Politics Could Set Back Clean Energy

You may be able to debate the necessity of subsidies for renewable energies like wind or solar. I'd love to see subsidies help push these energy sources toward grid parity quickly, but I definitely understand the argument that if they can't stand on their own, we shouldn't help them out.

But I don't understand, and can't defend, arguments that we should eliminate subsidies for renewable sources of energy while retaining subsidies for non-renewable energy sources. Are we deliberately trying to test whether global warming is indeed true? Do we enjoy smog, toxins in our water, and importing oil from unfriendly sources? Or are we just proving that the oil industry is so entrenched with the politically powerful that our legislators will do anything to keep the oil industry wealthy?

I would like to think that the first two are rhetorical and sarcastic questions, but after sifting through Paul Ryan's "Path to Prosperity: Restoring America's Promise," the third possibility still troubles me. In an op-ed piece for The Wall Street Journal commenting on the plan, Ryan said he would "roll back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration." If that were true, I would applaud Ryan, as would most of the greentech industry. But Ryan doesn't mention, and even fails to answer in direct questions, why his plan keeps $40 billion in tax loopholes for Big Oil while cutting greentech funding.

Republicans haven't hidden their distaste for anything green, and the market isn't stupid, so you might think that "green" funding would have dried up after Republicans took control of the House of Representatives. After all, if greentech were such an "expensive" energy source, free market investors would never spend money on any energy source that needs subsidies to compete. But following the dollars tells a different story:

  • Just yesterday, General Electric (NYSE: GE  ) announced that it had both completed the acquisition of Prime Star Solar and achieved a 13% efficient CdTe solar module. This beats First Solar's (Nasdaq: FSLR  ) 11.6% efficiency, but there's no word yet on whether GE can also beat First Solar's $0.75 per watt.
  • Venture capital investors put a total of $2.6 billion into 115 greentech deals in the first quarter of 2011 alone.
  • First Solar announced a new plant in Arizona, and Chinese firms like Trina Solar (NYSE: TSL  ) and Yingli Green Energy are expanding their U.S. operations.

If greentech were such a bad idea, why would venture capitalists invest dollars in the sector? Aren't these folks supposed to follow the pulse of the future, betting that huge returns will follow?

In short, the facts tell me that:

  • Oil prices are rising.
  • Exploration for oil is costly and risky, as the Gulf spill last year demonstrates.
  • Nuclear energy is not going anywhere after the Japan disaster.
  • Renewable, solar in particular, has seen costs fall rapidly over the last few years.
  • Free-market funding is quickly flowing into new "green" companies.

According to these trends, oil is the past, and solar, wind, geothermal, and other renewable sources are the future. Wouldn't we be going backward to leave subsidies for oil intact, but eliminate them for greener energy?

We need to be smarter about greentech
It's true that a few bad deals have tarnished government support for greentech companies. I've even argued that we needed to rethink how we handed out government grants after Evergreen Solar (Nasdaq: ESLR  ) and Energy Conversion Devices (Nasdaq: ENER  ) decided to shift at least some production to China and Mexico, respectively, after getting federal dollars.

And even advanced battery makers have yet to live up to their promise. But there's no way A123 Systems (Nasdaq: AONE  ) or Ener1 (Nasdaq: HEV  ) would be where they are today without grants from the government.

I'm not advocating for increased subsidies, or even subsidies at all. A level playing field would be fine. But cutting any subsidies greentech now has while leaving big oil tax benefits in place is disingenuous, contrary to national security interests, and bad for the economy. At this turning point for greentech, we can choose to foster its growth, stand idly by, or stunt its development.

Whether you believe in green energy or not, crippling clean energy technologies' chances for growth by putting them at a disadvantage is a mistake we can't make. Wherever your political interests lie, I hope we can all agree on that.

Let me know your thoughts about Ryan's plan, greentech subsidies, or my thoughts in the comments section below.

Interested in reading more about greentech? Add your favorite stock to My Watchlist, and My Watchlist will find all of our Foolish analysis on that stock.

