Obama’s Green Energy Myth

Obama’s Green Energy Myth

Posted By Rich Trzupek On June 28, 2010 @ 12:26 am In FrontPage | 20 Comments

President Obama’s attempt to turn the Deepwater Horizon disaster into an advertisement for alternative “green” energies and “cap and trade” legislation was so offensive that even Senator Diane Feinstein was forced to observe [1] that “the climate bill isn’t going to stop the oil leak.”

In a June 15 column [2] published by the New York Times, Peter Baker took that analysis a bit further:

“The connection to the spill, of course, goes only so far. While (Obama) called for more wind turbines and solar panels, for instance, neither fills gasoline tanks in cars and trucks, and so their expansion would not particularly reduce the need for the sort of deepwater drilling that resulted in the spill.”

This entirely reasonable and technically accurate statement enflamed the president’s cheerleaders over at Media Matters, where Fae Jencks [3] took Baker to task:

“While wind and solar energy may not fill cars’ tanks, it will power their batteries. What Baker fails to acknowledge is that by ensuring that ‘more of our electricity comes from wind and solar power,’ Obama would ensure that those vehicles are powered with clean energy rather than with electricity produced by fossil fuel plants.”

Those two sentences summarize the green nirvana that the president is trying to foist upon America. It’s a goal that’s entirely unachievable, because of a number of technical and economic realties that lie just below the surface of simplistic analysis.  It’s not surprising that a technically-illiterate blogger who posts at a site devoted to echoing this administration’s progressive agenda would make such an assertion, but it’s quite disturbing that the man who is supposed to be the leader of the free world would utter such foolishness.

Both wind power [4] and solar power [5] are more expensive – incredibly so in the case of solar – than either fossil power or nuclear power. Worse, you can’t count on either wind or solar as a reliable source of energy, since the wind doesn’t always blow and the sun doesn’t always shine. Accordingly, for each megawatt of wind and solar capacity we develop, another megawatt of back-up power, typically powered by fossil fuels, has to be in place. This redundancy adds to the already unacceptable cost of “green energy.”

Even if we ignore the economic aspects and accept the progressive proposition that the government has an infinite supply of money available to spend, the idea that the wind and sun can power our cars makes no sense. The reason that our vehicles use gasoline is that gas is a very efficient means to store energy. A gallon of gasoline, which weighs a little over six pounds, contains far more useful energy than the six pounds of the best batteries on the market. So, before you factor anything else in, gasoline’s weight to power ratio makes it the better choice in terms of energy efficiency. Will batteries improve over time? Sure they will, although modern, high-capacity batteries typically involve using materials that come with their own environmental hazards. Still, no battery that exists or that is being contemplated comes close to matching the energy storage capacity of gasoline.

Next, there are the unavoidable inefficiencies of the electric transmission system itself. America’s power grid is a wonder of modern technology and it’s obviously necessary to distribute the power we need to run our refrigerators and computers, light our homes and keep the pumps and motors that industry depends on turning. Yet, electric power distribution is hardly the model of efficiency. A significant portion of the energy generated by power plants is lost in distribution [6], due to voltage drops, resistant heating and other line losses. In many cases, moving energy around the nation via a network of thousands of miles of metal cables represents the best way to transmit power, but it’s hardly the most efficient way to do it.

Consider motor vehicles. By the time we work our way through all of the inherent, expensive and unavoidable inefficiencies of generating, transporting and storing so-called green power in the vain effort to fuel our transportation needs, we are left with the unavoidable conclusion that doing so would create more of a demand for power, not less. Or, to put the president’s proposition another way, if America somehow transformed itself into a nation in which the transportation sector was fueled entirely by electricity, we would be significantly less energy efficient than we are today. We can, and should, continue to develop hybrids, for that technology provides even more bang for our fossil fuel buck, without pretending that the ultimate source of power – crude oil – isn’t our best energy option.

Ultimately, if we can figure out a way to use as-of-yet undiscovered solar-powered catalysts to produce hydrogen inexpensively, we may free ourselves from the tyranny of fossil fuels altogether. Yet, as technology proceeds along those paths, we shouldn’t allow ourselves to be distracted by the promise of a green energy panacea.

Will Obama’s Goldman Sachs Attack Expose Al Gore? Or Other Dems?

Will Obama’s Goldman Sachs Attack Expose Al Gore? Or Other Dems?

Posted By Richard Pollock On April 22, 2010 @ 12:00 am In Column 1, Money, US News | 36 Comments

Whether Wall Street colossus Goldman Sachs has committed a crime remains to be seen, but the investigation may well uncover the environmental lobby and its public figurehead. For nearly a decade, Goldman Sachs has been a quiet but major investor in cap and trade. And Goldman’s main investment partner has been Al Gore.

