Two months ago, Senate Democrats supported by seven Republicans -- barely beat back a Bush Administration-backed national energy plan. The proposal was a fossil/nuke grab-bag, bloated by $20-30 billion in subsidies, tax breaks and other giveaways for some of the nations biggest polluters.
The administration invested significant political capital in pushing for the bills passage, and the defeat was a nasty shock for the White House. But those who think the fight has been won may be in for an even nastier shock in the coming months. As Congress slouches back into session, the fragile coalition that defeated the bill is already cracking. Now, advocates of clean energy face a formidable task: Develop a viable alternative to Team Bush's coal-oil-nuke-gas (CONG) plan, and do it soon.
Of course, just being greener wont be enough. Our clean alternative will need to make fiscal sense, and will need to meet the nations huge energy needs. The good news: Thanks to a host of technological advances, such a plan might be surprisingly simple to develop.
The Bush energy plan that failed in December was an unvarnished partisan play. Drafted in secret by Vice President Dick Cheney's infamous task force, it was fine-tuned in secret by Sen. Pete Domenici and Rep. Billy Tauzin -- two of King CONG's most ardent Capitol Hill guerillas. The resulting pork-laden legislation and the steamroller approach offended scores of lawmakers, and prompted scathing editorials nationwide. But in the Senate, the final straw was a rider providing a legal shield for makers of MTBE, a gasoline additive that's a suspected carcinogen (both Tauzin and House Majority Leader Tom DeLay have big MTBE producers in their districts). Some have opined, reassuringly, that the Bush/Cheney/Tauzin/Domenici CONG nightmare is dead that it could never pass in an election year. Unlikely. Bush now says hes shooting for a mid-February passage.
With no time to spare, advocates of green energy might want to steal a page from the Republicans "free market" playbook. GOP politicians and their bloviating brethren at right-wing think tanks love to declare their support for level playing fields and "unfettered competition," especially when attacking government regulations. But they conveniently overlook the huge federal subsidies that prop up King CONG. And they miss the crucial fact that, with one important caveat, renewable energy particularly wind energy -- is at the brink of blowing away its CONG competition in pure market terms.
Given recent breakthroughs in green technologies, it's now possible to shape an energy policy aimed at allowing all generating sources to compete on a level basis, letting the economic chips fall where they may. That goal cant be achieved overnight, but it is attainable. In three simple steps. First, renewables must be afforded the same sorts of subsidies and protections given to King CONG. Second, all costs must be accounted for meaning generators would have to pay for the health and environmental damage they cause. Third, all subsidies must be gradually, evenly abolished. Vijay Vaitheeswaran of The Economist in his new book, Power to the People joins others in saying, in essence, that whats really needed is a marriage between Adam Smith, the father of free markets, and Rachel Carson, the mother of the environmental movement.
Under the Bush energy bill, and the existing programs it would perpetuate, King CONG gets tax breaks and direct government handouts that dwarf what's given to renewables. One key Senatorial aide estimated the annual pork fest -- before the Bush bill -- at around $20 billion. But, he says, "that's just in direct subsidies. If you count destruction of public lands, artificially low royalties, R&D for clean coal, the health costs to society of air and water pollution," plus federal reactor insurance coverage , federal support for radioactive waste disposal, and so forth, the real costs could be "an order of magnitude higher."
The Bush/Cheney/Tauzin/Domenici plan would pile on another $20-30 billion in tribute to King CONG. Proposed loan guarantees for new nuclear plants alone are set at some $8.5 billion. And the bill continues to give reactor operators a free ride in case of a catastrophic meltdown. Under the 1957 Price-Anderson Act, such federal protection was to have expired once private insurers jumped in to underwrite the liability. A half-century later, American taxpayers are still on the hook for any costs related to a reactor accident that exceed $10 billion. The Bush plan would extend the giveaway to the next generation of nukes at a time when reactor-lade europe is turning heavily toward renewables. Further subsidies cover the costs of transporting and protecting high-level radioactive waste. And, while nuclear generators have long been taxed to pay for the construction of a nuclear waste repository, Congress has been unwilling to tap deeply into that tax revenue to fund the construction of a disposal site at Yucca Mountain, Nevada. Nearly two thirds of the money allocated for the project last year came from taxpayers, not the nuclear industry.
Fossil fuels also get billions in rebates, tax breaks and incentives hidden in the labyrinth of the federal corporate welfare system. And King CONG sources are afforded an epic free ride when it comes to health and environmental costs. Even without accounting for global warming -- possibly the most expensive of all long-term fossil/nuke impacts -- the real costs of coal, oil, nuclear and gas pollution dwarf the already massive direct subsidies and tax breaks combined.
