manufacturing plants on the Front Range and employs 1,700 people in Colorado.

Evangelical group holds firm on ‘pro-life’ link to EPA rule

A green evangelical group won’t bow to conservative anti-abortion-rights leaders or Republicans who are pressuring them to stop casting support for new EPA pollution rules as a “pro-life” position.

The Environmental Evangelical Network (EEN) is under attack from the religious right over its campaign in favor of EPA’s new restrictions on mercury emissions from coal-fired power plants – rules that EEN calls vital to protecting the health of the unborn.

Alexei Laushkin, an EEN spokesman, said in an interview Thursday that the group won’t back off the way it frames support for the rules issued late last year.

“We believe protecting the unborn from mercury poisoning is a consistent pro-life position,” he said. “An issue that impacts the unborn – that’s where we resonate as a pro-life organization.”

Cuban Oil: Country’s Ambitions Endanger Florida Coral Reefs and Coast

Cuba’s fledgling oil industry has for the first time dropped an offshore rig into the waters off the Florida Keys, a move that has U.S. officials and environmentalists warning that the island nation’s energy ambitions could come at the expense of the ecologically sensitive region at the tip of the Florida Peninsula.

The Cornwall Alliance calls environmentalism "one of the greatest threats to society."

A conservative religious organization with ties to the oil industry is lashing out at health-conscious evangelical leaders for supporting new federal rules on mercury.  They assert that protection of the unborn from toxic pollution cannot be called pro-life because the term does not mean “quality of life.”

The Cornwall Alliance is a group of conservative evangelicals devoted to spreading disinformation about climate change through its mission of  “free-market environmental stewardship.” In its Declaration on Global Warming, the organization says “we deny that carbon dioxide … is a pollutant” and that “we deny that alternative, renewable fuels can … replace fossil and nuclear fuels.”

Think Progress conducted a lengthy investigation of this pollution-pushing evangelical group in 2010.

Responding to a new video and radio ad campaign from the Evangelical Environment Network that encourages lawmakers to support new mercury standards in order to “protect the unborn,” the Cornwall Alliance issued a statement explaining its view that being pro-life does not denote “quality of life.”

The term pro-life originated historically in the struggle to end abortion on demand and continues to be used in public discourse overwhelmingly in that sense. To ignore that is at best sloppy communication and at worst intentional deception. The life in pro-life denotes not quality of life but life itself. The term denotes opposition to a procedure that intentionally results in dead babies. (Bold not our emphasis.)

This doesn’t mean we should ignore environmental risks. It does mean they should not be portrayed as pro-life. Genuinely pro-life people will usually desire to reduce other risks as well—guided by cost/benefit analysis. But to call those issues “pro-life” is to obscure the meaning of the term.

The Environmental Protection Agency estimates that the new mercury rules will prevent 11,000 premature deaths and 130,000 asthma attacks each year. And the impact of high levels of mercury in unborn children are well documented:

For fetuses, infants, and children, the primary health effect of methylmercury is impaired neurological development. Impacts on cognitive thinking, memory, attention, language, and fine motor and visual spatial skills have been seen in children exposed to methylmercury in the womb.

Outbreaks of methylmercury poisonings have made it clear that adults, children, and developing fetuses are at risk from ingestion exposure to methylmercury. During these poisoning outbreaks some mothers with no symptoms of nervous system damage gave birth to infants with severe disabilities, it became clear that the developing nervous system of the fetus may be more vulnerable to methylmercury than is the adult nervous system.

A growing number of religious leaders — including the U.S. Conference of Bishops — has come out in favor of reducing mercury emissions because of their impact on the health of children.

“A new national standard to reduce mercury and toxic air pollution from power plants is an important step forward to protect the health of all people, especially unborn babies and young children, from harmful exposure to dangerous air pollutants,” said the U.S. bishops’ domestic policy chairman in response to the proposed rules on mercury emissions.

In stark contrast to mainstream religious leaders, the fringe Cornwall Alliance has called the environmental movement “one of the greatest threats to society and the church today.”

Perhaps they are referring to the leader of the Catholic Church, Pope Benedict XVI? Dubbed the “Green Pope,” Pope Benedict has been a vocal supporter of strong environmental standards, renewable energy, and action on climate change in order to protect “the whole of creation.”

Watch the video ad campaign from the Evangelical Environment Network below:

by Alexis Karolides, cross-posted from the Rocky Mountain Institute

Which commercial building sector uses more energy per square foot than all but one other and is more than twice as energy-intensive as office buildings and schools? Grocery stores, second only to food service.

With utility costs rising—and already a significant percentage of the famously thin profit margin on food sales—stores must get serious about energy efficiency, particularly if they care to keep prices low for value-conscious customers.

Now, imagine slashing the energy use of a new or existing store in half, while achieving a better customer environment. How could this be done? Rocky Mountain Institute’s whole-system approach, reaping multiple benefits from single design moves, works particularly well when a retailer is willing to push the boundaries.

In 2010, building on years of experience with several other grocery chains and related industries, RMI worked closely with Texas grocery retailer H-E-B to inform a dramatically efficient design being used for a store that is to begin construction this year in a brownfield redevelopment area at Austin’s former airport site. The plan is expected to reap 50 percent energy savings. RMI studied H-E-B’s efficiency opportunity areas in energy, water and waste, and then held a workshop to innovate breakthrough strategies for designing efficient new stores and retrofitting existing ones.

Illustration by Lisa Haney

RMI often uses innovation workshops, engaging many disciplines within a client’s organization (including design, engineering, and operations staff) as well as an RMI team of experts in various disciplines, to turn complex challenges into integrative design solutions. The goal is not just to solve the problem, but to transform how the client designs and runs all its facilities, and to help shift the underlying strategy and culture, so the change is durable and creates competitive pressure for emulation.

Bill Reynolds, architect and group vice president-facility alliance for H-E-B, said that not only is the new Austin store on track to meet its 50 percent energy savings goal, but the RMI charrette was a catalyst for H-E-B to incorporate progressively better efficiency strategies in other new and existing stores.

“The tipping point was the [RMI] charrette,” Reynolds said, using the architectural term for an intensive, roundtable, transdisciplinary design workshop with ambitious deliverables.

To understand the energy savings H-E-B will achieve, let’s look at where grocery store operations use energy. Of all utility costs (including truck fuel, landfill fees, water, gas, and electricity), store electricity is by far the biggest expense. Breaking this down into end uses of electricity, the biggest chunk goes to refrigeration, then refrigerated-case anti-sweat devices and other equipment, heating ventilation and air conditioning, and then lighting.

How is H-E-B’s new store design, located at Austin’s Robert Mueller Airport Redevelopment site, going to use 50 percent less energy than this capable firm’s standard design of new stores, as well as efficient water and waste use? These integrative design moves are key:

• An airlock store design with vestibules (so trucks can deliver goods without making a big hole in the back of the building) and enhanced insulation.
• A lighting scheme that allows daylight to provide all of the ambient light when possible, eliminates glare, highlights product, enhances merchandising, and dims night lighting to comfortable levels inside while providing adequate lighting outside with LEDs (this can be enhanced by light-colored pavement that also reflects heat during the day).
• A highly efficient refrigeration and air conditioning system, with chillers and cooling towers, combined with a radiant slab that can heat or cool.
• Landscape and drainage strategies that eliminate irrigation and provide unique Texas character to the site.
• Indoor water use efficiency, including high-performance domestic fixtures, and such kitchen improvements as using portable pressure washers and eliminating seafood display ice.
• Reclaiming condensate for cooling towers.
• Aggressively composting and recycling remaining waste streams. Already H-E-B recovers over 50 percent of its waste, but the company’s sights are now set much higher.

Not only do these efficiency gains save energy and resources, they can also improve the indoor environment. Natural daylight and better electric lighting design improve the shopping experience—and studies show that shoppers spend more time in well-daylit stores. Well-designed nighttime lighting can reduce glare and eyestrain, while nontoxic finishes (eliminating vinyl floors and off-gassing paints for instance) improve indoor air quality.

The store is being touted as the “most sustainable” store H-E-B has ever built.

“RMI was the catalyst that spurred the green design,” said Charlie Wernette, H-E-B’s director of engineering. Next, H-E-B will implement these whole-system efficiency strategies across its existing store portfolio.

Given the grocery sector’s energy intensity, the implications can be even greater, with these steps serving as a model for other retailers. H-E-B’s execution of RMI’s Reinventing Fire principles are a critical example of making the ideas real. Buildings use 42 percent of the nation’s energy, costing more than Medicare—and most of that is wasted through inefficiency. Reinventing Fire shows that scalable efficiency solutions can transform our buildings from energy hogs to more comfortable, livable, healthful, and workable spaces that help usher in an efficient, secure, renewable energy era.

These steps are how RMI design recommendations would reduce typical store electricity demand:

• High-efficiency refrigeration systems—saves up to 18 percent of the store’s total electricity use.
• Skylights, and high-efficiency interior and exterior lighting—saves 12 percent.
• HVAC efficiency: chilled water, efficient fans and ductwork, desiccant dehumidifier—saves 10 percent.
• Radiant heating and cooling—saves 6 percent.
• Superinsulated walls, tight construction—saves 3 percent.
• Greatly reduced infiltration at entrances (vestibules)—saves 3 percent.

Potential water savings and waste recovery, though smaller in total expenditures, are even more dramatic on a percentage basis. Water efficiency could reduce consumption by 80 percent:

• Xeriscaping—saves 28 percent.
• Low-flow restroom fixtures and sink aerators—save 23 percent.
• Rooftop rainwater capture and use—saves 11 percent.
• Kitchen improvements such as portable pressure washers and pre-rinse spray valves—save 5 percent.
• Reclaiming HVAC condensate—saves 3 percent.