Fool contributor Travis Hoium is a solar investor and owns shares of solar companies First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On April 08, 2011, at 2:59 PM, GCshipbuilder wrote:

    I can't argue geothermal because I don't know much about it, but wind and solar are good for ideologies, not technologies. They sound good, they will save the world, but they don't work at a level to support humanity. They may be able to be supplemental power sources, but their cost is still too significant to implement at a level to reduce demand on coal. Especially when you consider the cost of installation (parts, labor, permits, etc). You fail to mention that nobody typically uses unfriendly sources of oil to provide electricity, they use coal. As for smog, get out of the city. It's no secret that smog is linked to geography. If you put a million cars in one city and surround it by mountains and buildings, the gases become trapped and can't go anywhere. However I do agree that giving subsidies to energy companies should be removed altogether. With billions in annual profits, I think any and all subsidies should be returned annually (or used to buy down gas prices).

  • Report this Comment On April 08, 2011, at 3:40 PM, viper32080 wrote:

    The Republican party does not care about advocating policies that conform to reality. Ryan's proposals to solve the problem of national deficits is a case in point. Cutting spending back to 2008 levels without rasing taxes is no solution. Taxes were higher in 2008 than they are now and we still had record deficits for the time back in 2008. Ryan, however, like the rest of the GOP do not deal with reality as it exists on anything, rather they create policy ideas out of lala-land and expect them to work in the real world. When they do not, they try to blame others for the problems their policies cause. Remember when were told the Bush tax cuts would create even bigger surpluses than was created by Bill Clinton's balanced budget. As far as enrgy policy goes, asking the GOP to promote sensible ideas on complex topics such as energy generation and use is like asking Sarah Palin to explain what a fractal is. The GOP is the party of creationism, afterall. Expecting sense out of anyone as dumb as the average redneck who votes Republican is not a winning expectation. As far as the earlier comment above, the likes of General Electric, Goldman Sachs would not be investing in the wind and solar sectors if they were not viable energy sources. Even Berkshire Hathaway is a major investor in wind through its MidAmerica holding. Buffet does not invest pipedreams. Wind is for real as is solar and other renewables. Besides, if oil and coal are really so economical as the GOP says, why do the industries have to receive hundreds of times more subsidizing than renewables from the State and Federal governments.

  • Report this Comment On April 08, 2011, at 4:32 PM, vinbaba99 wrote:

    Republicans I see as Texas based, meaning keep the oil going. Most of the power, is leaning that way. Believe or not, there are people out (with enough smarts) that can make it better for everyone.

  • Report this Comment On April 08, 2011, at 4:47 PM, DoctorLewis4 wrote:

    GOP vs GOP battle over nat gas is looming. Tea party is really the big oil party, as it was big oil that paid for all those rallies.

  • Report this Comment On April 08, 2011, at 4:55 PM, buffalonate wrote:

    They just announced that their is a new natural gas transportation bill that has 60 cosigners. It provides support for 5 years instead of 20 and they believe it has the support to pass.

  • Report this Comment On April 08, 2011, at 6:06 PM, DonSolar wrote:

    The politicians go where the money and power is. Big oil has paid for a lot of their campaigns. Typically they are NOT forward looking. What the GOP is doing is NOT in the best interest of the country or it citizens. They are essentially pandering to their lobbyists.

    Noemployee: Your information is out of date. Solar is already cheaper than the grid (despite the huge subsidies the oil and coal get) in Hawaii, most of California, and most of the southwest (including ironically most of Texas). Concentrator solar cells are now 42.4% efficient http://en.wikipedia.org/wiki/File:PVeff(rev100921).jpg and there is now production efficiency at 41.4% http://www.greentechmedia.com/articles/read/update-solar-jun... The efficiency will continue to rise (check out Rainbow Concentrator at www.sol-solution.net)

    In California you are starting to see a lot of people going solar with electric cars. Hopefully smog may become a bad relic from the past.

