Tag: Todd Myers

StrikeOut

Washington State’s Failed ‘Energy Freedom’ Loans Are 0-for-3, Risking $4.4 Million in Taxpayer Funds

Today, the Washington State Department of Commerce released its assessment of the Energy Freedom Program, created in 2006 to “promote public research and development in bioenergy.” As part of the program the state loaned just over $10 million to four companies, in partnership with public entities, to generate biofuels and renewable energy. One company just began operations in July, but the other three have been operating for a few years now and are a useful guide to the failure of political efforts to create a “green” economy.

Of the three remaining projects, all three are struggling or failed, putting at risk the $4.4 million still owed taxpayers by these companies. Here is the rundown:

  • Inland Empire Oilseeds. Late last year, Inland Empire Oilseeds declared bankruptcy for the second time in three years. They still owe the state more than $3 million on their loans. Although the Department of Commerce says it “anticipates contracting with a new management entity in the near future,” IEO entered Chapter 7 bankruptcy in anticipation of liquidation, not reorganization.
  • Natural Selection Farms. Owing more than $400,000 on its loan for its oilseed crushing facility, they did not make a payment on their loan in 2012 and will not in 2013. The Department of Commerce notes that these payments will be deferred until June 1, 2018.
  • DeRuyter and Sons Farms. The family operation received nearly $2 million to build an anaerobic digester which would use methane to create renewable energy. The project, however, is now losing money and is under reorganization. As the Capital Press reported recently, the project “ceased being profitable at the end of 2012 as the return…dropped from 6.5 cents per kilowatt-hour to 3.5 cents, below the break-even of 6 cents.” The project still owes more than $700,000 to the state.

The remaining project, Pacific Coast Canola, is operating at 50 percent of its capacity and still owes the state $1.3 million on its loan. The company reports it expects “it to take time to fully develop the PCC business as part of the normal transition into a commercial producer.”

Two lessons stand out.

First, these loans are another example of the failure of political programs to create “green” jobs or promote a “green” economy. The money lost on these failed loans came from families and businesses that were creating jobs and sent to failed efforts. With $4.4 million, the state could have supported projects (based on the California cap-and-trade price), cutting 338,461 metric tons of CO2, or nearly 1,500 rail cars of coal or remove the CO2 from 70,512 cars for a year.

Second, as we noted recently in comparing the collapse of Boeing’s Supersonic Transport in the 1960s to current government green energy programs, government is again trying to lure businesses into unsustainable practices with the promise of cheap money. When those business strategies ultimately fail, as they have here, the businesses and taxpayers pay the price. Politicians and those at state agencies who promoted these projects pay no price. Until politicians pay a price for wasting money and resources, they will continue to promote projects that harm the economy and the environment.

This fall, Washington lawmakers will be receiving a report from the Climate Legislative Executive Workgroup outlining possible strategies to cut carbon emissions. We hope they will learn the lesson from the state’s failed “Energy Freedom Account,” and follow an approach that is guided more by effective, market-based approaches and less on the politically driven, failed policies like this one.

 

[Re-posted from the Washington Policy Center blog; image used under Creative Commons license with attribution, credit: Hjelle]

Milton Friedman’s Gift to the Environment

Honoring his birthday two years ago, I told a story about Friedman’s insight on the responsible use of resources. It is a story that may be more Friedman-esque than actually having come from Milton Friedman himself. It is a story that is even more relevant today and a lesson that is worth repeating.

Traveling in Asia, Friedman was shown a canal project being built by the government and noted that workers were using shovels instead of machinery. It was explained that this was a jobs program and that using shovels allowed the creation of more jobs.

toddmyers-friedman-graphic“If you really want to create jobs,” Friedman replied, “then by all means give these men spoons, not shovels.”

It is a sign of the power of Friedman’s ideas that stories such as this become attributed to him even if it is unclear whether the words truly came from his mouth. The concept that wealth comes from using resources wisely – whether those resources are people or natural resources – is one he embraced.

Sadly, it is a simple lesson that is still unlearned by many who believe we should crate “green” jobs by lavishing subsidies on wind and solar power. Advocates of types of energy often brag about the fact that they require more labor and resources to create energy than natural gas or other types of energy.