– Alexis Karolides is a principal architect working in the Electricity practice area at the Rocky Mountain Institute. This piece was originally published at the RMI website.

by Melanie Hart

The U.S. Department of Commerce next month is expected to issue a critical ruling on one of the biggest trade cases to hit the U.S.-China energy relationship in recent years. Seven U.S. solar companies claim that the Chinese government unfairly subsidizes Chinese solar panel manufacturers to enable those companies to sell their products at below-market prices and drive U.S. competitors out of the market. The seven companies support subsidy and dumping petitions filed by SolarWorld Industries America Inc. against Chinese solar imports in October that ask the Commerce Department to levy triple-digit tariffs on solar cells and modules imported from China.

This case highlights a major challenge facing U.S.-China clean energy relationships more broadly: how to handle the Chinese government’s deployment of massive resources toward developing renewable energy technologies, many of which are designed for export. Indeed, this is an issue that bedevils U.S.-China trade relations not just in clean energy, but also in other industrial and services sectors, which means that how this complaint by U.S. solar manufacturers plays out may well have much broader implications.

One of the biggest challenges facing renewable energy in the United States is that traditional fossil fuels are cheaper here than they are in almost any other developed country. This is primarily due to the large supply of fossil fuels such as coal and natural gas in our nation, as well as a long history of federal government subsidies for developing those energy sources. The United States has also failed to put a carbon price on fossil fuels, so U.S. fossil-fuel prices do not include the environmental and public-health damage from greenhouse-gas pollution. Relatively low fossil-fuel prices make it particularly hard for renewable energy to compete against conventional energy in the U.S. market.

Nonetheless, over the past decade U.S. companies have gotten much better at manufacturing, deploying, and operating renewable energy technologies, and as a result prices are coming down rapidly. As prices decrease renewable energy gains market share and speeds our transition toward a more sustainable energy economy.

The problem is China is particularly good at making things cheaply. At the lower end of the value chain, that is primarily due to the country’s low labor costs and massive supply chains. Also advantageous are China’s lax labor, safety, health, and environmental standards. At the higher end, that is often because the Chinese government provides generous subsidies and other forms of support for high-technology research, development, and commercialization. Low-cost Chinese manufacturing plays a large role in driving prices down for a wide range of products, including renewable energy technologies. Chinese manufacturing also plays a large role in pricing some U.S. manufacturers out of business, with many of those manufacturers claiming that the “China price” is driven by Chinese government intervention rather than natural market forces. If the Chinese government is intervening in a way that breaks trade rules then that type of rule breaking should be remedied in some way.

Determining whether China is playing by the rules requires taking a close look at their renewable energy policies—not only at the national level but also at the provincial and local levels.

Those policies are often difficult to parse because China’s economic system is not like that of the United States. It is a nonmarket economy with a top-down, command-and-control energy planning process that is often nontransparent with even more opaque interactions between the central government in Beijing and the provincial and local governments when these policies are implemented. All this makes it very difficult to figure out whether the country is abiding by international trade rules.

The United States has much to gain from cooperating with China on clean energy. As the world’s fastest- and largest-growing energy market, China is an ideal testing ground for scaling up and commercializing clean energy technologies. Combining our two energy markets increases economies of scale to bring down costs for consumers in both countries.

But the China we are dealing with today is not the same China we were dealing with 10 years ago. We are accustomed to China focusing on low-end manufacturing and using their cost advantages to make U.S.-designed consumer electronics and other low-end products cheaper and faster. Now China is moving up the value chain to higher-end technology. They are aiming to compete with us in highly engineered, capital-intensive industries such as solar photovoltaic, or PV, systems, where the United States has long enjoyed a comparative advantage.

In short, instead of serving as the low-cost workshop for U.S. companies, China is aiming to capture the parts of the product and services value chain that we are used to dominating.

The United States should not shrink from that challenge. Our firms are generating the best high-end technologies in the world, and we have a skilled workforce that is hard to beat. A rising China is not a reason for us to close off our clean energy markets and forfeit the benefits we can get from bilateral trade and other forms of collaboration. This relationship is only a win-win, however, if we compete with the Chinese on a level play- ing field, which is proving to be the biggest challenge.

Ensuring that the Chinese play by the rules will require more policy coordination on these types of bilateral trade disputes here in the United States. The Obama administration’s new trade enforcement initiative is a critical step in that direction. But it is only a first step. This issue brief will give an overview of the current solar PV trade dispute to highlight the larger challenges we face.

China’s energy economy is a massive command-and-control juggernaut, and our energy companies are often forced to choose between letting a variety of trade problems slide versus squaring off against that system on their own. Ensuring the U.S. government recognizes and addresses that imbalance at the federal level vis-à-vis China will be critical for keeping the U.S.-China clean energy partnership moving in a positive direction.

The United States will also have to do a better job coordinating trade enforcement at the international level because multilateral pressure is increasingly needed to make the Chinese government adhere to global norms and rules. Since China’s trade policies are also harming clean energy exporters in many other countries—particularly in Europe— the United States should have plenty of partners to work with.

The global solar PV market and China’s manufacturing rise

The current trade case focuses on crystalline silicon photovoltaic cells and modules, which convert sunlight into electrical energy. The demand for these PV solar cells and modules is driven by the demand for solar panel installations. Solar technology has expanded rapidly in recent years due to the increasing interest in low-emissions technology and the declining costs of solar cells. Since it is a newer technology, however, it is still generally more expensive to deploy than natural gas or coal, at least in the short term. Most countries already have extensive infrastructure to support coal, but solar infrastructure is still underdeveloped so solar prices have to include infrastructure development and capital costs. Due to those additional costs, the price differential for solar panels over the past decade has been driven primarily by government subsidies to boost deployment of solar energy.

In Europe many of those subsidies are in the form of a “feed-in tariff,” which requires utilities to purchase solar energy at prices that are higher than what the utility is paying for conventional fossil energy. Germany launched the first major nationwide solar feed-in tariff in 2004, and other European countries followed suit. In contrast the United States has tended to pass renewable electricity standards, which set an overall goal for utilities in a certain state or city to produce a certain amount of electricity using renewable sources. Twenty-nine U.S. states now have these policies.

Before 2004 global solar panel demand was relatively low, and there were no strong incentives to produce solar equipment for export. Starting in 2004, however, global demand increased exponentially, particularly in Europe, which caught the attention of equipment manufacturers worldwide. Chinese firms in particular saw a new export opportunity and started manufacturing solar panels for Europe and other overseas markets.

Chinese manufacturers entered the global market in 2004. By 2007 China had become the world’s largest solar cell production country. By 2008 they were the largest solar panel producer in the world. By 2010 they controlled almost half of the global market, up from just 15 percent in 2006. (see Figure 1)

As they have in many other sectors, Chinese enterprises took over the global solar manufacturing market by competing on price.

U.S. trade allegations and China’s response

The “China price” is the focus of the current trade case. The solar PV petition claims that the Chinese government unfairly subsidizes Chinese solar panel manufacturers by providing land, electricity, material inputs, and financing at below-market rates, as well as direct financial support and other preferential policies. The petition says those subsidies are designed to artificially suppress Chinese manufacturing costs and drive foreign competitors out of the market.

China certainly has a host of policies designed to spur indigenous innovation across a wide range of clean energy technologies including solar.[1] At the national level Chinese leaders define clean energy as their “historic opportunity” to finally gain a dominant market position in a critical technology sector. Green energy is one of seven strategic industries that Beijing strongly supports with state financial resources and other preferential policies such as tax breaks.

Since Beijing prioritizes clean energy development, provincial and local governments have a strong incentive to develop their own support policies. Some local officials simply implement national directives such as the Ministry of Finance directives calling on local financial bureaus to raise and distribute green energy development funds. Other local governments see clean energy as a prime growth opportunity and go well beyond national policy requirements in an attempt to turn their provinces into clean energy manufacturing hubs.

Case in point: Jiangsu Province has particularly aggressive solar development policies. Jiangsu’s 2009 three-year solar PV development plan set ambitious targets for solar-module production and called on local officials to cultivate name-brand products and internationally competitive enterprises by providing state assistance for product development and supply-chain verticalization.[2] The result is a province responsible for two-thirds of China’s total solar PV equipment production in 2010—more than 90 percent of those products were exported to overseas markets.[3]

Subsidy programs are not necessarily anti-competitive. Green energy is an emerging technology sector, and policy assistance is often required to help new technologies compete with existing market alternatives—especially when the existing alternatives such as coal already receive explicit and implicit public subsidies. We have similar green energy programs here in the United States.

What the U.S. trade petition claims, however, is that China’s subsidies are designed not just to support infant industries but also to undercut competitors so that China’s domes- tic enterprises can take over a larger share of the global market. The solar PV trade petition claims that the subsidies provided to Chinese manufacturers are “countervailable,” which means they artificially suppress Chinese manufacturing costs to enable Chinese companies to sell their products at non-market prices that U.S. companies cannot match. If the Chinese government is indeed using subsidies for that purpose then it is a market- distorting tactic that violates a host of trade rules—not only World Trade Organization subsidy rules but also domestic trade legislation here in the United States.

The solar petitions also include allegations that China is “dumping” in the U.S. market. “Dumping” is the practice of selling goods in the United States at less than home market price or cost of production. Dumping is also prohibited by the WTO agreements and by U.S. law, if it results in material injury to a competing U.S. industry.

The Chinese dispute those allegations. When interviewed for this issue brief in Beijing recently, Chinese analysts all claimed China’s low solar PV prices are due to a combination of China’s comparative advantages in manufacturing and, particularly over the past few years, excess capacity and market-induced inventory clearing. According to the Chinese manufacturers, soaring demand growth between 2008 and 2010 (see Figure 2 below) made solar manufacturing look like a golden opportunity, and as a result hundreds of private Chinese enterprises dove into the sector throughout 2010 and early 2011.

