Solyndra Scandal Ends Green Jobs Myth

Morning Bell: Solyndra Scandal Ends Green Jobs Myth

Posted By Lachlan Markay On September 16, 2011 @ 10:09 am In Energy and Environment,Enterprise and Free Markets | 21 Comments

President Barack Obama’s solution for America’s unemployment woes has been a stubborn campaign to spend hundreds of billions of dollars on economic “stimulus”–much of it on so-called “green jobs.” Report after report has shown the approach to be a total failure. And now, a new scandal involving Solyndra, a bankrupt solar panel company in California, should be the final nail in the coffin for the government’s meddling in the free market.

“[W]e can see the positive impacts [of the stimulus] right here at Solyndra,” Obama claimed when he spoke at the company’s newly unveiled factory [1] in May of last year. He was correct that the results of his stimulus would be on display at that factory. But he was wrong that those results would be positive. Little more than a year later, the company has filed for Chapter 11 bankruptcy protection and plans to lay off more than 1,000 employees.

The Solyndra factory where Obama spoke was built after the company received a $535 million loan guarantee from the Energy Department as part of the stimulus’s green jobs push. “Through the Recovery Act, this company received a loan to expand its operations,” Obama noted. “This new factory is the result of those loans.”

But “everyone knew that the plant wouldn’t work,” according to a former Solyndra employee [2]. So why was the President so sure of the plant’s success when he spoke there? What’s more, the company was built on “a model that says, well, I can build something for six dollars and sell it for three dollars,” according to an industry analyst [3]. That would normally be a red flag for investors. So why did the President claim that “the true engine of economic growth will always be companies like Solyndra”?

The answer to both of those questions: The government’s decisions are driven by politics and ideology and are divorced from economic reality. Want proof? Take a look at a January 31 e-mail [4] between Office of Management and Budget staff regarding “Solyndra optics” — that is, how the issue looks in the public’s eyes. ”If Solyndra defaults down the road, the optics will arguably be worse later than they would be today,” they wrote, adding:

In addition, the timing will likely coincide with the 2012 campaign season heating up, whereas a default today could be put in the context of (and perhaps even get some credit for) fiscal discipline / good government because the Administration would be limiting further taxpayer exposure letting bad projects go, and could make public steps it is taking to learn lessons and improve / limit future lending.

In other words, in January the Administration was essentially letting the 2012 campaign dictate decisions on the federal government’s financial involvement with Solyndra. They were not responding to normal profit-and-loss signals, as they should. Had Energy Department bureaucrats been investing their own money, they might have been more careful. But it was others’ money — taxpayers’ money — at stake. Self-interested investors, who naturally weed out bad investments, were wholly absent. The result: Taxpayers are likely to lose up to $535 million, while the people who made the decision to throw money at Solyndra have, so far, been completely insulated from reprisal.

Much attention has been paid to accusations of cronyism in the Energy Department, given that a major Solyndra investor is also a big Obama donor [5]. But the fundamental lesson of the Solyndra scandal is not that money buys political favors. That now goes without saying. The real takeaway is that government intervention in the economy is a fool’s errand, as Heritage’s Nicolas Loris notes [6]:

Solyndra exemplifies the government’s abysmal track record of picking winners and losers in the marketplace, and the solar company is not the only example of energy stimulus struggles. With a number of targeted energy tax credits set to expire at the end of this year or next, industry groups are lobbying hard for extensions. Especially given the U.S. fiscal situation, this is a time to end all energy subsidies—not to extend wasteful, market-distorting policies. When the government decides to favor a technology with subsidies, it’s a good bet that subsidy ‘winner’ is a loser in the marketplace.

Indeed, at least four other companies to receive money from Obama’s stimulus package have gone bankrupt, Fox News reports [7].

Even where companies do create jobs, they do so at such exorbitant cost that the effort cannot reasonably be considered a success. To date, The Washington Post reports [8], the Energy Department loan guarantee program from which Solyndra benefitted has created one new permanent job for every $5.5 million spent. Lend that kind of money to a private business in an industry that doesn’t rely on taxpayer support, and it will put hundreds if not thousands to work.