For example, the Seattle Times’ own “business” columnist Jon Talton once wrote that government spending on “green” jobs “produced more ‘job hours’ than tax cuts or traditional infrastructure spending.” Just as moving from shovels to spoons would have created more “job hours” for canal diggers, Talton believes we should move to renewable energy using the same logic.

This is what passes for “business” journalism these days.

Talton, however, is not the only person claiming to be an environmentalist while advocating policies that do more with less. He is not the only person claiming to be concerned about scarce resources and then actually encouraging waste to achieve a “green” future.

Last year the Political Economy Research Institute at the University of Massachusetts released a graphic demonstrating that spending on solar energy created three times as many jobs dollar-for-dollar. They called this “The Truth About Job Creation.” It is a rule of political rhetoric that if something purports to be “The Truth,” it isn’t.

The Institute released a graphic (which I’ve modified slightly), showing the amount of job creation in a number of economic sectors related to energy creation and conservation. In their telling, natural gas is the worst, because it generates large amounts of energy while creating few jobs. Solar, on the other hand, requires more jobs to create the same amount of energy.

I decided they were simply not ambitious enough. Why settle for 14 jobs per million dollars invested when we could put people on bicycle generators and employ 1,610 jobs? People could pedal for eight hours a day, lose weight and generate electricity.

If this seems absurd, it is. Yet, if the goal is to create “job hours” or “job creation,” bicycle generators are the best option. Judging policies based on these types of claims, however, is not merely anti-prosperity, it is anti-environment.

Concern for the environment is, at its core, a desire to do more with less and a concern about scarce resources. Left-wing environmentalists, however, too often promote policies that do less with more and waste resources. They ignore the lost opportunities to put people and resources to work doing other great things for the environment. To make use of prosperity and discretionary income to promote clean air, healthy forests and wildlife protection.

Unfortunately, the left probably won’t learn the lessons of Milton Friedman and resource use. It is ironic that on his birthday, it is Milton Friedman who has given a gift to us and those who truly care about the environment.

 

BullittCenter01

Is the Bullitt Center Worth The Carbon Emissions of Issaquah, Sammamish, Snoqualmie and Woodinville Combined?

Sunday was Earth Day and Governor Inslee and Mayor McGinn attended the opening of the Bullitt Center, billed as the “greenest” building on the planet. One of the selling points is that it creates more energy than it uses. But, is it really green?

The Seattle Times notes the building cost $30 million to build and is 50,000 square feet. That amounts to construction costs of $600 a square foot. Last year, Crosscut reported the Bullitt Foundation expected it to cost much less, noting at the time that “The $30 million Center will run about $350 a square foot in construction costs finished – about $50 more per square foot than your typical commercial building.” Even if Crosscut’s previous projection was incorrect, the Bullitt Center is still twice as expensive as a typical commercial building.

Assuming these numbers are correct, the Bullitt Center cost $15 million more than a comparable building. What environmental benefits do they get for all that additional cost?

With the same amount of money, here are a few things they could have done to benefit the environment:

  • Eliminate all carbon emissions from Issaquah, Sammamish, Snoqualmie and Woodinville for an entire year – 1.5 million metric tons of CO2.
  • Fund five years of the Puget Sound Partnership’s #6 priority, matching federal grants from the Natural Resources Conservation Service, which is zeroed out in the Governor’s budget.
  • Fund three years of the gap between the agency request and the Governor’s budget for the Floodplain Management Local Grant Program. The request is $6 million, but the Governor’s budget funds only $1 million.
  • Fund half of all Pollution Prevention & Cleanup projects the Puget Sound Partnership lists as needing “additional resources” to complete before 2020.

Remember, this is the additional cost for one building. If this building is truly the model some hope, hundreds of millions of dollars could be spent to meet these standards rather than fund other environmental priorities.

Will the Bullitt Center provide more environmental benefit than could be provided by any of the above? That remains to be seen. Even if it falls short of these alternatives, it will likely be claimed that the building was an experiment and it is important to learn from successes as well as mistakes. That is certainly true. Knowledge is pushed forward by people taking risks and experimenting, so this is a positive step in that process.

I am certain the Bullitt Foundation will brag about those things that worked. Let’s hope they are also honest about those things that don’t work. The environmental community has not been forthcoming about admitting its failures and ending projects that don’t work, shifting limited funding and resources to projects that can make a difference. They have, instead, tended to double down on those very projects arguing that failed programs just need a bit more funding.