Even Chinese leather companies dove into the market by opening up solar manufacturing subsidiaries.[4] Chinese energy analysts call these manufacturers “bantu chujia,” which roughly translates to “halfway monk,” or someone who takes up something new with- out committing to it completely and without acquiring the necessary expertise.[5]

Then the pace of global market growth slowed significantly—from almost 140 percent growth in 2010 to around 17 percent in 2011. Chinese firms claim the multitude of new entrants flooded the market with excess capacity, and Chinese manufacturers were forced to price solar modules below market value to clear inventories, thus triggering a steep price drop that damaged profits not only in the United States but also in China.

Unfortunately, parsing out how much of the China price is due to market forces versus anti-competitive government subsidies is extremely difficult. The reason: China’s subsidy programs are often nontransparent, particularly at the provincial and local levels. It is very common, for example, for local officials to provide land, electricity, and other resources at below-market rates to attract economic development (and the associated tax revenue) even when the central government does not support those tactics.

Loan subsidization is also common. China’s tier-one manufacturers claim they are paying market interest rates for their massive and controversial China Development Bank loan guarantees, but some local governments reportedly reimburse those companies for most of their interest payments, thus reducing the effective interest rate to nearly zero (or, depending on inflation, possibly even below zero). In many cases local governments provide these supportive measures on a case-by-case basis instead of via clear development policies that apply to all firms across the board. These measures can make China’s local level clean energy support programs very difficult to measure.

China’s national leaders often struggle among themselves to get an accurate picture of what their local level officials are doing. Indeed, national level officials complain that local level economic growth statistics are often fabricated. When even Beijing has a hard time tracking local activity, it is almost impossible for foreign observers to do so in a systematic fashion, and that can create confusion here in the United States.

The bigger question

How to deal with China’s ambitious green technology development policies

The Department of Commerce is investigating this solar PV case and will soon announce whether they have found sufficient evidence to levy trade remedies. Commerce investigators are tracing the financial and policy support the Chinese government provides to Chinese solar manufacturers, and the U.S. International Trade Commission will try to determine to what degree that support decreases Chinese manufacturing prices and damages U.S. manufacturers.

The Department of Commerce is expected to issue a preliminary subsidy determination in early March and a preliminary anti-dumping determination several weeks later. If the ongoing investigations find Chinese trade violations, then that preliminary announcement will likely include a plan to levy tariffs against Chinese imports. It is possible that once the Chinese government realizes tariffs are imminent they will try to negotiate a settlement—they may offer to halt the contested subsidies or take other action to get SolarWorld to drop the case.

That is how China responded to the September 2010 WTO complaint by the United Steelworkers about Chinese government subsidies to wind equipment manufacturers. Some U.S. solar companies—particularly the companies that already have purchasing agreements with Chinese solar manufacturers—are hoping that this case will end in a negotiated settlement instead of import tariffs.

No matter how this particular dispute ends, however, there is a much bigger underlying issue here that we must not overlook. Over the past three decades, China’s role in the global economy has primarily been as a low-value-added manufacturer. Now the Chinese want to move up the value chain to increase profit margins and play a more dominant role in higher-end global technology markets. Specifically, they want to supply the United States with higher-value-added technologies, particularly clean energy technologies. And the Chinese government is dedicating a huge amount of state resources to help their enterprises achieve that goal.

China’s technology ambitions can be a good thing for the United States, particularly in renewable energy. Our two countries are the world’s biggest energy consumers, and open competition between our massive energy markets can fuel innovation, bring clean energy prices down, and speed both of our country’s transitions toward a more sustainable energy economy.

But here’s the rub. China is a non-market economy with a less-than-transparent energy planning process. This makes it very hard to identify when the Chinese cross the line from market competition (which we want to encourage) to anti-competitive behavior (which we should fight back against).

We already know that the Chinese government sometimes tries to skirt trade rules. When China joined the World Trade Organization in 2001, the government pledged to submit required reports on specific national and regional subsidy programs every two years, but it has not abided by that pledge. Over the past 10 years it has only issued two reports. The first, in April 2006, covered some subsidies from 2001 to 2004, and that report was incomplete because it only included national subsidies not sub-national programs. The Chinese government submitted a second notification in October 2011, but again did not include sub-national programs—even though China has clear obligations to do so.

Because China has not submitted these reports as promised, it makes it more difficult for U.S. companies to examine Chinese policy programs and determine whether they are rule-abiding or anti-competitive. Furthermore, since government transparency is a major problem in China across the board, even when U.S. companies are willing to spend their own resources to collect that data, it is extremely hard to do. This gives China a lot of maneuvering room to enact programs that erode U.S. competitiveness.

Clearly the Chinese government needs to do more to comply with these trade rules, and the U.S. government—and the global community as a whole—needs to do more to enforce that compliance.

We have two dispute-resolution systems specifically designed to handle company complaints about apparently anti-competitive trade practices—the anti-dumping and countervailing duty mechanisms here in the United States and the WTO process at the international level. But filing a formal complaint is costly in both cases. Some U.S. manufacturers may not be willing to invest in expensive legal fees, particularly if—due to the transparency issue—they themselves are not certain whether the China price is market-based or government-induced.

For those companies who are actually doing business directly with China, retaliation is another concern. Officials at U.S. Office of the Trade Representative, or USTR, frequently complain that although U.S. companies share information about Chinese rule breaking privately, most are unwilling to file formal complaints because they suspect the Chinese will retaliate with punitive market access reductions. In the current dispute SolarWorld Industries America Inc., the domestic unit of the German company SolarWorld AG, was the only one of the seven solar companies willing to state its support for the case publicly. The other six companies remained anonymous due to fears that China would retaliate.

Retaliation can also spread beyond the actual petitioners to harm the U.S. economy more broadly. In the current case, for example, trade remedies that spark Chinese retaliation could also harm U.S. companies selling clean technology inputs to China. Chinese manufacturers have already targeted upstream solar suppliers by calling on their own Commerce Ministry to initiate an investigation into U.S. subsidies and dumping for polysilicon exports to China.

China could retaliate by blocking market access as well. In private conversations many U.S.-based polysilicon and solar manufacturing equipment suppliers say that in the current trade case, retaliatory market access limitations are a major concern. Many U.S. solar industry suppliers fear that if the Commerce Department levies tariffs against Chinese manufacturers, then those manufacturers will immediately start buy- ing upstream products from other countries instead of from the United States. Some Chinese companies are apparently already inserting escape clauses into their purchasing contracts to pave the way for that switch.

If U.S. companies do face retaliatory measures from the Chinese, that would be a trade violation, and they can certainly file another round of formal complaints. But retaliation can be difficult to prove because it can be difficult to prove why a Chinese customer switched from a U.S. supplier to a European one. What’s more, successive rounds of trade disputes over switching customers would be a massive economic drain on U.S. companies.

The flip side of retaliation is coercion—in the form of required technology transfer to enter the Chinese marketplace and access the country’s cheap labor, its booming domestic market, and the many government subsidy programs that are available to companies. Technology transfer is frequently part of global trade deals, but the Chinese government often carries it too far by blatantly pressuring foreign companies to share proprietary engineering information for the types of high-end technology products Chinese firms are struggling to develop themselves. This can lead to intellectual property theft, which again harms U.S. companies and erodes U.S. competitiveness.

To move forward the U.S. government will have to do a better job at dealing with these threats to U.S. companies operating in China or exporting there. We need to understand and then act upon the reality that the Chinese economy does not operate like ours. The U.S. economy is a decentralized, market-based system without top-down economic planning. Chinese leaders, in contrast, run their economy with top-down development plans that put a lot of government support behind critical industries such as clean energy. Those top-down directives then metastasize at the provincial and local levels into myriad programs and policies that are all but impossible to discern.

That difference can sometimes mean that when problems arise, individual U.S. companies and industries are forced to choose between letting apparent rule breaking slide versus squaring off against China’s massive administrative state at the national, provincial, and local level. Both options erode U.S. company profits, but in an era where China is a global economic powerhouse, many U.S. companies decide that the first strategy—tacit accommodation—is likely to result in the least damage.

Over time tacit accommodation can erode U.S. competitiveness. To avoid that we need to find ways to lower the costs of monitoring this bilateral relationship to make sure Chinese enterprises and officials play by the rules and compete with U.S. companies on an even playing field. Doing so will require a shift from the current strategy that places our primary enforcement efforts on the backs of individual U.S. companies, some of which—like many renewable energy companies—are in emerging industries that lack the political leverage to do battle with the Chinese.

The best way to address this problem is to improve trade policy coordination at home. Beijing is very adept at “divide-and-conquer” tactics. In the foreign policy realm, Chinese leaders are well aware that if they can maneuver other countries to deal with them bilaterally, China will have more negotiating leverage than it would against a united multilateral group. China wants to use the same tactics against U.S. companies— maneuvering them to square off one by one against the massive Chinese state.

The U.S. government needs to do a better job making sure that this approach is not effective. In 2010 the USTR took a critical step in that direction with a year-long program to monitor Chinese government support for Chinese companies competing against the United States in clean energy. USTR also surveyed China’s subsidy programs across the board, uncovering around 200 different programs that violated WTO rules.

USTR notified the Chinese government of these alleged violations and also submitted a list of Chinese subsidies to the WTO. That step does not automatically trigger a WTO investigation, but it does require China to provide more information about the USTR- contested subsidy programs. It also makes the USTR findings available to other countries, which can help increase multilateral pressure against this type of rule breaking. If the Chinese government fails to respond to USTR notification by providing detailed information on their subsidy programs, then USTR may escalate by submitting a complaint to the WTO Subsidies Committee.