    Anytime you subsidize something you get inefficiencies. By subsidizing energy, the demand is for less energy efficient products, so those are the products that are produced. Similarly by not considering CO2 a waste product, then companies are free to produce as much of the waste product as they want. Imagine if we didn’t require sewage removal, and people could dump it wherever they wanted. Cities would smell disgusting (look up London smell 1800).

  • Report this Comment On April 09, 2011, at 12:02 AM, sailrick wrote:

    Paul Ryan hasn't a clue, or he is just dishonest.

    Fossil fuels are costing us hundreds of billions every year. Two wars have killed how many? The last Iraq war will likely cost about $1.8 trillion. Health costs from coal are likely $150 billion a year.

    Other than support for Israel, our entire national interest in the Mid-East is about oil and pipelines. Hence the wars and mistrust there.

    Then there's the military costs of protecting oil, tens of billions a year, even without a war ongoing. Environmental costs are beyond any $$ measurement.

    Contrary to what the science free GOP congress thinks, man made global warming is real. There is no debate about that among honest scientists. The only debate now, is about how bad it will be. Is there uncertainty? Sure, like there always is in science.

    Uncertainty cuts both ways. The Arctic is melting about 20 years ahead of what scientists expected, just a few years ago.

    What is going on right now in congress is criminal. After 6 investigations of climategate, which all found absolutley no wrong doing by scientists, Sen Inhofe demanded another investigation. It had the same result. Yet they are still carrying on a witch hunt in congress, bringing in as witnesses, people who have no expertise in science, let alone climate science, and the usual fossil fuel industry funded skeptics. John Christy, the only climate scientist who the GOP had as a witness, has very little credibility left. His tesimony has been widely debunked. It was complete nonsense. Their favorite climate expert, Monckton is not a scientist at all, and you could fill several books with the thorough debunkings of his disinformation.

    He is a complete and utter charlatan, as any scientist will tell you. But the GOP has twice called him as a witness in Congress. The last time, in May 2010, he was their only witness for a House Select Committee On Energy Independence and Global Warming hearing.

    In 2008, he was introduced to the House Subcommittee on Energy and Environment, by Joe (apologise to BP) Barton (R-TX) .

    He referred to Monckton, in his opening remarks, as being generally regarded as one of the most knowledgeable, if not the most knowledgeable, experts on the skeptic side. He is not a scientist!! He's a con man, with a glib tongue, who has been proven wrong on every point he has ever made about climate science. Repeatedly.

    Coal is killing 20,000 Americans every year. It is poisoning our fish with mercury. It has ruined over 700 streams and rivers in Appalachia, the result of mountaintop removal.

    The Alberta Tar Sands has been called the most destructive project on the planet, threatening the Boreal Forest of Canada, one of the most important ecosystems on the planet. It is threatening the Athabascan River watershed. They use 5 gallons of fresh water for every gallon of oil produced and are using relatively clean natural gas to process the oil. The tar sands oil's total CO2 emissions are three and a half times that of normally produced oil.

    The low hanging fruit of fossil fuels is gone. Tar Sands, drilling for oil in the Arctic, and deep water, which as we have seen is problematic. Hydraulic fracturing for natural gas is probably threatening our fresh water supply.

    One estimate of fossil fuel subsidies is $49 billion a year. Oil has been subsidized since 1918 nonstop. Coal has been subsidized since 1932 nonstop. The U.S. gives TWICE as much in subsidies and tax credits to fossil fuels as it gives to all renewable combined. And a big chunk for renewables goes to corn based ethanol, which only big AG and other industrials want.

    The entire global warming denial phenonemon is completely manufactured.

    "The target audience of denialism is the lay audience, not scientists. It’s made up to look like science, but it’s PR."

    David Archer

    "This is a triumph of disinformation. It is a living proof of the success of one of the boldest and most extensive PR campaigns in history, primarily financed by the energy industry and executed by some of the best PR talent in the world."

    http://www.desmogblog.com/slamming-the-climate-skeptic-scam

    "Climate Change and Disinformation"

    http://energysolutionswecanbelievein.blogspot.com/

    Do some reading if you doubt what I say.