Until the results are in, however, we can’t call the Bullitt Center the “greenest” or even a “green” building.

[Reprinted with permission from the Washington Policy Center blog]

AlGore

Gore Praises Jay Inslee’s Book, But Has He Actually Read It?

Former V.P. Al Gore will be in town this Wednesday to support Jay Inslee’s campaign for governor and he has praise for Inslee’s book on the green economy, “Apollo’s Fire.” Gore called the book, “one of the best books out there” on creating a so-called “green” economy.

The question is whether Gore has actually read it.

Published just a few years ago, none of the book’s predictions have come true, but several of the policies advocated there have already failed.

With great bravado, Inslee and his co-author wrote “It would be comforting to avoid the prospect of being proven wrong by the passage of time. But your authors are built of sterner stock.” Indeed, they have already been proven wrong.

The most glaring error is Inslee’s claim that “About 2011…meaningful amounts of cellulosic ethanol are becoming available at service stations across the country.” Not only are “meaningful amounts” not available, cellulosic ethanol is not available at all. As the U.S. Department of Energy notes, “Cellulosic ethanol has not yet been produced commercially.” Ironically, Congress requires oil companies to purchases cellulosic ethanol even though it is not available. As a result, the companies had to purchase waivers for a product that does not exist.

Other predictions fall short as well.

Inslee also predicted that Grays Harbor County would become a model of the green economy, citing Grays Harbor Paper’s production of all-recycled paper in a plant run by renewable energy.

Earlier this year, however, Grays Harbor Paper’s plant was shut down, laying off 240 people.

Inslee also promised that good things were on the horizon for Imperium Renewables, a biofuel company also located in Grays Harbor County. Inslee praised the creation of new regulations to promote biofuel production like “the very promising development of new policies like the California low-carbon fuel standard, which rewards reductions in the amount of CO2 in fuels…”

Ironically, John Plaza, the head of Imperium, last year called California’s low-carbon fuel standard “a complete and utter disaster.” Plaza said the standard relied on “utopian requirements to meet standards that will just kill off first generation fuels in California, and you never get to the second generation.”

Jay also had high praise for the growth of the solar industry and solar energy. With the high profile failure of Solyndra and other solar panel companies, Inslee’s hopes seem pretty misplaced. Inslee, however, cites a company called Nanosolar which he argues produces panels at a cost “so low that their plant could be producing grid-competitive electricity in a matter of a few years.” Far from being “grid-competitive” with the average cost of electricity today, Nanosolar isn’t even competitive within the industry. Earlier this year their production costs were estimated at $1.35 per watt, nearly twice the cost of another thin-film solar panel manufacturer, First Solar, who reports production costs of 75 cents per watt. Even that cost, however, isn’t low enough and First Solar is downgrading its earnings estimates and has postponed production of a new plant.

Finally, Jay claims government support for renewable energy will create new green jobs and even cites a project in Pennsylvania by Spanish wind turbine manufacturer Gamesa. In his book, Inslee notes Gamesa “is currently building three more manufacturing facilities on the site of a closed steel mill and is investing in eighteen wind farms around the commonwealth, all of which is forecast to create over a thousand jobs during the next five years.”

Today, however, the reality is quite different, with two of the three facilities being closed and Gamesa is in financial difficulty. Since Inslee published the book, Gamesa’ stock price has fallen from $14.45 to $3.47.

From ethanol, to solar energy to green jobs, the predictions Inslee made in his book have consistently fallen short. Given these failures, it would interesting to ask Mr. Gore if he can name a prediction that Inslee’s book got right.

 

Todd Myers served in the executive team at the Washington State Department of Natural Resources. He has been working in environmental politics for more than a decade.

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[photo credit: jdlasica]

EarthYinYang

Review: ‘Eco-Fads’ Is a Smart, Common Sense Assessment of Enviro Policy

When it comes to the environment, mere good intentions are not enough. We have to evaluate “green” practices for their true effectiveness. That is the basic premise behind Todd Myers’ new book, Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment” (now available at Amazon.com or the Washington Policy Center website, hardcover $26.95, Kindle $9.95).