These information-gathering and notification procedures call international and domestic political attention to Chinese rule breaking. They also lay the groundwork for the United States to file additional trade complaints and levy additional tariffs against Chinese imports, which should give the Chinese government stronger incentives to comply with the rules.

It is important to note that the USTR subsidy survey did not require specific U.S. companies to file formal petitions and act as intermediaries, a role that can often turn them into sacrificial lambs. Instead the Obama administration kicked off this investigation proactively when it launched the National Export Initiative in early 2010. That initiative ordered USTR and the Commerce Department to pay closer attention to foreign government subsidies that erode U.S. competitiveness, particularly vis-a-vis Chinese manufacturers.

Then there is the new Trade Enforcement Unit announced by President Barack Obama in his recent State of the Union speech. The president said the new unit will bring together key U.S. trade officials from the departments of the Treasury, Commerce, Energy, and USTR (under Michael Froman, deputy national security adviser for International Economic Affairs) to better coordinate U.S. trade actions against China. That unit will reportedly also consider asking the Commerce Department to initiate countervailing duty and anti-dumping cases itself on behalf of U.S. industries rather than waiting for companies to file individual petitions.

In theory this approach should go a long way toward balancing the interests of U.S. companies against Chinese government involvement in these disputes, thereby eliminating the burden on U.S. companies for initiating these actions and reducing the possibility of retaliation by the Chinese against individual U.S. companies. If this unit also directs more federal government time and resources toward monitoring Chinese government behavior—flagging apparent trade violations and raising formal complaints with the WTO—then this approach may also enable the United States to better enforce Chinese compliance with basic WTO rules.

We also need to make sure we are investing in the foundations of innovation here in the United States to give our companies the policy environment they need to remain competitive against a rising China. It is inevitable that there will be some global economic reshuffling as China moves up the economic ladder, but we can gain a lot of benefits from that process if handled well. China’s growing domestic market, for example, can be a major new source of consumers for U.S. products, but we have to make sure that we do not cede critical American jobs to the Chinese—in solar manufacturing as in other U.S. industries—just because we were lax on the policy side.

Conclusion

China’s focus on renewable energy and high technology is here to stay. That can be a great thing for the United States. Chinese competition can give U.S. companies stronger incentives for innovation and can help bring down renewable energy prices to better compete with traditional fossil fuels. Combining our two markets can also increase demand for U.S. clean energy products and provide exactly the types of higher-paying jobs that we need to restore our economy to sustainable, broad-based economic growth.

This relationship is only a win-win, however, if our companies have a level playing field, and more work is needed to achieve that goal. The Obama administration’s new trade enforcement initiative is a great start in the right direction. Other steps may be identified once the new Trade Enforcement Unit is up and running—steps both bilateral and international in scope that can help the United States and China better manage this critical bilateral trade relationship for the benefit of the global economy.

Melanie Hart is a Policy Analyst on China Energy and Climate Policy at the Center for American Progress. This piece was originally published at the Center for American Progress website.

Endnotes

[1]. “Guo jia zhong chang qi ke xue he ji shu fa zhan gui hua gang yao (2006-2020)” (Guidelines for the National Medium- and Long- Term Science and Technology Development Program, 2006-2020), PRC State Council, February 2006, available at http://www.gov. cn/jrzg/2006-02/09/content_183787.htm.

[2]. “Jiangsu sheng guang fu fa dian tui jin yi jian” (Jiangsu Province Opinions for Advancing Solar PV Generation), Jiangsu Sheng Fagaiwei (Jiangsu Provincial Development and Reform Commission), June 30, 2009, available at http://www.carcu.org/html/ zhengcefagui/20090702/2974.html.

[3]. “Guang fu chan ye zai wai shou zhi yu ren qi neng rang han dong leng le yang guang?” (Solar PV Industry Suffering Restraints Abroad: How to Shine Light on the Cold Winter?), Zhongguo Huanjing Bao (China Environment Report), December 31, 2011, avail- able at http://ditan360.com/NengYuan/Info-98515.html.

[4]. Xu Meng, “Guo nei guang fu chan ye cheng xian jing pen ren ren zheng gan tai yang neng sheng yan” (“Domestic Solar PV Industry Becomes a Gold Rush: Everyone Rushing to Join Solar Energy Feast”), Jiefang Ribao (Liberation Daily), February 23, 2011, available at http://www.chinanews.com/ny/2011/02-23/2861583.shtml.

[5]. Ibid.

Ecotricity calls itself the “world’s first green electricity company” devoted exclusively to procuring and selling renewable electrons. The company is also developing projects to support biogas and displace the use of natural gas.

I love the ad. But I’m a bit confused as to how this will make people want to move away from coal and nuclear?  I have to say, those tea-drinking cooling towers are kind of cute….

But his Monday NYT article on the Keystone XL tar sands pipeline reveals the myopia on climate that is characteristic of most business and economics reporters.  He simply asserts the tar sands “is hardly the environmental disaster many suppose,” while providing no evidence.

And Nocera asserts, “Environmental concerns notwithstanding, America will be using oil — and lots of it — for the foreseeable future,” which is true in a hand-waving sense:  If we ignore environmental concerns, we’re going to keep doing what we’re doing.  Whether humanity can withstand such self-destructive activity, however, is the real issue.

Ultimately Nocera writes:

As it turns out, the environmental movement doesn’t just want to shut down Keystone.  Its real goal, as I discovered when I spoke recently to Michael Brune, the executive director of the Sierra Club, is much bigger.  “The effort to stop Keystone is part of a broader effort to stop the expansion of the tar sands,” Brune said.  “It is based on choking off the ability to find markets for tar sands oil.”

This is a ludicrous goal.

In fact, it isn’t a ludicrous goal.  As the nation’s top climatologist, NASA’s James Hansen said back in June,  “Exploitation of tar sands would make it implausible to stabilize climate and avoid disastrous global climate impacts.”

If Nocera wants to take on Brune’s position, then he is going to have to actually discuss climate change, which he fails to do at all in this article.  So far, it seems as if Nocera’s views on global warming derive from reading the likes of the widely debunked physicist Freeman Dyson and attending Exxon-Mobil shareholder meetings, which causes him to dismissing knowledgeable people who express science-based views of as trying to “push Exxon Mobil toward their belief system — their global warming religion.”

That equation of science with religion puts him him the climate ignorati.

If Nocera wants to become informed on climate science, I’d suggest that he start talking to actual climate scientists, folks like Hansen (who is conveniently located in New York).  He might also call up Lonnie Thompson who can explain why climatologists are speaking out: “Virtually all of us are now convinced that global warming poses a clear and present danger to civilization.”

Nocera could also review the recent scientific literature, which  I have summarized here: “An Illustrated Guide to the Science of Global Warming Impacts: How We Know Inaction Is the Gravest Threat Humanity Faces.”

One final note.   What is particularly ironic about Nocera being suckered by the “Big Lie” of the climate deniers is that he described how the Big Lie works in a different instance with uncanny accuracy  in a column titled, “The Big Lie“:

So this is how the Big Lie works.

You begin with a hypothesis that has a certain surface plausibility. You find an ally whose background suggests that he’s an “expert”; out of thin air, he devises “data.” You write articles in sympathetic publications, repeating the data endlessly; in time, some of these publications make your cause their own. Like-minded congressmen pick up your mantra and invite you to testify at hearings.

You’re chosen for an investigative panel related to your topic. When other panel members, after inspecting your evidence, reject your thesis, you claim that they did so for ideological reasons. This, too, is repeated by your allies. Soon, the echo chamber you created drowns out dissenting views; even presidential candidates begin repeating the Big Lie.

Sound familiar?  Nocera was talking about a different lie:

Thus has Peter Wallison, a resident scholar at the American Enterprise Institute, and a former member of the Financial Crisis Inquiry Commission, almost single-handedly created the myth that Fannie Mae and Freddie Mac caused the financial crisis.

But he has nailed how the climate science deniers operate –  if you multiply  the whole thing by, say, 16 (see In Must-Read WSJ Letter, 3 Dozen Top Climate Scientists Slam Murdoch’s 16 Posers: “Dentists Practicing Cardiology”).

by Daniel J. Weiss and Zachary Rybarczyk

Yesterday’s House Subcommittee on Energy and Power meeting could more closely resemble a kangaroo court than real government oversight.

Here’s why. The subcommittee plans a hearing misleadingly titled “What EPA’s Utility MACT Rule Will Cost U.S. Consumers.” But the Republican majority is playing with words and the health of our children. Its witnesses from industry and their consulting firms suggest that the Republican majority has little interest in learning about the tens of billions of dollars of economic gains due to health benefits derived by the slashing millions of pounds of mercury, lead, arsenic, and other toxic air pollution from power plants that the rule would generate. And the subcommittee majority will pay little heed to the Environmental Protection Agency’s analysis that found the rules will only lead to modest electricity price increases, which are relatively small compared to the electricity price increases experienced over the past decade.

In addition, the majority will likely ignore the independent analysis and data that suggest that retrofitting power plants to cut toxic pollution will cost less than predicted by industry-funded studies. Instead, witnesses are likely to repeat findings from utility-and-coal-industry-financed reports that have already been debunked due to their flawed analysis.

Below we offer information on how the rules will affect U.S. ratepayers as well as the benefits that they will provide to all Americans.

Toxic air-pollution reductions yield jobs and billions of dollars in health benefits

To begin with, the final rules to reduce the mercury, lead, arsenic, and other toxic pollutants from coal-fired power plants will have huge public-health benefits. Slashing mercury and other contaminants will save 11,000 lives annually and prevent more than 100,000 asthma and heart attacks year. These health improvements will provide economic benefits of up to $90 billion every year. (see attached chart for state benefits from air toxics reductions)

The cleanup of toxic air pollution by utilities will also create jobs. These funds will go to install pollution-control equipment such as scrubbers. Mike Morris, the chief executive of American Electric Power, which generates two-thirds of its electricity from coal plants, noted that:

We have to hire plumbers, electricians, painters, folks who do that kind of work when you retrofit a plant. Jobs are created in the process—no question about that.