    "Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming"

    by Naomi Oreskes and Erik Conway

    Climate Cover-Up": The Crusade to Deny Global Warming"

    by James Hoggan with Richard Littlemore

    "Scorcher: The Dirty Politics of Climate Change"

    by Clive Hamilton

    He outlines the decade-long, coal-industry funded campaign in Australia to deny climate science.

    "Science as a Contact Sport: Inside the Battle to Save Earth's Climate"

    by Stephan H. Schneider and Tim Flannery

    "The Boiling Point" and "The Heat Is On" by Ross Gelbspan

    By the way, if you peruse the book shelves at your local Barnes and Noble, you will notice at least as many, if not more, books by climate change skeptics, as mainstream climate science books. There is a reason for this. The same "think tanks" who are spreading the disinformation for the fossil fuel industry, are funding most of these books. They promote 78% of skeptical books on climate change. This has resulted in at least 64 climate change skeptic books.

    There would be no denialist movement or literature if not for these groups. Books are another part of how they have manufactured the impression of a controversy about climate science, where there really isn't one.

    These 32 conservative organizations have all been involved in the tobacco industry's campaign to deny the science showing the dangers of tobacco.

    They are all now involved in the campaign to deny the science of climate change.

    The call themselves think tanks, but are really industry PR front groups. The Tea Party has been organized and coached by Koch brother interests, through Americans for Prosperity, which is on the list below. And guess what? They are almost all deniers. Who do they think spoon fed them all those ridiculous skeptic arguments?

    1. Acton Institute

    2. American Legislative Exchange Council (ALEC)

    3. Alexis de Tocquerville Institute

    4. American Enterprise Institute (AEI)

    5. Americans for Prosperity

    6. Atlas Economic Research Foundation

    7. Burson-Marsteller (PR firm)

    8. Citizens Against Government Waste (CAGW)

    9. Cato Institute

    10. Competitive Enterprise Institute (CEI)

    11. Consumer Alert

    12. DCI Group (PR firm)

    13. European Science and Environment Forum

    14. Fraser Institute

    15. Frontiers of Freedom

    16. George C. Marshall Institute

    17. Harvard Center for Risk Analysis

    18. Heartland Institute

    19. Heritage Foundation

    20. Independent Institute

    21. International Center for a Scientific Ecology

    22. International Policy Network

    23. John Locke Foundation

    24. Junk Science

    25. National Center for Public Policy Research

    26. National Journalism Center

    27. National Legal Center for the Public Interest (NLCPI)

    28. Pacific Research Institute

    29. Reason Foundation

    30. Small Business Survival Committee

    31. The Advancement of Sound Science Coalition (TASSC)

    32. Washington Legal Foundation

    Koch brothers created #5 and #9 and have their hands in several others, including Gerorge C Marshall Institute, and some not on this list.

    Steve Milloy #24 This is who FOX News presents as a climate expert.

    He's not even a scientist but a professional PR man, and a registered and paid lobbyist for fossil fuel interests. Did Fox ever disclose that?

    Maybe you've heard of Fred Singer, a well known skeptic scientist. Fred has been an expert supporting the interests of industry on topics ranging from acid rain, asbestos, CFCs, Tobacco, global warming. Singer also disputes that CFCs deplete the ozone layer. The effect of CFCs on the ozone layer is a well established scientific fact. Since the use of CFCs was limited by the Montreal Protocol, the hole in the ozone has diminished substantially. A Nobel prize was given to the scientists who figured it out. In a scientific advisory role, he got the Reagan administration to stall action on acid rain for years. Singer has been funded by big oil and the Reverand Sun Myung Moon, and Tobacco.

    Ater 3 years, and roughly 4,000 hours studying global warming, the science and it's debate, and after reading at least 4,000 articles, mostly written by scientists, I think I know what I'm talking about, more than the vast majority of Americans. Anyone who wants to learn something about the science would do well to start at Skeptical Science website.

