The interesting question is whether “crony capitalism” will be bad for green energy development over the long term. When I lived in Houston we had a saying that the oil boom is over when the lawyers and doctors start investing in the oil partnerships. Something similar can be said about the government involvement in green energy. Although I am mildly enthusiastic about green energy prospects, I am very suspicious of green energy proposals with government involvement. The green energy bubble has popped.

In his outstanding book, Throw Them All Out, Hoover Institution scholar Peter Schweizer goes through Obama’s 2008 campaign finance records and cross references Obama’s list of donors against the list of those who got grants and loans under the green energy program. Here is what he found:

•         71 percent of Energy Department grants and loans went to Obama’s political cronies. 71 percent!

•         Collectively, they raised about $457,834 for Obama’s campaign.

•         And they were in turn approved for grants or loans of nearly $11.346 billion.

•         That means they got $24,783 in taxpayer dollars for every $1 they gave to Obama’s campaign.

Now that is one heck of a return on investment.

Here’s a ‘rigged system,’ Mr. Vice President « The Enterprise Blog

Senate Bill 289 would allow AK Steel Corp. and Air Products and Chemicals Inc. to build a $310 million facility to capture waste gas vented from an AK Middletown Works blast furnace to generate steam and electricity as part of the state’s renewable energy market.

Today, the gas is burned off. But with this proposed facility, it could be used to generate steam and electricity for AK’s Middletown plant — about one million megawatt hours annually, enough to serve more than 85,000 Ohio homes, according to Air Products, which would own and operate the facility.

State Sen. Bill Coley, R-Middletown, who introduced the bill, wants to amend Ohio law so the blast furnace gas would qualify for the renewable energy market.

Companies that generate power from renewable energy sources — usually wind and solar — can sell Ohio renewable energy credits to other, less energy-efficient companies or to organizations that want to support renewable energy. The credits are meant to be incentives to pursue renewable energy creation.

The interesting twist in this bill is that the flue gas will qualify as a "Renewable energy resource". This allows the company to get a little more profit by selling renewable energy credits. It seems an odd match but it looks like a win-win situation. We get cleaner air, possibly lower electrical rates, and AK Steel gets a little more profit from the plant. Every day it stays open is a good day for the folks whose jobs are dependent on the plant. Although opening the “Renewable energy resource” credits to flue gas seems to be a stretch, there really are not that many feasible solar or wind projects in this part of the state. Although I think renewable energy credits is a dumb idea that should quietly go away, I understand why the Senator sponsored the bill. The wording in the bill is pretty restrictive on who qualifies. Here is what the bill says:

energy produced by cogeneration technology for which more than ninety per cent of the total annual energy input is from a waste or byproduct gas from an air contaminant source in this state, which source has been in operation since on or before January 1, 1985

The Baedeker travel guide is now available in an environmentally-friendly version. The 200-page book, entitled "Germany – Discover Renewable Energy," lists the sights of the solar age: the solar café in Kirchzarten, the solar golf course in Bad Saulgau, the light tower in Solingen and the "Alster Sun" in Hamburg, possibly the largest solar boat in the world.

The only thing that’s missing at the moment is sunshine. For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity. The days are short, the weather is bad and the sky is overcast.

As is so often the case in winter, all solar panels more or less stopped generating electricity at the same time. To avert power shortages, Germany currently has to import large amounts of electricity generated at nuclear power plants in France and the Czech Republic. To offset the temporary loss of solar power, grid operator Tennet resorted to an emergency backup plan, powering up an old oil-fired plant in the Austrian city of Graz.

Solar energy has gone from being the great white hope, to an impediment, to a reliable energy supply. Solar farm operators and homeowners with solar panels on their roofs collected more than €8 billion ($10.2 billion) in subsidies in 2011, but the electricity they generated made up only about 3 percent of the total power supply, and that at unpredictable times.

For kicks I decided to run the 2011 data(minus the air conditioner months of June through September) through a linear regression. A polynomial equation fits the data better, but the linear equation gives me a nice multiplier to work with. Here is my graph.