According to a University of Massachusetts study, such investments could create 325,000 direct jobs over five years in conjunction with the sulfur and nitrogen-oxide reductions under the Cross-State Air-Pollution rules. The latter rule will reduce smog, acid rain, and particle pollution that pollutes states downwind from the emitting power plants.

Dr. Josh Bivens, acting research and policy director at the Economic Policy Institute, also concluded that the air-toxics reduction rule would create jobs. He determined that “the final toxics rule is forecast to have a modest, positive net impact on overall employment.” Bivens estimated that the rules would create a net increase of 55,000 direct jobs by 2015.

Pollution reductions will have small impact on electricity rates

Companies that retrofit their coal-fired power plants to reduce mercury and other toxic pollutants will likely seek to increase their rates to reflect these new costs. But it’s important to note that such rate increases will actually correct a market failure. Currently, coal plants and their consumers are getting a free ride because the cost of electricity from these plants is artificially low—it does not reflect the health harms and other costs from their emissions. Their pollution exacts a tremendous economic toll from premature deaths, damage to children’s cognitive capacity, asthma attacks, and other serious ailments.

As mentioned above the estimated cost of this pollution is $90 billion annually, and it’s borne by children, seniors, and other vulnerable people who breathe mercury and other toxic air pollution. Requiring these polluting plants to slash their harmful emissions will require power companies to internalize the cost of this pollution, which will likely lead to some electricity price hikes.

Even so, these electricity price increases could be relatively small according to EPA’s Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards:

EPA’s analysis projects a near-term increase in the average retail electricity price of 3.1% in 2015 falling to 2% by 2020 under the final rule in the contiguous United States.

Even the most affected places of the southern plains, upper midwest, and eastern coal belt will only see a modest average rise in electricity rates by 2020 due to the air-toxics rule. (The table below is an excerpt from EPA’s Regulatory Impact Analysis. For the price impact of all contiguous regions go to p. 3-24. For a map of states in each EPA Price Model region go to p. 3-25.)

To put these price increases in perspective, the Energy Information Administration, or EIA, estimates that the average U.S. electricity cost increased by 14 percent between 2000 and 2010. (see attached spread sheet)

A major reason for projected electricity prices to grow much more slowly in the coming decade than they did in the previous decade is due to changing fuel prices. EIA’s Annual Energy Outlook 2012 Early Review notes:

Electricity prices tend to reflect trends in fuel prices—particularly natural gas prices—because in much of the country natural gas fired plants often set wholesale power prices.

Natural gas prices are at a historic low and are likely to remain that way for some time due to abundant domestic gas production.

Opponents overestimate costs

Despite these projections some states believe that they will face significant rate increases. For instance, a study prepared for the Indiana Utility Regulatory Commission predicts that new rules will increase electricity prices by 14 percent by 2020. This increase, however, is less than the 17 percent rate increase Indiana experienced from 2000-2010—an era with unfettered pollution. (see attached spreadsheet)

There are also legitimate questions over whether this study accurately predicts Indiana’s electricity rates in 2020. The estimate is based on the implementation of four power-plant-related rules: reduction of acid rain, smog, and particulate pollution that travels between states; cuts in mercury and air toxic pollution; changes to power plant water intake rules under the Clean Water Act; and disposal rules for toxic coal ash to prevent spills. EPA has not yet finalized the water and toxic ash rules used in the Indiana analysis, and the study’s authors acknowledge that “considerable uncertainty remains regarding the details of these rules.”

In addition, ratepayers are responsible to pay for the installation of pollution-reduction equipment at the power plants on an after-the-fact basis. As noted below, the initial cost estimates could be too high, and may not actually occur at all. The subsequent necessary rate increase would then be lower than the projected increase. Estimates such as the Indiana prediction thus may make for newspaper headlines, but ratepayers will only pay for expenses that are actually incurred, which may be far less.

Importantly, the prediction of electricity price increases also “does not address the benefits of reduced emissions” according to the Indiana analysis. Indiana will receive health benefits of at least $2.4 billion in 2016 due to saving 290 lives as well the reduction of other harms to human health. The nation will experience $90 billion in benefits annually, due in part to 11,000 fewer air-pollution-related deaths annually. (see attached chart for all state electricity rates and benefits from pollution reductions)

Some hearing witnesses may invoke studies by the National Economic Research Associates, or NERA, that purport to demonstrate that we cannot afford to protect children, seniors, and others from mercury and other toxic air pollutants. Dr. Laurie T. Johnson, chief economist at the Natural Resources Defense Council, or NRDC, conducted thorough reviews of NERA’s studies that were paid for by big utilities and coal companies. After a detailed review of one such NERA study, Johnson concluded:

The report makes assumptions that artificially inflate costs, and displays a level of (non)transparency so egregious it would never pass a peer-review process.

Against exaggerated cost estimates, NERA ignores sizable benefits of the regulations, including preventing tens of thousands of premature deaths, nonfatal heart attacks, hospitalizations and emergency room visits, almost a million cases of aggravated asthma and other respiratory ailments, and millions of days of missed work or school due to illness, per year.

Estimates of pollution-reduction costs are typically too high

Projections of future price increases due to pollution-reduction costs are very difficult to predict, and nearly always overestimate future costs. This is because such studies base their cost assumptions on current cleanup technologies and practices—they do not account for the vast potential for innovation once binding reductions and deadlines are set.

Consider that during the debate over the Clean Air Act of 1990 numerous cost studies predicted large electricity rate increases due to reductions in power plant pollution to attack acid rain. In 1989 the EPA calculated that the expected annual compliance cost of an acid rain program “was expected to be $2.7 billion to $4.0 billion.” Yet an EPA analysis a decade later determined that the actual cost of cutting acid rain pollution by 40 percent was substantially lower—“$1 to $2 billion per year, just one quarter of original EPA estimates.”

Energy efficiency can reduce pollution-reduction expenditures

In addition, ideas to cost-effectively reduce power plant pollution are already emerging, such as employment of energy efficiency. These can help bring down family’s and businesses’ electricity bills by reducing consumption.

The American Council for an Energy Efficient Economy just released an analysis that promotes this solution. The report, “Energy Efficiency: The Slip Switch to a New Track Toward Compliance with Federal Air Regulations,” determined that an analysis of the Mercury and Air Toxics Standard shows:

…actions to encourage energy efficiency significantly decrease demand and reliability concerns (EPA 2011a). The ‘Energy Efficiency’ case also showed that if energy-efficiency policies are implemented along with the MATS, electricity bills would fall because customers will be consuming less electricity.

The opportunities to use energy efficiency as a mechanism to comply with the suite of federal air regulations provides a chance for PUCs [Public Utility Commissions] to safeguard system reliability and curb compliance costs.

Conclusion

Be warned. At the hearing today, and in the coming months, highly polluting utilities, their political allies, and state public service and utility commissions will frequently claim that we cannot afford the new safeguards from mercury, lead, arsenic, and other toxic air pollution from coal-fired power plants. These claims will likely ignore the billions of dollars in health benefits, the creation of thousands of jobs, the projection that utility prices will increase less over the next decade than they did during the previous one, and the exaggerated claims of the cost of public health protection.

For our children, parents, and others’ sake, it is essential that government officials don’t buy these arguments.

Download recent state-specific electricity costs and benefits of the EPA rule (.xls)

Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy and Zachary Rybarczyk is an intern with the Energy team at American Progress. This piece was originally published at the Center for American Progress website.

Speaking about his plan to encourage domestic energy production, Romney got the solar company Solyndra and the Keystone tar sands pipeline mixed up:

“My course for America is to become energy secure and to open up that Solyndra – that, that pipeline, excuse me, the Keystone pipeline,” Romney told about 400 supporters at a stone importing company in northern Atlanta. “Not Solyndra. … The Keystone pipeline to get energy here in this country.”

The small stumble could have been a good opportunity for Romney to throw some support behind solar as an important domestic energy source. After all, the industry was the “fastest growing in America” for two years in a row, supports more than 100,000 direct and indirect jobs in all 50 states, and accounted for a $1.9 billion trade surplus in 2010.

Instead, Romney quickly fell back to his talking points and called federal loan guarantees an example of “crony capitalism.”

The Solyndra slip up is not the first for a Republican presidential candidate. Last December, Texas Governor and former candidate Rick Perry thought Solyndra (which he called “Solynda”) was a country that America gave money to.

A new study confirms we are on track for significant sea level rise this century

Global warming: CU-led study pinpoints Earth’s ice loss

Earth’s glaciers and ice caps outside of the regions of Greenland and Antarctica are shedding about 150 billion tons of ice annually, according to a new study led by the University of Colorado Boulder.

The total mass ice loss from Greenland, Antarctica and all Earth’s glaciers and ice caps between 2003 to 2010 was 1,000 cubic miles, about eight times the water volume of Lake Erie.

“The total amount of ice lost to Earth’s oceans from 2003 to 2010 would cover the entire United States in about 1 and one-half feet of water,” said CU-Boulder physics Professor John Wahr, who helped lead the study….

The measurements are important because the melting of the world’s glaciers and ice caps, along with Greenland and Antarctica, pose the greatest threat to sea level increases in the future, Wahr said.

The researchers used satellite measurements from the Gravity Recovery and Climate Experiment (GRACE) to calculate that the world’s glaciers and ice caps lost about 148 billion tons, or about 39 cubic miles of ice annually from 2003 to 2010. The total does not count the mass from individual glacier and ice caps on the fringes of the Greenland and Antarctic ice sheets, which could add up to an additional 80 billion tons.

