April 04, 2013
universe doesn’t pay a whole lot of attention to your desires and the way you
want things to be. In a battle between you and the universe, always bet on the
- Srikumar Rao
Never accuse environmentalists of having low self-esteem.
Greens are convinced of their ability to rewrite the laws of
physics, chemistry, and economics. In their concoction of reality, ethanol,
biodiesel, wind, and solar will supplant coal, oil, and natural gas. The
process can’t happen naturally, of course. The usual suspects -- “Big Oil,” the
Koch brothers, redneck voters -- are in the way. So incentives, mandates,
and “public investments” are necessary to pave the path to renewable nirvana.
Yet as Professor Rao advises, the universe imposes adamantine rules
that not even the Prius-driving supplicants of “sustainability” can ignore. For
evidence, consider two of modern environmentalism’s most treasured energy
The Renewable Fuel Standard (RFS), adopted by Congress and
George W. Bush as part of the Energy Policy Act of 2005, decreed that at least 7.5
billion gallons of politically correct liquids be blended into the nation’s gasoline
and diesel supplies by 2012. In 2007, fedpols hiked the requirement to 15.2
billion gallons, and by 2022, the minimum was set at a cavernous 36 billion
Corn-based ethanol meets a portion of the RFS, with biodiesel
and cellulosic ethanol covering the remainder. As a Congressional Research
Service report dryly observed, “by guaranteeing a market for biofuels, [the RFS]
substantially reduces the risk associated with biofuels production, thus
providing an indirect subsidy for capital investment in the construction of
biofuels plants.” So in addition to environmentalists’ blinkered -- if well-funded
-- vision of an America no longer “addicted” to “fossil
fuels,” there are now jobs, profits, and votes at stake.
Little wonder, then, that the EPA is refusing to face the undesirable
consequences of government meddling in the transportation-fuels market. Last summer,
the American Petroleum Institute (API) petitioned for a waiver of the cellulosic-ethanol
dictate, given that no U.S.
firms produce the stuff. (Refiners must purchase credits and/or buy abroad.) Governors
industries asked for relief, too, given the hike in feed costs spawned by
severe drought in many of the country’s agricultural states.
The Obama administration’s eco-bureaucrats weren’t willing to
relax the RFS’s bite, and EPA intransigence is breeding a mounting biofuels backlash.
That’s a good thing. Trade associations seldom have the guts to advocate for
the elimination of an entrenched regulatory scheme -- it’s bad for “government
relations” -- but the API, denouncing the “ineffectiveness of biofuels/ethanol
mandates in advancing America’s
energy security” and the “market-distorting aspects of top-down mandates,” seeks
a total “scrapping” of the RFS. Own a car? Eat? The organization’s cause
deserves your support.
Greens’ blunder with electricity might be pricier than the RFS boondoggle.
portfolio standard (RPS) requires a portion of the power generated within a
state to use fuels that politicians deem proper. The mandates began to
proliferate in the late 1990s. But in the second decade of the 21st century, that
nasty creature reality has struck again. Predictions of renewables’ eventual
price-competitiveness were wildly optimistic. According to the latest estimates
by the U.S.
Energy Information Administration, the cost of a megawatthour of
electricity produced in an advanced, natural-gas, combined-cycle power station in
2018 will be $66. An onshore wind turbine will produce the same amount of juice
for $87. (Offshore is off the scale: $222.) A photovoltaic megawatthour will
cost $144; biomass, $111. And no, these projections do not include the billions of dollars worth of grants, tax breaks, and
loan guarantees that annually flow to the suppliers of fashionably generated
Last month, The Wall
Street Journal reported that half of the states with RPSs are considering
rollbacks. An Ohio legislator told the Journal that the Buckeye State’s standard
reminded him of “Joseph Stalin’s five-year plan,” adding that his focus was on
“what delivers the lowest price for electricity.” In North Carolina, a House of Representatives subcommittee
recently approved a complete repeal in 2018. RPSs face strong opposition in Montana, Missouri, and Kansas. Governor Paul LePage, who wants
to sign contracts for cheap Canadian hydropower, is demanding a modification of
his state’s RPS, alleging that “those with powerful political
have forced higher cost renewables onto the backs of Maine ratepayers.”
Environmentalists, who have elevated denial to a secular sacrament,
won’t raise their consciousness enough to grasp the expensive side effects of energy
planning. Perhaps consumers, struggling to pay household bills in a low-growth
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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