Government subsidies are invitations for political favoritism, of course. But more importantly, as engines of job creation, they simply don’t work (just ask Spain [9]). Sure, the Administration’s “green jobs” program has led to allegations of corruption. But it has also failed even in its foremost task of creating jobs for an economy with a chronic unemployment problem. Columnist Jim Pethokoukis writes [10], “Solyndra is the logical endpoint of Obamanomics.” Unfortunately, the American people are paying the price for getting us there.

“We didn’t have the green thing back in my day.”

THIS IS REALLY GOOD! SEND TO ALL YOUR
KIDS & GRANDKIDS
In the line at
the store, the young cashier told the older woman that she should
bring her own
reusable grocery bags because
plastic bags weren’t good for
the

environment…….
The woman
apologized and explained,
“We didn’t have the green thing back
in my day.”
The clerk responded,
“That’s what’s caused our problems today.
Your generation wasn’t green and
did not care enough to save our environment.”

He was right, that
generation didn’t have the green thing in its day.

Back
then
, they  returned their milk
bottles, soda bottles and beer
bottles to the store.

The store sent them back to
the plant to be washed and sterilized and refilled,
so it could use the
same bottles over and over. So they really were recycled.

But they didn’t have the green thing
back in that customer’s day.
In her day, they walked up stairs, because they
didn’t have an escalator in every store and office building.
They walked to the grocery
store and didn’t climb into a 300-horsepower
machine every time they had to go two blocks.

But she was right. They didn’t have the green thing in
her day.

Back then, they washed the baby’s diapers because
they didn’t have the throw-away kind.

They dried clothes on a line, not in an
energy gobbling machine burning up 220 volts – wind and solar power really did dry the
clothes.

Kids got hand-me-down
clothes from their brothers or sisters, not always brand-new
clothing.

But that old lady is right,
they didn’t have
the green thing back in her day.

Back then, they had one TV, or radio, in the  house – not a TV
in every room.

And the TV had a small screen the size of a
handkerchief, not a screen the size of the state of Montana .

In the
kitchen
, blended
and stirred by hand because they didn’t have electric machines to do everything for
you.

When they packaged a
fragile item to send in the mail, they used a wadded up old newspaper to cushion
it,
not Styrofoam or
plastic bubble wrap.
Back
then
, they didn’t fire up an engine and burn gasoline
just to cut the
lawn. They used a push mower that ran on human power.

They exercised by working so they
didn’t need to go to a health club
to run on treadmills that operate on
electricity.

But she’s right, they
didn’t have the green thing back then.
They drank from a fountain when they were thirsty
instead of using a cup or a plastic
bottle every time they had a drink of water.

They
refilled

their writing pens with ink instead of buying a new pen, and they replaced the
razor blades in a razor
instead of throwing away the whole razor just because the blade got
dull.
“But they didn’t have the
green thing back then.”
Back then, people took the streetcar or a bus and
kids rode their bikes to school or walked instead of turning their moms into a
24-hour taxi service.

They had one electrical outlet in a
room, not an entire bank of sockets to power a dozen appliances.
And they didn’t need a computerized gadget
to receive a signal beamed from satellites 2,000 miles out  in space in order to
find the nearest pizza joint.

But isn’t it sad that the current
generation laments how wasteful the old folks were just because they didn’t have the green thing
back then?

Al Gore’s Green Blasphemy

 

Al Gore’s Green Blasphemy

Posted
By Rich Trzupek On November 23, 2010 @ 12:45 am In FrontPage | 10
Comments

Back in 1994,
vice-president of the United States Al Gore cast the tie-breaking vote that
started us on the long road of taking American farms out of food production and
converting them to fuel production. While conservatives and libertarians argued
at the time that subsidizing ethanol production made no economic or
environmental sense, Gore and his green allies were certain that bio-fuels
would solve all the nation’s woes. Sixteen years later, Mr. Gore has apparently
seen the light, admitting that America’s rush to embrace corn
ethanol has been something of a mistake.

Here is what
Vice President Al Gore had to say [1] about his role in subsidizing
ethanol, while speaking at the Farm Journal conference back in 1998:

I was also
proud to stand up for the ethanol tax exemption when it was under attack in the
Congress — at one point, supplying a tie-breaking vote in the Senate to save
it. The more we can make this home-grown fuel a successful, widely-used
product, the better-off our farmers and our environment will be.