“This is the first time anyone has looked at all of the mass loss from all of Earth’s glaciers and ice caps with GRACE,” said Wahr. “The Earth is losing an incredible amount of ice to the oceans annually, and these new results will help us answer important questions in terms of both sea rise and how the planet’s cold regions are responding to global change.”

… According to the GRACE data, total sea level rise from all land-based ice on Earth including Greenland and Antarctica was roughly 1.5 millimeters per year annually or about 12 millimeters, or one-half inch, from 2003 to 2010, said Wahr. The sea rise amount does include the expansion of water due to warming, which is the second key sea-rise component and is roughly equal to melt totals, he said.

JR:  I checked with JPL’s Eric Rignot, who called the study “a solid confirmation” of his 2011 paper, which I wrote about here:  “JPL bombshell: Polar ice sheet mass loss is speeding up, on pace for 1 foot sea level rise by 2050.”

Bank of England Says to Evaluate Fossil-Fuel Investment Risk

The Bank of England will evaluate whether the U.K.’s exposure to investments in greenhouse gas- emitting industries poses a risk to financial stability, Governor Mervyn King said.

Responding to a Jan. 19 letter from Climate Change Capital Ltd. and more than 20 other investors, academics and campaign groups urging a probe, King said that while there is a “question” about whether any danger exists, he’ll try to investigate investments in polluting industries further.

“There is clearly a scope for further evaluation of these issues,” King wrote in his Feb. 1 reply, posted on the Climate Change Capital website and confirmed by the bank. “We will endeavor to include this in the list of topics we regularly discuss with market participants to assess whether or not this is a risk of which they are aware and the extent to which they are taking it into account in their investment decisions.”

Offshore renewable energy planning system to be streamlined

The planning system for offshore renewable energy projects in Scottish waters is to be streamlined.

The move was welcomed by renewable energy firms and environmental groups.

They said the new approach would reduce delay while taking account of possible threats to wildlife.

First Minister Alex Salmond said the changes would make the planning, development and deployment of offshore wind, wave and tidal generation more effective and efficient.

He said: “Scotland now has a world lead in offshore wind and we want to make sure the planning process doesn’t allow other countries to catch us, and make sure that the tens of thousands of jobs which are going to come to Scotland from this industry are not unnecessarily delayed by the planning process.”

Natural-gas operations could release far more methane into the atmosphere than previously thought. [Source: Nature]

How much methane leaks during the entire lifecycle of unconventional gas has emerged as a key question in the fracking debate.  Natural gas is mostly methane (CH4).  And methane is a far more potent greenhouse gas than (CO2), which is released when any hydrocarbon, like natural gas, is burned.

Even without a high-leakage rate for shale gas, we know that “Absent a Serious Price for Global Warming Pollution, Natural Gas Is A Bridge To Nowhere.”

But the leakage rate does matter.  A major 2011 study by Tom Wigley of the Center for Atmospheric Research (NCAR) concluded:

The most important result, however, in accord with the above authors, is that, unless leakage rates for new methane can be kept below 2%, substituting gas for coal is not an effective means for reducing the magnitude of future climate change.

The industry has tended kept most of the data secret while downplaying the leakage issue.  Yet I know of no independent analysis that finds a rate below 2%, including one by the National Energy Technology Laboratory, the DOE’s premier fossil fuel lab.

Now, as the journal Nature reports, we finally have some actual air sampling measurements, and they appear to confirm the higher estimates put forward by Cornell professor Robert Howarth:

When US government scientists began sampling the air from a tower north of Denver, Colorado, they expected urban smog — but not strong whiffs of what looked like natural gas. They eventually linked the mysterious pollution to a nearby natural-gas field, and their investigation has now produced the first hard evidence that the cleanest-burning fossil fuel might not be much better than coal when it comes to climate change.

Led by researchers at the National Oceanic and Atmospheric Administration (NOAA) and the University of Colorado, Boulder, the study estimates that natural-gas producers in an area known as the Denver-Julesburg Basin are losing about 4% of their gas to the atmosphere — not including additional losses in the pipeline and distribution system. This is more than double the official inventory, but roughly in line with estimates made in 2011 that have been challenged by industry. And because methane is some 25 times more efficient than carbon dioxide at trapping heat in the atmosphere, releases of that magnitude could effectively offset the environmental edge that natural gas is said to enjoy over other fossil fuels.

Methane is 25 times  more efficient than CO2 trapping heat over 100 year — but it is 100 times more efficient than CO2 trapping heat over two decades.

“If we want natural gas to be the cleanest fossil fuel source, methane emissions have to be reduced,” says Gabrielle Pétron, an atmospheric scientist at NOAA and at the University of Colorado in Boulder, and first author on the study, currently in press at the Journal of Geophysical Research. Emissions will vary depending on the site, but Pétron sees no reason to think that this particular basin is unique. “I think we seriously need to look at natural-gas operations on the national scale.”

UPDATE:  The 30-author study, led by NOAA researchers, “Hydrocarbon emissions characterization in the Colorado Front Range – A pilot study” is online here (subs. req’d).

Natural gas emits about half as much carbon dioxide as coal per unit of energy when burned, but separate teams at Cornell University in Ithaca, New York, and at the US Environmental Protection Agency (EPA) concluded last year that methane emissions from shale gas are much larger than previously thought. The industry and some academics branded those findings as exaggerated, but the debate has been marked by a scarcity of hard data.

“It’s great to get some actual numbers from the field,” says Robert Howarth, a Cornell researcher whose team raised concerns about methane emissions from shale-gas drilling in a pair of papers, one published in April last year and another last month (R. W. Howarth et al. Clim. Change Lett. 106, 679–690; 2011; R. W. Howarth et al. Clim. Change in the press). “I’m not looking for vindication here, but [the NOAA] numbers are coming in very close to ours, maybe a little higher,” he says.

Natural gas might still have an advantage over coal when burned to create electricity, because gas-fired power plants tend to be newer and far more efficient than older facilities that provide the bulk of the country’s coal-fired generation. But only 30% of US gas is used to produce electricity, Howarth says, with much of the rest being used for heating, for which there is no such advantage.

Late last year, some of the leading (center-right) economists in the country — Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus — concluded in a top economic journal that the total damages from natural gas generation exceed its value-added at a low-ball carbon price of $27 per ton! At a price of $65 a ton of carbon, the total damages from natural gas are more than double its value-added!

For the record, stabilizing at 550 ppm atmospheric concentrations of CO2, which would likely still be catastrophic for humanity, would require a price of $330 a metric ton of carbon in 2030, the International Energy Agency (IEA) noted back in 2008. So even leak-free, new gas generation isn’t a good investment if avoiding catastrophic warming is your goal.

Back in April, I wrote about Howarth’s controversial paper, “New study questions shale gas as a bridge fuel,” arguing:

This is a potentially game-unchanging conclusion for one of the seminal energy policy choices of this decade — how hard to push shale gas here and around the world.  And yet, as the lead author Cornell Prof. Robert Howarth explained to me in an interview, it is based upon very limited data.  And that’s in part because the industry has fought efforts to get more data.  Prof. Howarth agreed with my suggestion that this would be a very ripe topic for the National Academy of Sciences to review.

Howarth’s analysis does in fact appear to be vindicated by these real-world observations.  I asked him for comment.  He writes of the Nature piece:

As they point out, our estimates seem to be a little on the low side.  That’s not surprising, as we were pretty conservative in our published analysis.  This new paper has the first actual measurements at the landscape scale, which is exactly what has been needed (as we concluded in our first and second papers).

In truth, it would not have surprised me if their numbers had come out either considerably higher than or considerably lower than ours, but it is quite gratifying to see that they basically confirm our estimates, and suggest in fact that the greenhouse gas emissions are even somewhat worse than we had concluded.  This is bad news for the planet, but good news for our credibility.

He directed me to an online version of his new 2012 paper, which concludes:

We reiterate our conclusion from our April 2011 paper that shale gas is not a suitable bridge fuel for the 21st Century.

The fact that natural gas is a bridge fuel to nowhere was also demonstrated by the International Energy Agency in its big June 2011 report on gas — see IEA’s “Golden Age of Gas Scenario” Leads to More Than 6°F Warming and Out-of-Control Climate Change.  That study — which had both coal and oil consumption peaking in 2020 — made abundantly clear that if we want to avoid catastrophic warming, we need to start getting off of all fossil fuels ASAP.

I’ll end with some more background detail on the study from Nature:

The first clues appeared in 2007, when NOAA researchers noticed occasional plumes of pollutants including methane, butane and propane in air samples taken from a 300-metre-high atmospheric monitoring tower north of Denver. The NOAA researchers worked out the general direction that the pollution was coming from by monitoring winds, and in 2008, the team took advantage of new equipment and drove around the region, sampling the air in real time. Their readings led them to the Denver-Julesburg Basin, where more than 20,000 oil and gas wells have been drilled during the past four decades.

Most of the wells in the basin are drilled into ‘tight sand’ formations that require the same fracking technology being used in shale formations. This process involves injecting a slurry of water, chemicals and sand into wells at high pressure to fracture the rock and create veins that can carry trapped gas to the well. Afterwards, companies need to pump out the fracking fluids, releasing bubbles of dissolved gas as well as burps of early gas production. Companies typically vent these early gases into the atmosphere for up to a month or more until the well hits its full stride, at which point it is hooked up to a pipeline.

The team analysed the ratios of various pollutants in the air samples and then tied that chemical fingerprint back to emissions from gas-storage tanks built to hold liquid petroleum gases before shipment. In doing so, they were able to work out the local emissions that would be necessary to explain the concentrations that they were seeing in the atmosphere. Some of the emissions come from the storage tanks, says Pétron, “but a big part of it is just raw gas that is leaking from the infrastructure”. Their range of 2.3–7.7% loss, with a best guess of 4%, is slightly higher than Corn­ell’s estimate of 2.2–3.8% for shale-gas drilling and production. It is also higher than calculations by the EPA, which revised its methodology last year and roughly doubled the official US inventory of emissions from the natural-gas industry over the past decade. Howarth says the EPA methodology translates to a 2.8% loss.