As the title suggests, Myers’ book calls attention to “eco-fads” that are simply trends currently in vogue that purport to address environmental dilemmas. His book brings an honest perspective on green accountability to the existing volatile discussion on energy and environment issues.

Myers’ book can be defined by what it is not. It is not a conspiracy-theory book. It does not try to debate the science behind climate change. It is not political-insider baseball.  Anybody who wants to help the environment will benefit by reading “Eco-Fads.”

Some would argue that if you truly loved the environment, you’d spend unlimited money on green policies. But there is an issue beyond just money here: eco-fads are often not so eco-friendly after all. Myers explains that simply spending money on anything labeled green is not necessarily environmentally friendly. Consider:

  1. We understand that we should conserve resources and avoid waste. Wasting money is wasting resources.
  2. Money wasted on bad ideas is money we can’t spend on effective ideas. And it detracts from solving real problems.
  3. Often these plans backfire and aren’t actually environmentally friendly after all. This is the signature of an eco-fad.

Myers goes into detail with examples of eco-fads in areas diverse as forestry, energy production, climate, and lifestyles. For example, in forestry, green certification systems can be somewhat arbitrary and actually penalize green practices. In energy, saving one ton of carbon only costs $20 on the European market, so a carbon-reduction project that costs $300 per ton of carbon reduced is wasting 90% of the funds. Subsidies may sound enticing, but they can encourage gaming the system via environmentally-poor behavior like shipping biofuels around the world just to collect a subsidy. And “buy local” isn’t necessarily greener because transportation is only 11 percent of CO2 emissions for food production.

Diving deeply into each issue and avoiding shallow politicized talking points, Myers explains why well-intentioned, rational people in business, politics, the media, and even science would succumb to an eco-fad.

Fortunately, Myers also offers solutions. He’s careful to emphasize that not all environmental policies are eco-fads. For example, windmills can be cost effective in certain scenarios in the right regions. A smart grid can help consumers shift energy consumption off peak usage where it is more environmentally-friendly to produce. And he shows how to avoid eco-fads by asking the hard questions:

  1. Efficiency: “Is that the best way to spend the money to accomplish that goal?”
  2. Accountability: “How well did the green program actually deliver on its promises?”
  3. Opportunity cost: “How much did that green job cost to create? And where did the money come from? How many jobs were lost to extract those funds?”

“Eco-Fads” is a must-read book for anybody who wants to be part of the environmental solution.

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[photo credit: DonkeyHotey]

EcoFads_Feature

Review: ‘Eco-Fads’ Exposes the Roots of Errant Environmentalism

In a love triangle betwixt people, their common sense, and passion for the environment, the seduction of so-called green choices is leaving rational choices out in the cold, so argues environmental policy expert and author Todd Myers in his new examination of errant environmentalism, “Eco-Fads: How the Rise of Trendy Environmentalism Is Harming the Environment” [for Kindle ($9.95) or in hardcover ($26.95) at Amazon.com or the Washington Policy Center website].

The people of the Pacific Northwest have a special connection with the natural world around them, one that transcends appreciation to approach what some might call love. Take a ferry ride, drive over a mountain pass, or just walk outside and open your eyes. In the case of a lack of emotional response, check your pulse.

It comes as no surprise to long-time Northwesterners then that, as a global conversation about environmental dangers has grown, people in our Cascadia region have often been first-responders in the cause of saving the planet. Nothing motivates mankind to act like the mixture of hot passion and perceived imminent danger. In the realm of myth, twelve hundred Spartan ships raced across the Aegean to rescue the beauteous Helen; today a green movement of millions of individuals are being urged by powerful special interests on a crusade to save Mother Earth.

Myers’ “Eco-Fads” is a reminder to environmentalists that while love is intoxicating, when taken to blind excess it can become toxic. In its rush to adopt and endorse anything blessed as green by champions of the environment – a mad scramble in which politically correct action is assigned greater value than measurable benefits – the whole Gaia-loving green world has gone mad.

Whether in Myers’ debunking of expensive green schools (they most often use more energy than traditionally-built alternatives), compact fluorescent lamp (CFL) light bulbs (they contain compounds long known to be toxic to humans), or dozens of other “eco-fads,” he has asked critical questions to assess the true impact of green policies and solutions.

