There is confusion in objectives. Is it near-term job creation, tax relief, a shift in policy objectives (“green jobs” emphasis) and inclusion of 8,560 pork-barrel projects to curry voter favor? Among both political parties and the public, support is shaky. Were it not that we already knew legislative leaders in both parties are incompetent and that the President is totally inexperienced and unaware how policy interacts with realities of citizen’s lives (except for his socialist ideologies and intent to impose them on an unwilling nation), Washington events since Inauguration Day would not pass any test for a comedy movie script.
The national GDP may be consumed this year feeding multi-trillion dollar frivolities imposed by Congress. Economic confidence in leadership as reflected by debt and equity markets is about half of what it was three months ago. These cretins have no idea that they have caused the problems and are exacerbating the bad situation with profligate spending. Last month, this column suggested Americans exercise recall of elected people who created the national financial havoc America now experiences. That still applies.
It is quite difficult to get a cohesive definition of what is included in the total $787 billion law. Every spending allocation deciphering gives a different answer, but approximately one-third of the $550 billion in direct spending (versus loan guarantee, for example) is called “green” and covers matters such as R&D of renewable energy production, making government buildings energy efficient or subsidizing electric automobile improvements. Readers of this journal tend to be intensive energy users, so that is the focus today. How will money be spent to meet this sector’s consumption needs, and what could be the consequence of spending of the $49.7 billion directly associated with power generation?
In the U.S. today, 40% of energy used is from petroleum, 22% from coal and 7% from “renewables.” Of that renewable sliver, 53% comes from ethanol (corn), 36% from hydroelectric, 5% from geothermal, 5% from wind and 1% from solar. So 0.042% of U.S. energy use comes from the wind and sun, and Congressional dolts think we should go along with spending that cannot get meaningful improvement. In round numbers, electric power generated from all fuels is equivalent to burning oil, coal or gas and is 40% of energy consumption. Remember that in August 2007 the House passed a bill requiring electric utilities to meet 15% of energy requirements with renewables, allowing 4% to come through efficiency improvements and 11% directly. This requirement alone demands doubling renewable-energy output immediately, and the politicians think that can happen with sun and wind. Get real!
The Department of Energy will get $39 billion to do everything from give $2 billion in grants for advanced car batteries, $2.6 billion via R&D to “diversify the Nation’s (renewable) energy portfolio,” $4.6 billion for fossil-fuel research (including $1 billion for clean-coal research) and $2 billion for near-zero emissions technology – all of which was then defeated from the law at final passage.
Then $8.5 billion went for loan guarantees on wind and solar projects, and $6.5 billion went to expand and upgrade federal electric-power generation sites. While this law favors wind and solar projects (all astronomically priced compared to fossil-fueled energy use), the intended cap-and-trade laws and regulations (not part of this law but still this Administration’s stated top priority in spite of Canada and all Europeans rejecting their versions of the same) will provide the other edge of the sword that will cripple or kill U.S. industrial activity.
Remember that payments for electric power use must include recovery of R&D costs, debt service and capital facility repayments and a multi-fold cost increase of production over existing power-generation means. Further, the new law provides a 30% investment tax credit for all renewable projects in just one year versus a production tax credit over 10 years, but it allows investors in these projects to offset taxes on profits elsewhere. The law also allows developers and investors in renewable-energy projects to swap tax credits for cash grants. This seems to me to be another formula (using tax- and policy-driven financing) for fraud, similar to the bank and financial scandals that America still endures. It is also notable that Congress removed from the bill that eventually passed a $50 billion loan guarantee for new nuclear power plants and $4.6 billion for enhancing carbon-capture and sequestration technologies, which is a big and real part of the near-term energy solution for America.
The new President has made it clear that he favors public spending, for which liberals use the erroneous term “investment” as the preferred energy supply and climate-policy mechanism for America. For the record, the government can never invest; by definition, it can only spend. So, are you going to grumble privately, start recall proceedings or emigrate? IH