    80% of political contributions from oil goes to the GOP

    90% for coal

    Senator Inhofe is the biggest recipient of oil money in the Senate

    Joe Barton is the biggest recipient of oil money in the House

    They are using the cover of cutting the deficit, to destroy decades of environmental progress. 75% of Americans support the EPA regulating greenhouse gases. The GOP even wants to cut climate research funding and the tiny bit the U.S gives the IPCC.

    $2.5 million Wow, that will fix the deficit.

  • Report this Comment On April 09, 2011, at 1:04 AM, sailrick wrote:

    Fossil Fuel Follies

    "These oil industry subsidies are nothing to scoff at. In 2005, then-President George W. Bush authorized a total of $32.9 billion worth of new subsidies for the industry over five years, bringing the annual total of their subsidies to a staggering $39 billion. The new subsidies were put in place at a time when Americans were paying the highest price for gasoline at the pump in history, which coincided with the largest oil company profits to date. "

    http://www.desmogblog.com/congress-seeks-end-billions-subsid...

    Massey Energy violated the Clean Water Act 4,500 times between 2000 and 2007.

    In 2000, a subsidiary of Massey Energy had a 300 million gallon spill of black toxic sludge from a coal processing plant in Kentucky ( nearly 30 times the size of the Exxon Valdez oil spill). The EPA called it the worst environmental disaster in the history of the southeastern United States. The water of 27,000 people was contaminated. A plume of sludge extented 75 miles to the Ohio River. There was an investigation by MSHA that was squelched after Bush's election. The investigators were ready to proceed with 8 serious violations, with possible criminal charges. The lead investigator was reassigned, and demoted then fired.

    He was replaced with another, who on the first day said he would close the investigation within a week. He later got a seat on the board of directors of Massey Energy. It probably didn't hurt that the coal industry and Massey Energy virtually won W. Virginia for Republicans in an upset victory, after contributing heavily to the campaign.

    Massey Energy got off with a $55,000 fine.

    The Bush administration played a major role in the propaganda campaign to discredit science. President Bush authorized a major study on climate change, then had a Petroleum Institute lawyer edit the report done by climate scientists, to water it down.

    They also tried to prevent world renowned climate scientist James Hansen from releasing a report about global temperature for 2005. There was a systematic attempt to stifle the free speech of climate scientists at NASA's Goddard Institute for Space Studies, where Hansen works. They had public policy people inserted into the Institute to ride herd over the scientists.

    To learn much more about this, read the book:

    The Petroleum Institute lawyer that edited the climate report was also involved in this.

    "Censoring Science: the Political Attack on Dr. James Hansen and the Truth of Global Warming" by Mark Bowen

    Science decides science, not talk show hosts, scientifically illiterate congressmen, retired TV weathermen, political scientists like Monckton, Lomborg, economists like McKitrick, fossil fuel lobbyists and PR men like Steve Milloy. And certainly not oil industry funded scientists for hire, like all the well known skeptic scientists. It's not just that they are for hire, they share the same extreme right political ideology, of no regulations, no envrionmental regulation, free market unregulated capitalism.

    These are the same people who pushed for the Citizens United Supreme Court decision that allows unlimited political funding by corporations. Steve Milloy was involved with this, for example.

    "The tentacles of the Kochtopus: What you need to know about the financiers of the Radical Right"

    http://climateprogress.org/2011/04/04/kochtopus/

    Read the full report here- 31 pages

    http://www.americanprogressaction.org/issues/2011/04/koch_br...

  • Report this Comment On April 09, 2011, at 1:24 AM, sailrick wrote:

    Commentary on US Committee hearing on climate change"

    By Bart Verheggen

    http://ourchangingclimate.wordpress.com/2011/03/31/commentar...

    The prestigous science journal "Nature" has twice publicly criticized the GOP for it's anti science stance and obtuseness on global warming. This is not something scientists normally do. They are not usually very good at public speaking and are averse to getting involved in policy debates or politics. But they are under attack by you know who. What is going on is beyond belief. The deniers are flat out dead wrong on the most important issue humans have ever faced.

    The greenhouse effect has been accepted science for a century.