A former employee in the Washington State Department of Natural Resources and current director of the Washington Policy Center’s Center for the Environmental, Myers is certainly not a newcomer to the business of evaluating the environmental gain from the choices consumers and businesses make. Nor can Myers be painted into the corner of being unsympathetic to the goal of keeping our environment clean.

“Eco-Fads” is a caution to Greenies to stop behaving like a herd of color-blind bulls, charging en masse every time a green cape is waved in front of their eyes without first pausing to consider the full impact of their actions. In this way, the greatest value in Myers book is not the shockingly long list of green flops he documents. After all, if monetary costs and benefits were the only factors affecting people’s decisions about green products and policies the free market would have sorted this out by now. But Myers cracks open the mind of a green-minded individual to suggest that the critical exchange functioning in the green movement has nothing to do with money.

Nowhere has green madness taken hold more in the U.S. than in the Pacific Northwest, an ecotopian Petri dish and a politically correct society in which the emotional satisfaction of conspicuous environmental consciousness also has value as social currency. As Myers writes, “Green is the new blue-blood.”

Myers makes a strong case that perceived morality and social standing are what many consumers are really buying when electing to pay more for green options, an observation that provides a good explanation for why accountability for results is often dismissed or ignored as long as the intent is for a green outcome.

But the fact that Myers’ bases his skeptical approach on science and metrics – most often using environmental impact as the standard – is why the green movement should resist reacting to “Eco-Fads” as a vampire to holy water. Ill-considered eco-fads tread harshly on public goodwill and as their inefficacy is revealed over time will make it harder to convince the public to adopt real, rational and beneficial solutions. If we have a common goal to keep the world around us clean, it only makes sense to have a smart conversation not only one that makes people feel good.

Myers’ well-written, meticulously documented book draws upon anecdotal evidence, academic work, and the author’s own solid use of logic to identify why eco-fads bypass science to gather support on a sociological level. “Eco-Fads” should be required reading for anyone with a voice or a vote on environmental policies.

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milton-nobel-speech

Freedom (Not Mandates) Is Our Best Hope For a ‘Greener’ Future

I have a bumper sticker on my desk that reads “I’m an environmentalist, but NOT the anti-human, collectivist kind.” In Washington state, too many believe that to be one you must be the other. In fact, however, wherever we look, we see people working in a free market doing more for environmental sustainability than politicians and government programs. Unfortunately, much of our current environmental approach sees the only solution coming from collectivist approaches like public transit and sees humans, and especially human freedom, as the enemy.

As we celebrate his birthday, we can also celebrate Milton Friedman’s fundamental commitment to the reality that even as politicians tell us we cannot make progress on environmental stewardship without them, individuals in a free market system are already doing it.

Perhaps Milton Friedman’s greatest insight is recognizing the power of free and voluntary interactions between people to improve lives and find ways to be better stewards of resources. Those voluntary interactions exist whether we recognize them or not, even when politicians might wish to stifle them.

As Friedman notes in Capitalism and Freedom, even as McCarthyism sought to blacklist some for their views, the power of people’s desire to make quality films allowed one blacklisted writer to win an Academy Award using a nom de plume. Jim Crow laws in the south are another example of politicians using the power of government to limit voluntary interactions between people.

A similar pattern emerges with environmental policy. Politicians promise their schemes will yield benefits but when they fail, those same politicians push for more of the same – at the expense of individual liberty.

The City of Seattle claims success in meeting the Kyoto Protocol’s carbon reduction targets but quietly admits that “economic factors,” i.e. individual efforts to save energy, rather than government regulations created the reduction. Metro buys soy diesel to cut carbon emissions in its buses, only to dump it a year later when it turned out the cost was too high and it didn’t help the environment. And rather than allowing school districts to find the best way to cut energy costs, legislators required schools to meet a cookie cutter “green” building standard the legislature’s own auditor says costs more than it saves.

Perhaps the area where Milton Friedman would have most to say about the green movement is in the claim that “green” jobs will create prosperity. When visiting China, Friedman watched as laborers worked to build a dam with shovels and picks. He asked why they weren’t using modern equipment. When his Chinese hosts explained that this was a jobs program, Friedman responded “Then why aren’t they using spoons?” Green jobs work in a similar way.

