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Thursday, June 11, 2009

Both Parties Clueless on Energy

Yesterday, the Republicans unveiled their plan for energy independence. Here are some highlights.

Among the highlights: Nuclear power would be the battle horse, with a call to build 100 new reactors. The GOP plan takes aim at all the industry’s hurdles. Long lead times and pricey components? Streamline nuclear licensing and slash import tariffs on nuclear components. Iffy economics? Give nuclear power tax credits like wind and solar power. Questions about waste storage? Revive and expand Yucca Mountain, and start reprocessing spent nuclear fuel.

The Republican plan would also heavily support clean energy, something that never seemed to happen when the GOP did have the votes. It would make clean-energy tax credits permanent. It would also create a clean-energy trust fund financed by selling off all the new oil and gas leases meant to promote domestic oil production. It would also cut environmental red tape surrounding new renewable-energy projects. The plan would also extend and expand tax-credit programs for hybrid and electric cars, and for energy-efficiency measures.

The plan would also support dirty energy, repealing federal prohibitions on using oil from Canada’s oil sands, and ramping up support for coal-to-liquids technology.

On the Democratic side, we have cap and trade, huge increases in emissions standards, more tax breaks for energy efficiency, as well as massive increases in the budget of the Energy Department.

From my perspective, we have two parties equally as clueless, and you are merely choosing your poison over which plan would fail worse. Neither plan will make us very much more energy independent, and the Democrat's plan will likely cost a lot more. Though, even that is debateable.

For instance, the Republicans call for building one hundred new nuclear power plants. That sounds like a good idea only it costs $5 billion just to build one nuclear power plant. Since no private company would ever invest those kind of dollars, I can only assume the Republicans want the Federal government to pick up the tab. Given that our deficit is already almost $2 trillion, I don't think that it is very fiscally responsible to add another half a trillion dollars to an already ballooning deficit. Whatever the potential benefits of nuclear power, they are years if not decades away. Meanwhile, the cost for all of these nuclear power plants must be paid now. Now may not be the time to add to our deficit.

Furthermore, the Republicans are now behind this "all of the above" approach as though this is a new concept. All of these technologies: nuclear, wind, solar, biothermal, etc. have long been around. Both public and private entities have studied, researched, and attempted to market them for years. So far, most have been totally unsuccessful in gaining anything more than a marginal foothold in the market. We've tried tax breaks and credits. It doesn't work because most are far too expensive with very little mass reach. Making a renewed effort to all of these frankly identifies the wrong problem.

Meanwhile, the Democrats think the road to energy independence lies in willing a revolution in our economy. Our cars aren't energy efficient enough for them so they will mandate more energy efficiency. We have far too much CO2 burning energy, so we will cap it and force companies to come up with alternatives even if those alternatives aren't ready for any mass scale. On top of this, they'll just increase the budget of the Energy department. Keep in mind that the energy department has been working on alternatives for half a century and more. So far, the success has been nearly non existent. Throwing more money at the problem appears to be a bad use of our tax dollars.

Both parties, however, miss the point. Our energy dependence centers around one main problem, our dependence on oil. That dependence centers around one main problem. Almost all our cars run on gasoline derived from oil. The problem there is that to fill up our cars we are almost exclusively resigned to using one of six companies: BP Amoco, Mobile, etc. These companies have absolutely no motivation to ever create any other fuel that can be an alternative to the one derived from oil to act as an alternative at any of their several million gas stations in our country. If we can't fill up with an alternative fuel, no alternative fuel will ever exist on anything more than a marginal level.

Neither party addresses the main problem. The oil companies are making all sorts of dollars giving us gasoline derived from oil. They control this market. This market has massive barriers to entry. Their collasus size means that they can demolish any competition. At the same time, they have no intention of ever providing anything but gasoline derived from oil. Until this problem is resolved, all energy indepence plans will be bound for failure.

Here are my proposals to make us energy independent.


Anonymous said...

Actually, the private industry would be happy to spend the $500 billion in capital for 100 new nuclear plants, if they had some reason to believe they would actually be allowed to build them. The biggest cost of building a nuclear power plant right now is environmentalists. Let me say that again: the biggest cost of building a new nuclear power plant right now is environmentalists. More than half of that $5 billion figure goes to either legal fees to defend against obstructionist lawsuits, or it goes to pay interest on loans taken out to build the plant, which are lying fallow in a bank account because of the obstructionist litigation.

Ironically, for every nuclear plant environmentalists have killed in the last 30 years, we've gotten a shiny new coal-burning power plant instead. So, thanks to these environmentalists, instead of around 5 tons of waste a year that gets stored in cement-lined canisters (per power plant), we get 45,000 tons of waste a year (per power plant) that gets pumped directly into the atmosphere. Way to save that planet!

Besides environmentalist obstruction through litigation, nuclear power faces a several-year process to get licensed by the NRC, and that license doesn't actually guarantee that the plant will be allowed to be built. The licensing process, by the way, can cost up to a billion dollars to get, in addition to the 3 years of waiting around, not allowed to put shovel to ground.

Finally, there's the parts issue. Because we, as a nation, have boycotted nuclear energy for the last 30-odd years, there is no manufacturing industry to mass produce parts for the nuclear industry. If such an infrastructure were in place, the cost of those parts would go down. If there were a demand for 100 new nuclear power plants, and the need for all the parts entailed in that, you can bet that such an industry would occur. (Or we could buy the parts from Japan and China.)

All congress needs to do to allow the nuclear industry to build 100 new nuclear plants in the next 20 years is: 1) offer guaranteed loans at some reasonable interest rate, and 2) use 'imminent domain' and 'national security' to keep the environmentalists out of the equation. Let the NRC and the EPA do any litigation necessary to ensure that the power companies are not doing anything to endanger the public.

It would be helpful if the NRC would get off its ass and actually approve some of the Generation 3 (or 4) designs for nuclear plants.

It would be helpful if there were tort reform which made it very expensive to bring frivilous lawsuits to court. (This would also solve health care. Sadly our country is run by lawyers who get rich off frivolous lawsuits, so this will never happen).

It would be helpful if we upgraded our power grid infrastructure, which is even older than our newest nuclear power plants, so it could actually carry the load that 100 new power plants would add to it. There are parts of our power grid that take punch cards to get new programming instructions. Punch cards! Unfortunately, the environmentalists will obstruct this effort as well.

However, loans (not gifts) from the government and protection from frivilous lawsuits would be all the nuclear industry would need to rapidly expand its presence in America.

mike volpe said...

Who exactly in the private industry has $500 billion? I think that is a bit of wishful thinking.

Anonymous said...

I'm no Pollyanna about the oil companies, but I do understand the risks involved at Thunderhorse and what sort of inticements it takes to get companies to take risks of that scale.

No matter how you slice it, the oil company's risk adjusted returns are not out of line.

mike volpe said...

What risk? This has been going on for nearly a century and they have made absolutely no effort to evolve.