About a decade ago, Goldman executives recognized that personal fortunes could be made with the invention of a carbon trading system through the passage of a U.S. cap-and-trade bill.  This area was well suited to Goldman Sachs, the architects behind the complex world of futures trading and exotic derivatives.

Goldman joined Al Gore in 2004 and capitalized his investment company, Generation Investment Management. Strangely for a man who was a heartbeat away from the presidency, Gore decided to register his company in London — not the United States.

In November 2004, Gore unveiled GIM. Standing at his side was David Blood, the CEO of Goldman Asset Management. Blood was to become his co-founder (the new company was quickly nicknamed “Blood & Gore”). It was established with the initial capital of $206 million, much of it from Blood clients at Goldman Sachs.

Gore also turned to Goldman Sachs guru (and later Bush Treasury Secretary) Henry Paulson to help him establish GIM. At the time, Paulson himself was an eco-warrior of sorts, serving as chairman of the board of the Nature Conservancy.

Today, seven of Gore’s GIM chief partners are from Goldman Sachs. The company is now valued [1] at $2.2 billion.

It doesn’t stop there. The Goldman Sachs/Gore team then established the Chicago Climate Exchange (CCX), a new cap-and-trade carbon trading platform, and partnered with the UK-based Climate Exchange, Plc (CLE), a holding company [2] listed on the London Stock Exchange [3]. CLE does carbon trading in Europe. In late 2004, they also created the Chicago Climate Futures Exchange [4] (CCFX).

In September of 2006, Climate Exchange Plc acquired [5] the remainder of CCX it didn’t own [6] and placed £12.2 million of new shares with Goldman Sachs [7].

Goldman is reported to have made an investment of $23 million in the venture. Between Gore and Goldman, they are the largest investors in the Chicago Climate Exchange, owning 20% of it.

Last year, in an expose from Rolling Stone writer Matt Taibbi (Inside the Great American Bubble Machine [8]“) Taibbi identified Goldman Sachs as the father of some of our most notable modern day economic crises. He profiled a firm that handsomely profiteered over both the tech bubble and the metastasizing housing bubble.

Taibbi predicted Goldman’s next big play in cap and trade. This would become our next bubble. Taibbi tagged Goldman Sachs a “gangster state, running on gangster economics.”

Marc Morano, publisher of Climatedepot.com, agrees:

Goldman Sachs is helping to engineer the next great bubble. And we are talking about subprime science, subprime politics, and subprime economics. Goldman Sachs is at the forefront of the subprime economics of carbon trading.

Although cap and trade has temporarily faded in Washington, D.C., carbon trading still lives in the nation’s capital. Next week, Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joe Lieberman (I-CT) are expected to unveil a new cap-and-trade bill.

The idea of turning a free, colorless, and odorless gas into a product still attracts the money people. Myron Ebell, director of Freedom Action, says:

These Gore investments could potentially make him a billionaire. For a guy who started with just a small fortune he could end up with a very large one.

In describing its own mission, CCFE’s website is reminiscent of last Friday’s SEC fraud charge on mortgage derivatives:

Chicago Climate Futures Exchange® operates the leading U.S. marketplace for environmental derivatives, financial instruments whose underlying values are tradeable environmental assets.

CCFE was launched in 2004 and is part of the Climate Exchange Plc (LSE: CLE.L) group of companies, which comprise the world’s leading exchanges specializing in environmental derivatives. Also owned by Climate Exchange Plc are the European Climate Exchange® (ECX®) and the Chicago Climate Exchange® (CCX®), of which CCFE is a subsidiary. ECX is the dominant exchange by trading volume for carbon derivatives in the European Union Emissions Trading Scheme.

Morano thinks the tarnished Goldman Sachs brand can taint Al Gore and cap-and-trade advocates:

You add to that the underpinnings of the people who backed [cap and trade] and helped create it are tied to Al Gore and Goldman Sachs, and then you have a real crisis in confidence. And then you have more woes for the global warming establishment.

Goldman Sachs is one of the most politically connected investment firms in all of America. In the 2008 political cycle alone, the Goldman Sachs PAC lavished $5.9 million upon candidates for Congress.

Three out of four Goldman Sachs dollars went to Democrats. Nearly $1 million more went to Barack Obama. Goldman Sachs was the second-highest contributor to the Democratic presidential candidate. And in the last three years Goldman Sachs spent a cool $12.3 million to lobby the halls of Congress.

Even Barack Obama, who seems to be needling Goldman in his war against Wall Street, has himself turned to the storied Wall Street firm. Neel Kashkari, who led Goldman’s security investment banking practice, was tapped to run Obama’s TARP government bailout program.

As the presidential attack on Goldman intensifies, will Obama wound some of his closest political allies?