    Fourier calculates colder earth without an atmosphere (1824)

    Tyndall discovers relationship between CO2 and long-wave radiation (1859)

    Arrhenius calculates global warming from anthropogenic CO2 (1896)

    Chamberlin models global carbon exchange including feedbacks (1897)

    Callendar predicts global warming increase catalysed by CO2 emissions (1938)

    Revelle predicts inability of oceans to sequester anthropogenic CO2 (1958)

    from "The Discovery of Global Warming" by Spencer Weart

    To summerize:

    the greenhouse gas effect was first proposed by Joseph Fourier in 1824, proven to exist by John Tyndall in 1858, and quantified by Svante Arrhenius in 1896.

    But for Rush Limbaugh and the Republicans and tea baggers, Global Warming is just an agenda cooked up by Al Gore and other liberals.

  • Report this Comment On April 09, 2011, at 10:48 AM, Peonfoot wrote:

    As an atheist writer, (Mirror Reversal, Peppertree Press, 2007) I blame religion for causing most of the problems of humanity, both presently and historically. The problem is religion distorts and perverts the worldview of the people it infects.

    Humans grew out of the Earth like every other living creature. We weren't created by some chimerical god that rewards blind faith and punishes evil doers. What kind of entity would create a creature knowing it would be sent to endless torture?

    Political leaders must realize that the way we take care of the planet this generation will determine the future of our species. There’s no god that’s going to come out of the clouds to help us. We’re on our own and the universe is indifferent.

  • Report this Comment On April 09, 2011, at 3:09 PM, mgreczyn wrote:

    With regards to subsidies, I have only two questions (well, really one worded two different ways): How many more decades will we have to shovel government money into the coal, oil, nuclear and natural gas industries before they are finally able to be economically competitive? How many hundreds of billions of dollars do we need to spend before the business of digging stuff out of the ground and lighting it on fire can stand on it's own?

    I say the above with a bit of sarcasm, but the truth is that energy subsidies have been going to fossil industries for 80 or 90 years now. I suppose that unless we get a nice, healthy dose of pollution along with our energy, we somehow feel cheated of our subsidy dollars. The real problem here is that fossil proponents have successfully branded clean energy subsidies as "green" subsidies while maintaining the more benign label of "energy incentives" for dirty energy sources.

  • Report this Comment On April 11, 2011, at 5:38 PM, whoisjohngalt000 wrote:

    I don't share your comments on Republicans rejecting green technology. I am a conservative and have been green since I was 9 (now 61). The problem with subsidies, is that they fund the implementation of technologies that are politically expedient but not necessarily cost effective. I have never supported this kind of technology rollout. What I support is increased R&D funding into technologies that have a chance of increasing the availability of energy while decreasing the cost of acquiring that energy. The decision of where people get their energy and use their energy will then be a no-brainer. The free market will accelerate the conversion to green tech. Had we committed to this R&D effort 40 years ago, we would have been a lot further ahead and maybe totally green by now with cheaper and more plentiful energy, and, by the way, cheaper energy would accelerate economic recovery because people would have more money to spend.

  • Report this Comment On April 12, 2011, at 10:37 AM, number2son wrote:

    "Had we committed to this R&D effort 40 years ago, we would have been a lot further ahead and maybe totally green by now with cheaper and more plentiful energy ..."

    Um, Jimmy Carter did that only to have Reagan roll back the clock. We're paying for that folly to this day.

    Trouble is, these days both the Dems and the GOP are corporate-sponsored frauds. With respect to alternative energy, they're both dancing to the tune of big oil. And we all suffer as a consequence.

  • Report this Comment On April 14, 2011, at 8:20 AM, jkl78 wrote:

    Hi there, The government shouldn't be competing with the private sector in investments. If an industry can't compete without government subsidies and bailouts, it's one that shouldn't continue.

    You say that greentech VCs are investing. So they should! But, it's not the government's job to distort the market and choose winners. I agree about rolling back oil and gas subsidies as well.

    Actually, if you look at the House Republican plan, why do you think they don't address oil and gas subsidies? It says it supports addressing corporate subsidies across all energy sources.

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