Happy New Year. With the new year comes the end of the Ethanol tax credit which has been in place for three decades. Interestingly, both fiscal conservatives and liberal environmentalists are glad to see it go. Ethanol production will continue, but it will do so without a subsidy.
The death of the subsidy makes sense from both these perspectives – subsidies should be provided to help make a new initiative worth exploring scalable. But, at some point, the subsidy should go away – 30 years for Ethanol may have been a little long in tooth. If it cannot sustain itself after thirty years, then any idea should be questioned.
The other perspective is Ethanol is not the panacea it was hoped to be. Looking back with data, the cost to produce and deliver the Ethanol when factored in, took away a significant part of its value proposition. Plus, the competition against the use of corn as a food product and its other industrial uses has to weigh into the equation. Ethanol will remain with us and it should, but we need to be mindful of the cost/ benefit relationship.
This relationship is important as we look at alternative energy sources. There are a number of ideas which have merit and are being done on some scale. Yet, they are not as competitively priced at this point and do require some form of subsidy to make them more scalable. This is where our history of government partnerships with business has made a huge difference through subsidies and standards that must be achieved, such as increased miles per gallon requirements on gas powered automobiles.
The EPA recently released more onerous guidelines on coal fired energy which have been coming for decades. The more forward minded utilities have been preparing for them, while the others were hoping they would go away. I am in agreement with making tougher standards on coal fired energy as the data is overwhelming on the negative impact on people and the environment. We need to diminish our use of coal and several utilities are doing so through the retirement of older plants and the use of cleaner coal plants and alternative energy sources.
We also need to be equally smart about fracking as a means to get at natural gas reserves, which are in abundance. I think we should explore fracking, but we need to look at data regarding the residual effects on people and the environment. There are numerous cases of poisoned water supply and I saw a recent report where there is a correlation between an increase in earthquakes in an area and the use of fracking. Correlation is not causation, but we need to do more homework to make sure we know what we are doing before we scale this even more.
And, while it scares everyone at some level, we need to look at nuclear power in a judicious manner. After what happened in Japan, one industry spokesperson said that could never happen here. Never? I remember Three Mile Island and Chernobyl, so words like always and never should be taken with a grain of salt. Yet, we should be exploring its expansion but with a transparent lens of the cost/ benefit/ risk analysis.
As for the renewable energy sources, here is where we need to get more serious. I am with T. Boone Pickens that we should focus on wind energy to a large scale. We have places in our country and off our coast, where wind energy could be a huge factor. The utilities have pockets of success as they are obligated to do so with future renewable standards, yet we could truly make this more scalable. The birdwatchers correctly note the impact on migratory fowl, yet there has to be a solution waiting that is not inconsistent with the need of airports to reroute migratory birds. And, I like Bill Maher’s comment when he contrasted offshore wind energy and oil energy that if you place windmills offshore and they collapse, the only thing that happens is a splash.
Solar energy should also be explored, but it is one where the cost is more burdensome at this point. It is usable in a targeted way. In the book “That Used to Be Us” it was noted that in some new affordable housing projects packaging the tax subsidies from affordable housing and solar energy promoted more development in rebuilding impoverished areas, where the homes built were more economical for the buyer and the developer. Yet, we need to continue to find ways to make this source more usable. Just the other day, I read where a scientist from Wake Forest University was using poisonous berries that grew in the wild to make scalable, portable and cost effective solar powered lights that could be used in settings where power does not exist. The crushed berries retained the charge longer and more cheaply. Ideas like this are being looked into.
Hydro power and its various permutations are also worth exploring more. We have witnessed both the pros and cons of damming rivers. We have to understand the impact on water supply downstream, yet it has been a vast provider of power. The use of river currents and oceanic tides to turn turbines that turn the electromagnets to generate the power are also ideas worth exploring further. Are these as scalable and economic options as the other renewable sources?
Plus, the biomass energy deserves it place whether it is coming form hog waste, fry grease or landfills. These should be considered and invested in where it makes sense. Yes, there are drawbacks that should be evaluated along with their benefits. Finally, there are ideas that are more in their infancy, like algae farms and the like, that need to be explored. We need both industry and the government to step in to fund efforts.
In the final year of the known Mayan calendar, I believe it is time we move full steam ahead on alternative energy. Global warming is here folks and it is not going away. The data is overwhelming and we need to move further down the path to addressing it. All of us will bear the cost of moving forward – we may see a slightly higher power bill, we may see increased tax subsidies where they make sense or we need to do more of our share to conserve energy (which is its own major source), but we need to do it now. We need to make our leaders be more concerned about this before it is too late.