BLUEBLOCK: Green energy: Can it ever compete against coal and oil subsidies?

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Green energy: Can it ever compete against coal and oil subsidies?

Sunday, September 02, 2012 | Posted by Blueblock | | Edit Post

Minnesota-based Allete Clean Energy has just won regulatory approval to build a massive wind farm in North Dakota which would produce 100 megwatts of clean, nonpolluting energy.

But now the kicker: Allete is going to hold off on the project for now. Why? Because they don’t have a customer for the energy.

Say what?

Isn’t finding ever more energy the American national obsession? Aren’t we too dependent on foreign sources of oil? We are Republicans running around singing “drill baby drill?” Don’t we need to stop importing oil and develop and cut back on dirty, carbon-belching coal? Aren't nuclear plants too expensive and problematic?

Well, when you look at the economics and politics of what it takes to move from the old fossil fuel model to clean renewable alternatives, the picture quickly gets complex – starting with government subsidies.

Keep in mind that Allete is proposing to build where wind is strong and plentiful – the wide-open plains of North Dakota – but North Dakota is also the new “Saudi Arabia” of America in terms of coal and oil. The coal industry has a dominant presence there, and huge coal reserves in the ground. The current oil boom of North Dakota is nothing short of phenomenal.

North Dakota has the best economy in the United States today, with unemployment under 4%, a huge state budget surplus, never had a housing crisis, gobs of cash for infrastructure needs such as schools, roads, dikes and bridges – all thanks to the largess of coal and oil.

But wait – the energy generated by a wind plant doesn’t have to be sold in North Dakota, so what difference does it make? In fact, plans are for the Allete Clean Energy wind farm to sell the energy it produces outside of North Dakota. For that matter, much of the coal and oil of North Dakota is exported around the world anyway, and not necessarily powering only the local economy – so what difference does it make if North Dakota is coal and oil rich?

The difference is government subsidies. The coal industry, for example, is able to generate cheap power because it enjoys generous taxpayer cash in the form of subsidies. While this is a controversial and complex issue – with some maintaining that coal receives little or no government cash -- the indisputable fact is that it receives billions in direct or indirect taxpayer support from both the federal and state level.

For example, a study done by the Environmental Law Institute, coal received $17 billion in government cash between 2002 and 2008. Source

On top of that, each coal-producing state also dumps million more into a variety of direct or indirect coal-related infrastructure support.

So if dirty coal wasn’t getting all that clean government cash, building a wind farm would suddenly be an excellent alternative to coal – right?

Well, hold on. There’s more to the story. You see, wind energy has also been enjoying billions in federal subsidy money as well. Some two-thirds of the $24 billion Washington spent on energy subsidies in 2011 went to renewable sources such as wind, solar and biofuels. In addition, private investors poured another $48 billion into renewable energy last year, according to a report from Pew Charitable Trusts. See more

Unlike coal and oil, however, subsidies for alternative clean energies are shaky, never a sure thing, and may soon disappear.

A number of think tanks, including the Brookings Institute, say that Federal support for clean power may largely end by the end of 2014. Some 70% of the programs now in place will expire in the next two years. Much of the current money being channeled into wind and solar comes by way of the Obama Administration’s 2009 economic stimulus program.

In fact, executives at Alete Clean Energy have called this stimulus money a “key incentive.” Without it, building a 100-megwatt wind farm in North Dakota starts to look like a much riskier proposition – in addition to the fact is must compete with coal and oil – which is likely to continue heavy government subsidies like is always has. The coal and oil industry lobby remains among the most powerful in Washington.

So here’s the lesson for Green Party folks and all American concerns with our nation’s clean energy future:

The technology, the capability, the willingness and the infrastructure clearly exists for our country to begin transitioning right now – and rapidly – toward a clean wind, solar and biofuel dominated economy -- and away from a dirty, greenhouse gas generating, water and air-polluting coal and oil industry.

But the key right now is much in the hands of government policy, including which energy industry will be subsidy dominant. The question is, how do American citizens make their voices heard in federal and state legislatures about which energy future for America they want to support? How do you break the coal and oil industry strangle hold on the necks of Congress?

Source: examiner