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Why the BP Spill Won't Affect Renewable Energy

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One thing has nothing to do with the other, say experts.

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A poll out of Stanford University shows that 84% of those surveyed favor the federal government offering tax breaks to encourage more wind, solar, and water power.

Denise Bode, CEO of the American Wind Energy Association, said, "Americans' support for pure, clean energy is going to increase above its already overwhelming levels as a result of the oil spill."

And Microsoft (MSFT) founder Bill Gates is calling for a "revolution" to decrease oil dependency. Gates, GE (GE) CEO Jeff Immelt, Bank of America (BAC) chairman and former DuPont (DD) CEO Chad Holliday, former Lockheed Martin (LMT) chairman Norm Augustine, Xerox (XRX) CEO Ursula Burns, Cummins (CMI) CEO Tim Solso, and Kleiner Perkins Caufield and Byers partner John Doerr are campaigning for the government to triple its clean energy investments to $16 billion from $5 billion a year.

"We know from our business experience that if you only give a fraction of what's required to be a success, you will not be a success," said Holliday.

In the rush to use the BP spill as a backdrop to the larger issue of the feasibility of renewable energy, have we unintentionally further muddled the matter?

Jerry Taylor, a senior fellow on federal energy and environmental policy at the Cato Institute, tells Minyanville, "The relevant point here is, no matter what you believe about the environmental pros and cons of solar energy, wind power, or what have you, they are utterly irrelevant to the deepwater drilling moratorium, because those energy sources are responsible for electricity. They would not displace one single barrel of oil."

Taylor explains that, "Instead of moving the debate on energy policy forward, the spill is being used to grind preexisting policy axes. Unfortunately, those axes were none too sharp to begin with, and the grinding now in play does more to confuse than to enlighten."

He continues, "Too often in the debate on energy conservation, people confuse electricity generation with transportation. The implicit assumption is that all energy is interchangeable throughout the economy. It's simply not. That applies on the left and the right. The right is fond of saying nuclear power can decrease our dependence on foreign oil, but unless you're going to put a nuclear reactor under the hood of every car on the road, it won't do a thing to reduce energy dependence."

Patrick Michaels, a senior fellow in environmental studies at the Cato Institute, tells Minyanville that many are "hopelessly naïve" about climate change and that "conflating the BP spill with the renewable energy debate" is utterly absurd.

"How many years have I been reading that GE is a stock to buy because it's going to do so well because of climate change legislation? GE has done absolutely horribly. Jeff Immelt has tied much of the future of the company to climate change legislation and it's clear that the American people don't want it, and they don't want the stock either. They don't want to pay for power to be subsidized."

Subsidies or not, there are now reports coming from environmental advocates that take a dim view of a broad swath of alternative energy sources.

For example, new research shows that solar panels are lethal to certain aquatic insects.

"It's like these organisms become dazzled to death," said Bruce Robertson of Michigan State University's W.K. Kellogg Biological Station. "It's like going to the most amazing 3D movie you've ever seen and you can't leave. They just fly and fly and fly over these surfaces, and they get exhausted and die."

This is obviously not Michaels's primary concern with solar.

"Solar panels have to be subsidized five times more than wind turbines," he says. "I would say that there's a much greater argument against photovoltaic solar power than the idea that some bugs might get killed -- it is horribly inefficient. The subsidies required are staggering and the environmental effects are inconsequential."

Biomass has new detractors as well.

A study conducted by the Manomet Center for Conservation Sciences on behalf of Massachusetts state environmental officials found that wood-burning power plants using trees and other biomass release more greenhouse gases into the atmosphere than coal. The research stated that biomass-fired electricity would result in a 3% increase in carbon emissions compared to coal-fired electricity by 2050.

And wind?

Michael Fry of the American Bird Conservancy estimates that US wind turbines kill between 75,000 and 275,000 birds annually. According to the American Wind Energy Association, each megawatt of installed wind power kills between one and six birds a year. If the US is producing 20% of its electricity from wind by 2030, approximately 300,000 birds would be slaughtered by wind turbines every 365 days.

Cato's Taylor notes, "House Minority Leader John Boehner issued a news release May 3 arguing that the spill is but one more reason to adopt the GOP's "all of the above" energy agenda. Exactly why an oil spill implies the need for more subsidies to oil, gas, coal, and nuclear energy companies is unclear. If the argument is that energy companies will (for some unexplained reason) underinvest in energy production (the only foundation on which one can build a case for production subsidies), then why does a spill provide more evidence for that proposition? If the argument is that energy companies will invest only in what is profitable, leaving us short on energy so that we'd need to force investments through subsidies in what isn't otherwise profitable, then that's a curious position for Republicans to take. One doesn't create wealth by using carrots or sticks to compel companies to make otherwise unprofitable economic decisions."

Yes, the BP spill is horrific. But innovative ideas in energy generation will ultimately solve America's energy needs, not handouts and subsidies that will do nothing more than ensure everyone winds up paying more for what would otherwise be unaffordable in a true market-based economy.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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