The Cornell group had estimated that 1.9% of the gas produced over the lifetime of a typical shale-gas well escapes through fracking and well completion alone. NOAA’s study doesn’t differentiate between gas from fracking and leaks from any other point in the production process, but Pétron says that fracking clearly contributes to some of the gas her team measured.

Capturing and storing gases that are being vented during the fracking process is feasible, but industry says that these measures are too costly to adopt. An EPA rule that is due out as early as April would promote such changes by regulating emissions from the gas fields.

Officials with America’s Natural Gas Alliance, based in Washington DC, say that the study is difficult to evaluate based on a preliminary review, but in a statement to Nature they add that “the findings raise questions and warrant a closer examination by the scientific community”.

I think a NAS study is warranted, but these actual measurements, coupled with the myriad other analyses raising questions about the “dash to gas,” are more than reason enough to slow down any major investment in natural gas infrastructure that we will be stuck with for decades.

Filling up existing underutilized natural gas power plants to generate electricity that displaces coal remains a reasonable near-term idea.  But building a significant number of new natural gas fired power plants — or  building a major infrastructure for natural gas vehicles, which don’t even have the efficiency benefits of gas power plants — remains a counterproductive lock-in of scarce resources needed elsewhere to avert catastrophic global warming.

AtmosNews takes a lighthearted look at an unexpected analogy, explaining why some people call carbon dioxide (and the other greenhouse gases) the steroids of the climate system. Statistics and extreme behavior are involved, whether we’re talking about baseball or Earth’s atmosphere. NCAR scientist Gerald “Jerry” Meehl explains why.

NCAR has puts it together an very informative website on global warming and extreme weather, which I highly recommend.

Related Post:

• PBS Covers Link Between 2011′s “Mind-Boggling” Extreme Weather and Global Warming: It’s Like “Being on Steroids”

In the last two weeks, dozens of members of Congress, hundreds of scientists, and tens of thousands of concerned citizens have expressed their concerns about the environmental impact of drilling in Arctic waters.

In an open letter signed yesterday by 60 members of Congress, federal lawmakers called on Interior Secretary Ken Salazar to halt all leases for the Arctic in the agency’s five-year plan until a more sound review of disaster-response capabilities can be conducted:

“Successful oil spill response methods … cannot simply be transferred to the Arctic. The Arctic is a unique environment with significant hurdles that the DOI and related agencies must genuinely address before considering any new leasing in the region prior to including Arctic areas in a five-year plan.”

This follows a months-long investigation into disaster preparation in the Arctic by the Center for American Progress oceans team, which found a complete lack of infrastructure to deal with an oil spill:

There are no U.S. Coast Guard stations north of the Arctic Circle, and we currently operate just one functional icebreaking vessel. Alaska’s tiny ports and airports are incapable of supporting an extensive and sustained airlift effort. The region even lacks such basics as paved roads and railroads. This dearth of infrastructure would severely hamper the ability to transport the supplies and personnel required for any large-scale emergency response effort. Furthermore, the extreme and unpredictable weather conditions complicate transportation, preparedness, and cleanup of spilled oil to an even greater degree.

Just two weeks before, 573 scientists sent a letter to the White House urging the Obama Administration to take a science-based approach to issuing leases in the Arctic and to avoid opening up the region because of political pressure to expand drilling:

“Doing so prior to authorizing new oil and gas activity in the Arctic Ocean will respect the national significance of the environment and cultures of U.S. Arctic waters and demonstrate the value that your Administration places on having a sound scientific basis for managing industrial development of the Outer Continental Shelf.”

If one were to follow these concerns about taking a science-based approach to their logical conclusion, it’s highly unlikely that anyone would consider drilling for more fossil fuels in the Arctic. In its environmental impact statement, the Department of Interior even admits that “the Arctic is experiencing variations that are accelerating faster than previously realized” due to climate change — ironically making the region more attractive for oil and gas extraction as sea ice continues its downward spiral.

Apparently, the plan isn’t sitting well with many interested citizens either. Today was the final deadline for public comments, and almost 400,000 people have asked President Obama to stop the sales of leases in the Department of Interior’s five-year plan, according to the Alaska Wilderness League.

The Obama Administration is set to approve exploratory Arctic drilling permits to Royal Dutch Shell for operations next summer — a company that recently spilled 218 tons of oil in the North Sea and has the worst spill record in the UK since 2000.

Related Posts:

• Kentucky creationism theme park set to open in 2014 will “include dinosaurs”
• Doonesbury Takes on the Climate Change Deniers
• Great Doonesbury Global Warming Cartoon

When times get tough, companies often fall back on an old familiar phrase: “we just need to do more with less.” That usually applies to human resources. But it’s equally important with natural resources.

As it turns out, “green” companies in California that do more with fewer natural resources fared much better than companies in other sectors during the worst of America’s economic troubles — more than doubling the performance of the broader economy.

A new report from the non-partisan environmental think tank Next 10 shows that between 2009 and 2010, the “core green economy” in California — comprised of companies that provide products or services to cut natural resource use, re-purpose waste, and reduce global warming pollution — experienced half the number of job losses seen in the state’s broader economy.

Between January of 2009 and January of 2010, California’s economy shed 7% of jobs; however, the green economy saw only a 3% reduction in jobs. And from 1995 to 2010, the green economy in the state grew by 53% — far outpacing the 12% growth in the rest of the economy during that period of time.

California’s Core Green Economy shows signs of greater resilience than the economy as a whole. Over the past 16 years, its growth has outpaced the economy as a whole by more than a factor of four, and percentage losses are half those of the state’s total employment.

Despite these losses, some segments posted employment gains in the most recent observable period (January 2009 to 2010). Employment in Energy Infrastructure increased 14 percent, Advanced Materials expanded by four percent while Clean Transportation and Energy Generation grew by one percent each. Across the value chain, Manufacturing jobs in the Core Green Economy expanded by one percent from January 2009 to 2010, the only value chain segment to do so.

The big story was job creation in the clean energy/materials manufacturing sector, which increased by 53% from 1995 to 2010 while jobs in the rest of the manufacturing sector dropped by 18%. And as the report authors note above, even though companies saw a substantial slowdown due to the economic crisis between 2009 and 2010, employment in green manufacturing saw a slight increase in employment of one percent.

These figures echo those in a recent report from the Brookings Institution showing that clean energy jobs nationwide expanded by 8.3% per year from 2003 to 2010, with the rest of the “clean economy” (a broader definition including public transit, recycling and next-generation materials) growing 8.3% during the height of the recession between 2008 and 2009.

Related Posts:

• Green Jobs Reach 2.7 Million: The “Clean Economy” Starts Delivering on its Promise of High-Wage Jobs, Brookings finds
• Green Jobs Make Up 35% of Design and Construction Industry: “People Will Never Go Back to Building Inefficient Buildings”
• Top Five Reasons Why Attacks on Green Jobs Training Programs Don’t Hold Up

by Jessica Goad (with some thoughts by Joe Romm at the end)

The Los Angeles Times recently published a story on large-scale solar that gets much of the context and many of the facts about renewable energy on public lands flat out wrong.

The Times piece, called “Sacrificing the desert to save the Earth,” describes an apparent land rush for solar energy development on public lands, and raises important questions about the impacts of this technology on the Mojave Desert in California.

However, it gets the comparisons to oil and gas development completely wrong, and also omits important details about what the government has done thus far to ensure that solar on public lands does not become a real land rush.

First, much of the story is based on a comparison to oil and gas development on public lands. The Times argues that financial incentives for solar development in southern California have “sparked a land rush echoing the speculative booms” of other land rushes in the past:

Industrial-scale solar development is well underway in California, Nevada, Arizona, New Mexico, Colorado and Utah. The federal government has furnished more public property to this cause than it has for oil and gas exploration over the last decade — 21 million acres, more than the area of Los Angeles, Riverside and San Bernardino counties put together.

Even if only a few of the proposed projects are built, hundreds of square miles of wild land will be scraped clear. Several thousand miles of power transmission corridors will be created.

The desert will be scarred well beyond a human life span, and no amount of mitigation will repair it, according to scores of federal and state environmental reviews.

It is important to understand that this 21 million acres is the amount of public land that could be made available to solar energy development in six states (AZ , CA, CO, NV UT, NM), rather than the amount that will be eventually leased. (This is an arcane but important distinction when it comes to public lands, because companies bid for leases on parcels that are made available for development).  “Available” means that there is sufficient sun, the land is flat enough, none of the lands are protected (such as national parks), etc.

The data show that the Times’ comparison to oil and gas is totally incorrect. According to a Wilderness Society analysis, in just five western states (CO, NM, MT, UT, WY) over 50 million acres of public lands are already available to oil and gas development.

Oil and gas also take the cake in terms of the acres that have been or will be permitted.  All in all, 7 solar projects have been given the green light on public lands in California, and total about 28,000 acres.  And, an Interior Department analysis shows that the most solar that would likely be developed on Bureau of Land Management lands in six western states over 20 years is 214,000 acres.

Comparatively, the Interior Department stated in May 2011 that, “currently, 38.2 million acres of public lands are under lease for oil and gas devel­opment, of which 16.6 million acres are ac­tive and 21.6 million acres are inactive.”

In addition to misreporting the oil and gas comparison, the Times completely ignores what the administration is doing to ensure that solar is done right.  The Interior Department’s approach to solar represents an entirely new and far better way of developing energy on public lands than has traditionally been done.  Thanks to a flexible Administration, companies willing to negotiate, and conservation groups understanding that tough choices need to be made about our energy future, solar development has not become a “land rush” that will destroy the Mojave desert — though it very well could have been had history played out differently.