By contrast, when all subsidies and impacts are factored in, wind power is a bargain. Critics have consistently cited only one environmental impact bird kills and study after study has shown the threat posed by windmills located anywhere outside narrow migratory canyons is virtually nil. Except for concerns over noise and scenic impact, wind power has no other environmental costs. The federal support offered to wind producers is similarly meager, effectively limited to the Production Tax Credit, which pays wind producers a meager premium of about 1.8 centers per kilowatt hour. California and Minnesota also offer modest state credits.
Unlike the massive CONG handouts, however, the wind tax credits are provided on a year-to-year basis, leaving the industry hanging as Washington reconsiders the credit every fall. As if that werent enough, last year Bush yanked the tax credit reauthorization from the federal budget and dumped it into the energy bill, essentially holding wind producers hostage. The wind tax credit has broad bipartisan support, but when the energy bill was defeated, the wind industry took a hit. At very least, the wind tax credit should be put on a five-year basis, and should be restructured to make it accessible to farmers, communities, and small investors who could own their own wind farms.
But even the wind power tax credit could ultimately be phased out. On a truly level playing field, with no subsidies for anybody, wind power can compete flat-out with CONG sources. Where health and environmental externalities are counted, it's not even close. State commissions in Colorado and Minnesota have now certified wind power as the "least cost" alternative for new electric power generation. Studies by the American Wind Energy Association, the National Renewable Energy Laobratories, Worldwatch, and a host of others tell the same story.
In a classic open market, today's wind power technologies are competitive with coal, but leave it in the dust once ecological externalities are factored in. Price instability is pushing natural gas out of range. Oil hasn't been a significant generator of electricity for a century (except, ironically, in Hawaii, where a conversion to solar power is being pushed hard). Finally, given the realistic life cycle, the threat of terrorist attack, and the cost of waste disposal, atomic power is barely worth mentioning.
By comparison, new satellite mapping techniques have shown that wind resources in the U.S. are far greater and more widespread than originally believed. The Great Plains region between the Mississippi and the Rockies -- the "Saudi Arabia of Wind" -- could generate three times as much electricity as the US consumes. In 2001, $900 million worth of wind turbines were installed in Texas alone. Along the Great Lakes, big new "slow speed" turbines like Bowling Green's are already profitably turning wind into electricity.
As Alaska-based transmission expert Bill Leighty has shown, significant challenges remain in getting wind-generated power from remote regions to urban areas. But efficiency and solar power have no such problems.
Increased efficiency has long been the cheapest of all green energy initiatives. From the time the first coal was dug and the first oil burned, the US has wasted at least half the energy it consumes. Called "negawatts" by conservation guru Amory Lovins, increased efficiency can pump electricity back into the supply at under 2 cents/kilowatt hour -- a price unbeatable by any other source.
Photovoltaic cells (PV), those thin silicon wafers that can turn rooftops and south-facing walls and windows into solar energy generators, get virtually nothing in the Bush energy plan. If solar energy received short-term federal aid to encourage investment in PV arrays something like the subsidies provided in the Bush bill to underwrite nuclear plant construction areas like the desert southwest could generate massive amounts of extremely cheap, clean power. Estimates from John Turner at NREL indicate that a single PV array installation in central Nevada covering 100 square miles could generate enough electricity to meet the entire nations needs. Far less ambitious projects could power Las Vegas, Phoenix, Reno, and other cities in the inter-mountain West.
Solar power today is a bit more expensive, per megawatt generated, than coal, oil or gas -- until you factor in the health and environmental impacts, of course. But according to the American Solar Energy Society, in areas too remote to be reached by a centralized grid, solar power is already equal to nuclear in straight-up economic terms, and is closing in rapidly on fossil-based sources even without the eco-accounting.
The Sacramento Municipal Utility District, poster child for a green energy economy, voted shut its Rancho Seco reactor in 1989. Right next to the dead nuke, a 2-megawatt PV facility still feeds the grid. With extreme success, Sacramento has forged ahead with efficiency and conservation, and has scattered PV throughout the city. If the thousands of federal buildings did the same, taxpayers would reap huge savings and the new factory capacity making those cells would drive down the price.
There are other promising sources of green power -- solar power towers and parabolic trough generators, ocean thermal stations, undersea "tide mills", and bobbing wave generators and they deserve meaningful support in a green energy bill. All are becoming competitive with the dirty, vulnerable, unstable, and unreliable power stations of the obsolete and subsidy-dependant CONG economy.
For decades the CONG flaks have argued that renewables are a distant and "impractical" dream. Its time to put their claims to the test. Equalize the subsidies for all sources. Compare wind, solar, and efficiency with fossil and nuclear power after putting a price tag on their health and environmental costs. Then abolish all the subsidies.
Its time to call King CONGs bluff. Its time to make both Adam Smith and Rachel Carson smile. Its time to show that, when it comes to energy, a truly free market would be a green market.