Contrast that
with what the vice-president is quoted as saying in this report from Fox [2], statements he made while
he was attending a recent green energy conference held in Athens, Greece:

It is not a good policy to have these massive subsidies for first-generation
ethanol. First-generation ethanol I think was a mistake. The energy conversion
ratios are at best very small. One of the reasons I made that mistake is that I
paid particular attention to the farmers in my home state of Tennessee,
and I had a certain fondness for the farmers in the state of Iowa
because I was about to run for president. The size, the percentage of corn
particularly, which is now being (used for) first-generation ethanol definitely
has an impact on food prices. The competition with food prices is real.

While it’s
nice to hear that the hero of the environmental movement has embraced reality,
Gore’s conversion has come far too late. When Gore cast his critical vote in
1994, the bio-fuels industry produced about 1.4 billion gallons of ethanol each
year from less than fifty plants. Sixteen years
later
[3], as a direct result of government subsidies and tax
breaks, over a hundred new corn ethanol plants have been built and the amount
of ethanol produced in the United States has increased by almost an order of
magnitude, topping
10.5 billion gallons
[3] in 2009. Private investors have
invested tens of billions of dollars to build today’s massive corn ethanol
infrastructure and the government has invested tens of billions more to ensure
that it remains in place. Had Gore faced facts in 1994, the public and private
sectors could have used those funds more wisely and more profitably elsewhere.
But now? Having made this huge investment, the pain of admitting defeat,
suffering our losses and walking away from corn ethanol may be too much to
bear.

Congress has
to decide whether or not to renew the current $7.7 billion corn-ethanol subsidy
by the end of the year. On the one hand, it seems madness to prolong a fuel
industry that – at best – can only generate a bit more energy than it consumes
(and more often less), that takes cropland out of food and feed production and,
as result, raises the prices and lowers the availability of food. A 2007 Department of Agriculture report [4] clearly
outlined the effects of subsidizing corn ethanol: a steady decrease in food
production, concurrent decreases in agricultural exports and rising costs of
food products.

As distasteful
as it may be to bite the bullet and end corn-ethanol subsidies, the alternative
may be even more unpalatable to Congress. Demanding that the corn-ethanol
industry stand on its own two feet would result in the closure of dozens of
plants, the loss of thousands of jobs, writing off billions of dollars of
losses and finding new sources of petroleum to replace the billions of gallons
of ethanol that Americans put in their gas tanks each year. Both options are
painful, and while a free market advocate like me would advocate cutting our
losses, learning a painful lesson and moving beyond ethanol, Congress may not
be so inclined. The benefits of ending the ethanol subsidy are long-term and
market-driven. Few politicians are motivated to action by that big a picture,
particularly when the short-term damage can be so devastating to their careers.
How can even the most staunchly conservative farm-belt congressman face his
constituents after voting to end ethanol subsidies? If and when subsidies end,
farm income will drop, the property value of farms will plummet and thousands
of workers employed in the ethanol industry will find themselves on the
streets, looking for work in the worst economic climate since the Great
Depression.

The fact that
Al Gore has finally come to grips with corn-ethanol reality is a remarkable
development, but his conversion has probably come far too late to be of any
real value. The policies that he promoted throughout much of his political
career have come home to roost and the economic damage that those policies have
done is undeniable. Gore – more than anyone else – helped to create the
renewable energy monster that saps our nation’s resources and undermines our
prosperity today. Having profited handsomely from those efforts, the ex-vice
president’s belated mea culpa has fallen incredibly flat.

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.

Job situation…

Job situation…

June 5th, 2010

Al Gore’s growing carbon footprint

Al Gore’s growing carbon footprint

Thomas Lifson

The environmental impact of Al Gore is growing faster than his waistline. The warmist con game has been very lucrative for the king of carbon credits. He and Tipper have just added to their collection of energy-gobbling homes with a nearly 9 million dollar 5 bedroom, 9 bath Italian-style villa in the celebrity-studded coastal enclave of Montecito, California, home to Oprah Winfry and many other celebrities. Al certainly likes living large. The home comes complete with 6 fireplaces. How are Al and Tip going to use them without generating carbon dioxide?

Keeping the house functional while Al and family are on their private jet or in any of their other houses will eat up energy and resources.
Of course, as Ed Lasky notes, the Democrats are supposed to be for the little people. No doubt there are homeless people in Santa Barbara, next to Montecito, who really need shelter more than the Gores, who have other lavish residences. Let them eat carbon credits?
Hat tip: Ed Lasky

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?