Indeed, at the beginning of the Obama administration, there were hundreds of solar project applications in the queue, waiting to be processed and approved.  But through agency guidance and updated policies that changed with the times, the suite of applications (many of which were speculative) was narrowed down — in October of 2011, only 79 projects remained in the queue, not all of which will be developed due to market forces.

A second critical step in ensuring that solar has not become a land rush is the Interior Department’s commitment to solar energy zones, a radically new way of thinking when it comes to energy development on public lands.  Zones are selected in advance for their high resource value and low potential for conflict.  The numbers show just how fundamental this change is for the Interior Department.

All in all, 22 million acres of BLM-managed land were deemed to be available for solar projects, as described above.  But in December 2010, the Interior and Energy Departments announced that incentives and preference would be given to projects sited within 677,000 acres of “solar energy zones.”  After many public comments, the zones were further scaled down to encompass 285,000 acres.  Solar will not be restricted only to the zones—the 22 million acres are still  available, but under a “variance process” that will make it more difficult to site there due to increased environmental analysis, agency attention, and costs.

As the Center for American Progress has discussed in great detail, this is by far a better model for energy on public lands than the project by project approach taken for oil and gas.

Despite the factual errors and omissions, the LA Times story raises an important question for those who appreciate the varied values of our public lands (unlike Mitt Romney, who doesn’t know “what the purpose is” of public lands).

It is clear that oil and gas development is still the dominant use of our lands (not to mention the extraction of coal), eclipsing solar by millions of acres.  What do we want the energy coming off of our public lands to look like?  And what does it take to make sure that other values of public lands like recreation, hunting, fishing, and our heritage, are valued?

The reporter glosses over these important questions by making some pretty glaring factual errors on the comparison between renewable energy and fossil energy development on public lands.

Note: We’ve just addressed one angle to the story. BrightSource, the solar thermal company mentioned in the piece, has also published a piece on its blog focused on the economics and environmental impact of its Ivanpah project in the Mojave.

– Jessica Goad is manager of research and outreach on the public lands team at the Center for American Progress.

JR: Here are some of my thoughts on the subject.

Deserts are certainly fragile, inhospitable ecosystems — a key reason that nobody should want them spreading over one third the planet or the entire U.S. Southwest for 1,000 years (see “Nature Publishes My Piece on Dust-Bowlification“). Certainly, Californian, Nobelist, and Energy Secretary Steven Chu gets this (see Chu: “Wake up,” America, “we’re looking at a scenario where there’s no more agriculture in California”).

Indeed, it’s hard to imagine even the harsh Mojave ecosystem surviving another 10°F warming and over 100°F temperatures for nearly half the year along with even more aridity (see “How We Know Inaction Is the Gravest Threat Humanity Faces“).  Or worse (see “Science stunner — On our current emissions path, CO2 levels in 2100 will hit levels last seen when the Earth was 29°F (16°C) hotter“).

So California and the Mojave (and civilization as we know it today) can’t be saved without significant solar energy in the desert (see “The full global warming solution: How the world can stabilize at 350 to 450 ppm”).  So we need to move beyond the issue of whether we will be deploying solar in the desert to how we can do it in the most responsible fashion, which  appears to be the process that has now begun.

by Bill McKibben, reposted from TomDispatch

If we could see the world with a particularly illuminating set of spectacles, one of its most prominent features at the moment would be a giant carbon bubble, whose bursting someday will make the housing bubble of 2007 look like a lark. As yet — as we shall see — it’s unfortunately largely invisible to us.

In compensation, though, we have some truly beautiful images made possible by new technology.  Last month, for instance, NASA updated the most iconic photograph in our civilization’s gallery: “Blue Marble,” originally taken from Apollo 17 in 1972. The spectacular new high-def image shows a picture of the Americas on January 4th, a good day for snapping photos because there weren’t many clouds.

It was also a good day because of the striking way it could demonstrate to us just how much the planet has changed in 40 years. As Jeff Masters, the web’s most widely read meteorologist, explains, “The U.S. and Canada are virtually snow-free and cloud-free, which is extremely rare for a January day. The lack of snow in the mountains of the Western U.S. is particularly unusual. I doubt one could find a January day this cloud-free with so little snow on the ground throughout the entire satellite record, going back to the early 1960s.”

In fact, it’s likely that the week that photo was taken will prove “the driest first week in recorded U.S. history.” Indeed, it followed on 2011, which showed the greatest weather extremes in our history — 56% of the country was either in drought or flood, which was no surprise since “climate change science predicts wet areas will tend to get wetter and dry areas will tend to get drier.” Indeed, the nation suffered 14 weather disasters each causing $1 billion or more in damage last year. (The old record was nine.) Masters again: “Watching the weather over the past two years has been like watching a famous baseball hitter on steroids.”

In the face of such data — statistics that you can duplicate for almost every region of the planet — you’d think we’d already be in an all-out effort to do something about climate change. Instead, we’re witnessing an all-out effort to… deny there’s a problem.

Our GOP presidential candidates are working hard to make sure no one thinks they’d appease chemistry and physics. At the last Republican debate in Florida, Rick Santorum insisted that he should be the nominee because he’d caught on earlier than Newt or Mitt to the global warming “hoax.”

Most of the media pays remarkably little attention to what’s happening. Coverage of global warming has dipped 40% over the last two years. When, say, there’s a rare outbreak of January tornadoes, TV anchors politely discuss “extreme weather,” but climate change is the disaster that dare not speak its name.

And when they do break their silence, some of our elite organs are happy to indulge in outright denial. Last month, for instance, the Wall Street Journal published an op-ed by “16 scientists and engineers” headlined “No Need to Panic About Global Warming.” The article was easily debunked. It was nothing but a mash-up of long-since-disproved arguments by people who turned out mostly not to be climate scientists at all, quoting other scientists who immediately said their actual work showed just the opposite.

It’s no secret where this denialism comes from: the fossil fuel industry pays for it. (Of the 16 authors of the Journal article, for instance, five had had ties to Exxon.) Writers from Ross Gelbspan to Naomi Oreskes have made this case with such overwhelming power that no one even really tries denying it any more. The open question is why the industry persists in denial in the face of an endless body of fact showing climate change is the greatest danger we’ve ever faced.

Why doesn’t it fold the way the tobacco industry eventually did? Why doesn’t it invest its riches in things like solar panels and so profit handsomely from the next generation of energy? As it happens, the answer is more interesting than you might think.

Part of it’s simple enough: the giant energy companies are making so much money right now that they can’t stop gorging themselves. ExxonMobil, year after year, pulls in more money than any company in history. Chevron’s not far behind. Everyone in the business is swimming in money.

Still, they could theoretically invest all that cash in new clean technology or research and development for the same. As it happens, though, they’ve got a deeper problem, one that’s become clear only in the last few years. Put briefly: their value is largely based on fossil-fuel reserves that won’t be burned if we ever take global warming seriously.

When I talked about a carbon bubble at the beginning of this essay, this is what I meant. Here are some of the relevant numbers, courtesy of the Capital Institute: we’re already seeing widespread climate disruption, but if we want to avoid utter, civilization-shaking disaster, many scientists have pointed to a two-degree rise in global temperatures as the most we could possibly deal with.

If we spew 565 gigatons more carbon into the atmosphere, we’ll quite possibly go right past that reddest of red lines. But the oil companies, private and state-owned, have current reserves on the books equivalent to 2,795 gigatons — five times more than we can ever safely burn. It has to stay in the ground.

Put another way, in ecological terms it would be extremely prudent to write off $20 trillion worth of those reserves. In economic terms, of course, it would be a disaster, first and foremost for shareholders and executives of companies like ExxonMobil (and people in places like Venezuela).

If you run an oil company, this sort of write-off is the disastrous future staring you in the face as soon as climate change is taken as seriously as it should be, and that’s far scarier than drought and flood. It’s why you’ll do anything — including fund an endless campaigns of lies — to avoid coming to terms with its reality. So instead, we simply charge ahead.  To take just one example, last month the boss of the U.S. Chamber of Commerce, Thomas Donohue, called for burning all the country’s newly discovered coal, gas, and oil — believed to be 1,800 gigatons worth of carbon from our nation alone.

What he and the rest of the energy-industrial elite are denying, in other words, is that the business models at the center of our economy are in the deepest possible conflict with physics and chemistry. The carbon bubble that looms over our world needs to be deflated soon. As with our fiscal crisis, failure to do so will cause enormous pain — pain, in fact, almost beyond imagining. After all, if you think banks are too big to fail, consider the climate as a whole and imagine the nature of the bailout that would face us when that bubble finally bursts.

Unfortunately, it won’t burst by itself — not in time, anyway. The fossil-fuel companies, with their heavily funded denialism and their record campaign contributions, have been able to keep at bay even the tamest efforts at reining in carbon emissions. With each passing day, they’re leveraging us deeper into an unpayable carbon debt — and with each passing day, they’re raking in unimaginable returns. ExxonMobil last week reported its 2011 profits at $41 billion, the second highest of all time. Do you wonder who owns the record? That would be ExxonMobil in 2008 at $45 billion.

Telling the truth about climate change would require pulling away the biggest punchbowl in history, right when the party is in full swing. That’s why the fight is so pitched. That’s why those of us battling for the future need to raise our game. And it’s why that view from the satellites, however beautiful from a distance, is likely to become ever harder to recognize as our home planet.

This piece was originally published at TomDispatch.

Bill McKibben is Schumann Distinguished Scholar at Middlebury College, founder of the global climate campaign 350.org, a TomDispatch regular, and the author, most recently, of Eaarth: Making a Life on a Tough New Planet.