IEE’s report didn’t get at how each dollar of utility energy efficiency money was spent, though it’s clear that the majority is still coming from simple steps like replacing lights and appliances with newer, more efficient models, as well as encouraging people to change behavior in energy-saving ways, Wood said.

In my comment I pointed out that when our heat pump broke down in 2010, we were going to buy a high efficiency heat pump regardless of the rebate. Although the rebate was appreciated it was not very important in our decision. The other major energy efficient effort by our utility was to give away compact fluorescent lights(CFL). Since I already had extra CFLs on my shelf I will probably not use these new CFLs for a couple of years. From my experience rate reduction was a better use of money that more people can take advantage of.

In a subsequent comment I was surprised to find that this comment offended someone and he attempted to defend the policy by claiming that he knew what I would really do. Here is the quote,

How can you really say you would have purchased the high efficiency model? What people say is often not what they do – despite what classic economic theory says about rational behavior.

So I went back and reviewed the marketing brochures, cost estimates, and the decisions made by my wife and myself in replacing the heat pump. My conclusion is unchanged except I am now convinced that the energy efficiency experts slept through their Marketing 101 class. The most important reason my wife and I were going to buy a high efficiency model is that buying a low cost, inefficient model was not an option. Using the 2010 Bryant brochure as an example we were offered three different models that varied from the less expensive model with a 13+ SEER and  9 HSPF to the most expensive model with a 16+ SEER and 9 HSPF. It is interesting to note that all of the brochures talked primarily about performance, warranty, and special additions available on the more expensive models.  None of the brochures used the rebate as a selling point. By chance one of the brochures mentioned  that the Energy Department had decided in 2006 that all new AC units or heat pumps would have a minimum of 13  SEER. When I look at various 2010 brochures it appears that all of the manufacturers complied. From a general viewpoint it is easy to conclude that the 2006 Energy Department decision was primarily responsible for the energy efficiency gains. It is this simple stuff that "green" investment advocates cannot get a handle on.

Even if we delve into more specifics, the argument for energy efficiency rebates does not get any better. At our house we consume half of our annual electric power in the three coldest months. Naturally the most important energy efficiency specification is the heating system performance(HSPF). Since our old heat pump had a 9.2 SEER and an unknown but undoubtedly low HSPF, I was happy with all of the models offered by Bryant. All of the specifications were much better but the heating system performance had improved dramatically for heat pumps in the last ten years. My wife had an additional requirement, she wanted a heat pump with a good warranty. She wanted the moderately expensive model since it had a good warranty. It was nice that it qualified for the energy rebate but as you can see it was not an important factor in our decision making. Since the HSPF numbers for the different models were the same, our annual kilowatt usage was going to be about the same regardless of the model we selected.

Whichever way I looked at energy efficiency rebates, it was primarily a political idea that was not going to change our behavior. I suspect other people replacing AC and heat pumps came to the same conclusions. The rebate was 3% of the total bill. Since the rebate is no longer being offered in 2012, I have to conclude that the saner minds in government agree that this an incentive we can live without. I chalk this up as another #greenfail like the bankrupt firms of Solyndra and Ener1. Much ado about nothing!

In a pamphlet extolling the virtues of the looming federal ban on traditional incandescent light bulbs, the EPA says it’s a "myth" that the mercury used in compact fluorescent lights is "dangerous in your home."

"There’s no evidence," the brochure says, that "brief exposure to the mercury in a broken bulb presents a health risk to you or your family." Just air out the room, sweep up the debris into a jar and you’re fine.

Truth is there’s no meaningful health risk from either the bulbs or the power plants. As a 2004 paper published by the American Enterprise Institute and the Brookings Institution noted, "mercury exposure at current levels is unlikely to be causing harm."