Greens brag that it takes more labor to produce a kilowatt hour of green energy than traditional energy. This is like bragging that banning tractors would create more agricultural jobs. Workers would be poorer, prices would be higher, but politicians could claim they created more “jobs.”

Indeed, we could probably create an even greater number of green jobs by putting those workers on a treadmill to create “renewable” energy.

Despite a record of failed environmental policies, some see the solution as more government intervention, not less.

For example, in her book Green Gone Wrong, Heather Rogers laments the fact that there isn’t “social control of capital,” saying the failure of environmentalism to make a bigger impact is due to the lack of government power to make decisions for the planet. Ironically, she also laments the failure of the Indonesian government to protect mangrove swamps in that country, saying the political leaders side with big companies rather than indigenous peoples. Her philosophy comes down to something like “the government should be in control of key decisions, except when it shouldn’t.” Indeed, this is the only philosophy those who believe in government power can have. They can only make it up as they go, hoping the imposition of this regulation or law will work out better than the last and assuming the very people who often turn out to have their personal interests in mind, not the planet’s, will make good decisions.

People in a free market consistently do better than politicians because they can harness the creativity of millions of people, each looking to reduce the amount of energy and resources they use, rewarding those who come up with the best solutions.

This pro-human approach, respecting the voluntary choices of individuals and their relationships with each other, is not only more successful, it is more moral.

Each of us has an incentive to use as few resources as possible to attain the lifestyle we want to live. We don’t want to waste energy, food or resources because such waste is antithetical to the efficiency that is central to a free market approach.

It is why an economic mindset is so critical to offering the environmental amenities we in the Evergreen State love. Environmentalism is born of a concern about scarce resources. Economics is the study of the allocation of scarce resources. What could be a better match?

It is why environmentalism should leave the government-heavy mindset of the 1970s behind, and honor the contributions Milton Friedman made not only to human freedom and prosperity, but to future environmental sustainability.

This year we celebrate not another year of the man, perhaps, but another year of the man’s ideas that make such a difference for people and the planet.

 

Guest contributor Todd Myers is Director of Washington Policy Center’s Center for the Environment. He is one of the nation’s leading experts on free-market environmental policy and is the author of Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment, Five Years of Environmental Policy: Are We Making a Difference; Promoting Personal Choice, Incentives and Investment to Cut Greenhouse Gases, and more.  Todd’s in-depth research on the failure of the state’s 2005 “green” building mandate continues to receive national attention.  Todd holds a Master’s degree from the University of Washington.

JayInslee02

Inslee’s Record Picking Biofuel Winners and Losers is Far From Perfect

The issue of green jobs and clean energy solutions is likely to feature prominently throughout Congressman Jay Inslee’s campaign for Washington State governor. But what is Inslee’s real track record on picking the winning and losing fuel sources for America’s future. Not good, according to environmental policy guru Todd Myers.

Myers writes at Red County:

Inslee has long been an advocate of government regulations and subsidies that favor biofuels. As part of his announcement, when asked about potential future tax increases, Inslee would only say “We don’t know what the future brings.” By way of comparison, Inslee has been quite bold about his predictions regarding the future of biofuel technology. In 2008, when his book was published, he and his co-author confidently wrote:

It would be comforting to avoid the prospect of being proven wrong by the passage of time. But your authors are built of sterner stock. We refuse to take refuge in the privilege of punditry to cloak our comments in vague surmises. … About 2011, plug-in hybrids will start to hit the roads just at the same time that meaningful amounts of cellulosic ethanol are becoming available at service stations across the country.

Here in 2011, cellulosic ethanol has not emerged as a significant alternative. One reason is that he believed that by 2011 “Congress will have done its job and mandated production of flex-fuel vehicles and a certain percentage of service stations to offer biofuel pumps.” The fact that this did not occur can be laid, ironically, at the feet of Inslee and the members of his Congressional majority. They did not pass the legislation to make this happen, nor did they even pass a budget in 2010 to extend the biofuel credit, amounting to $1.00 a gallon for cellulosic biofuel.

This isn’t the only time Jay Inslee has been wrong about biofuels. Inslee’s faith in biofuels as an alternative energy and job-creator has repeatedly missed the mark.

You can read the entire piece about Inslee’s poor track record for predicting biofuels at Red County.

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[photo credit: flickr]

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