The EPA’s Mercury Madness – Investors.com

To put a face on the problem with pollution politics here is a power plant we go by every time we go to Virginia Tech. Across from the plant is a gas station I have stopped at on several of my trips. This part of my trip is one of the most scenic parts of my trip. The air is clean, the nearby forests are lush, and the water in the New River is cold and fast.  It is no surprise that the gas station is full of hunting and fishing supplies. So where do we draw the line when you cannot see, smell, or taste pollution? Are we trying to fix a problem that does not affect this community? In this rural area there are probably only two sources of good paying jobs, this plant and the chemical plant a few miles away at the Narrows.  I suspect that the closing of this plant will be catastrophic for the community. I doubt that these employees will find jobs nearby. Although this plant is 92 years old, requires updated scrubber technology, and is probably getting their butts kicked by gas powered generators, it is probably still making money for its parent company, AEP. Despite its money making prowess AEP did not find it to be cost effective to install scrubbers or convert the facility over to gas. To make up for the lost generating capacity AEP appears to have decided to install gas powered generators in some place that is not close to Glen Lyn or its employees. The really big problem I have with pollution politics is that closing this plant will increase rates by 15% and the community will not see, smell, or taste any benefits. The air will still be clear, the forests will still be lush, and the New River will still be cold and fast. For these “improvements” they get dramatically higher unemployment. As a country with a variety of complex business and environmental problems, you would think we would be getting better at balancing the needs of the business, environment, and community. At the very least we should be trying to avoid lose-lose decisions like this. Instead it appears that AEP and the folks around Glen Lyn did not have a say in the matter. We seem to have constructed a political system that is particularly adept at making “good” environmental decisions that appear to be lose-lose decisions for businesses and communities. We seem to have lost our way on how to make decisions that balances the needs of most of the people. We may not be able to satisfy everyone but we not even trying to balance the needs of these different groups. The sad part is that when this plant is closed, asthma sufferers will still be suffering from the same old triggers of asthma attacks. Nothing has changed for them!

Appalachian Power customers could see up to a 15 percent increase in monthly bills as a result.

By Laurence Hammack | The Roanoke Times

The Roanoke Times | File 2003

American Electric Power announced today that the Glen Lyn Plant along the New River in Giles County will be closed by Dec. 31, 2014. The plant is one of 11 in seven states to be retired or modified by AEP to meet new regulations from the U.S. Environmental Protection Agency.

A coal-burning power plant in Giles County that has spewed carbon emissions for years faces a shutdown to comply with clean-air requirements — and consumers are facing the possibility of higher electric bills

AEP announces plan to close coal-burning Giles County power plant – Roanoke.com

Numerous discrepancies exist in the EPA’s approach, data and analysis. A few of these discrepancies are:

• The EPA report ignores well-known historical realities with respect to the Pavillion field’s unique geology and hydrology. (See BACKGROUNDER below)
• The EPA drilled two deep monitoring wells (depth range: 783 – 981 feet) into a natural gas reservoir and found components of natural gas, which is an entirely expected result. The results in the EPA deep wells are radically different than those in the domestic water wells (typically less than 300 feet deep), thereby showing no connection. Natural gas developers didn’t put the natural gas at the bottom of the EPA’s deep monitoring wells, nature did.
• There is unacceptable inconsistency between EPA labs’ analysis for numerous organic compounds reported to have been found in the EPA deep monitoring wells. Data is not repeatable and the sample sets used to develop these preliminary opinions are inadequate.
• Several of the man-made chemicals detected in the EPA deep wells have never been detected in any of the other wells sampled. They were, however, detected in many of the quality control (blank) samples – which are ultra purified water samples commonly used in testing to ensure no contamination from field sampling procedures. These two observations suggest a more likely connection to what it found is due to the problems associated with EPA methodology in the drilling and sampling of these two wells.
• The EPA’s reported results of all four phases of its domestic water well tests do not exceed federal or state drinking water quality standards for any constituent related to oil and gas development.

Encana – 2011 News Releases – Why Encana refutes U.S. EPA Pavillion groundwater report