When Green Doesn't Mean Green: Obama Is Backtracking On Clean Energy

Environmentalists seized upon President Obama’s stimulus plan as a means to turn America into a low-carbon economy by pouring massive amounts of money into clean energy and green transportation. But in these tough economic times, taxpayers are not prepared to keep footing the subsidy bill. Belatedly, there is now recognition at the highest levels of government that a green industrial revolution is no longer realistic, economically or politically.

In the fools paradise of the boom years even trendy utopian causes like fighting oil addiction and global warming seemed possible. Confronting them was supposed to be central to Obama’s presidency. Unfortunately, now the U.S. is dealing with the economic and political realities of the Great Recession, it looks like a frivolous luxury. As the U.N.’s former climate change chief, Yvo de Boer, said in the Washington Post, “Very few governments are going to be willing to run their countries into the ground to save the planet.”

Yet, terminating the industrial economy is the explicit goal of the climate change movement. A brave green new world is to be built – whatever the economic cost. There is no sign, however, that Obama has ever been an apocalyptic crazy like Al Gore, especially now that an economic recovery can no longer be taken for granted – even before the next presidential election.

Gore’s Alliance for Climate Protection and other groups, like the Environmental Defense Fund, are openly clashing with an Administration which is no longer going to do anything that imperils an economic recovery – especially given that the legitimacy of the global warming alarmists’ case is being increasingly questioned post Climategate.

With the economy as bad as it is, “this summer’s wave of political discontent has been a completely new animal,” as Matt Taibi writes. Suddenly with the budget deficit running out of control, the stimulus has become a metaphor for wasted money. Public opinion has shifted manifestly, and the deficit and government spending is now second only to job creation and economic growth as a key concern of voters. This is why Tea Party activism has become such a driving force in many Primary races.

So, climate change is no longer a vote winner. Notably, Australian Prime Minister Kevin Rudd became the first political casualty of this new hard-nosed era; when his support for an emissions trading scheme saw him toppled from power because it was hurting his party. But an excited new American administration wasn’t paying attention to these developments in its eagerness to kick start what Republicans have called one of the biggest government boondoggles in history – as favours, and contracts were handed out to its friends.

The stimulus money is flowing. To create the first generation of mass-market electric cars, billions are being injected into clean-energy projects through oversubscribed grant programs. A123 Systems in Massachussets has won $249 million to build two lithium-ion battery plants in Michigan. And the Administration is also financing three of the world’s first electric-car plants, including a $529 million loan to Fisker Automotive in Biden’s home state, Delaware.

To power these electric cars, stimulus cash is putting the U.S. on track to exceed Obama’s goal of doubling renewable power by 2012. Billions of dollars are being spent building transmission lines to connect remote wind farms to population centers, and construct grid storage so the lights don’t go out when it isn’t windy or sunny. The wind industry added a record 10,000 megawatts in 2009; while on the solar front, the nation’s largest photovoltaic solar plant is being built in Florida, and what will be the world’s two largest solar thermal plants, are being built in Arizona and California.

Of course, these green technologies cannot compete without huge subsidies. The green revolution sold to the American people as necessary to build a competitive 21st Century economy may be “fun stuff”, but it will only make the U.S. uncompetitive.

Recognizing this, the stimulus has also funded the new Advanced Research Projects Agency-Energy, which is supposed to research new technologies that might dramatically cut costs. But if they fail – as scientists admit is possible – where will that leave the U.S. economy?

Evidence of quite how uneconomic such green policies can be is plain to see in the countries that have already implemented them; such as Spain, Germany, Denmark, and Italy; the very countries that Obama cited as a model. Wind and solar energy have not been the success it is made out to be, but an economic calamity – which is why government support for renewable energy is facing big cuts in Italy, Germany, and Spain, as part of their austerity drives! In Italy a law that obliges national grid operators to pay wind farm owners even when they are not producing electricity, at the world’s highest guaranteed rates has even triggered a Wild West frenzy of renewable building and carbon trading, exploited by organized crime.

Meanwhile in Spain, the government published a damning report which concluded its ‘green jobs’ energy program has been a catastrophic economic failure, and opted to retroactively cut previously agreed tariffs for its €20bn photovoltaic solar energy sector by 30%. This may be devastating for investors in highly-leveraged solar projects, but by freeing money to subsidize domestic coal-fired power, it will create jobs in Spanish coal mining.

Naturally, the global warming alarmists are up in arms (one solar energy firm, gratefully called Thermotechnic not Thermonuclear, sent a dismantled bomb to the author of the study). Interestingly, though, no-one disagrees with the conclusions. The fear is that jobs in the Spanish solar power industry will be lost if the true economic costs of solar power becomes known in the US. Why give a sucker an even break?

If Spain can’t make solar power work, can the U.S.? After all, in the worst recession in a lifetime, who’s going to invest in something as inefficient as solar energy? Doubts that Obama’s favourite green energy firm can continue as a going concern, provide a clue. In what Barron’s has described as a “king-size political embarrassment”, solar panel manufacturer Solyndra, a cornerstone of the new energy policy, is going bust only months after Obama said it was “leading the way towards a brighter and more prosperous future.” Despite a $535 million Federal loan guarantee, Barron’s reports taxpayers could lose $390 million.

Another case in point is General Motors’ new Chevrolet Volt electric car. Even with a potential $7,500 tax rebate it is unlikely to be anything more than a low-volume specialty car rather than a high-tech car for the masses, given that it is to be priced at $41,000. GM admits that the Volt is really about cultivating a green image – and positioning GM to compete in the event of tail risk peak oil – rather than profitably selling cars. So, billions of taxpayer dollars are being poured into a project which is really about selling cars to the well-off, at a time when the ordinary Joe can’t find a job.

It’s probably for the best if more good money is not thrown after bad, given the current political dynamic. Two thirds of respondents say they oppose a second government stimulus program and more than half say the country would have been better off without the first one, according to a recent Time magazine poll.

If opinion polls are right about the mid-term elections, then the political obstacles to a comprehensive energy and climate bill are only likely to grow. Obama has put global warming on the back burner, Rolling Stone magazine wrote in July, declaring cap and trade “officially dead.”

Hence the free-fall in carbon emissions prices and the announcement that the Chicago Climate Exchange is scaling back its operations – with massive layoffs. Now the game is up, and even the EU is stepping back from further announcements of emissions cuts, carbon is trading at a mere 10 cents per ton, compared $7.40 during the heyday of climate hysteria in 2008.

Wall Street tried to make environmentalism sexy, but the carbon-offset scams, and the web of corruption and shady deals concealed beneath Europe’s generous system of incentives, have taken their toll. The developing world was never going to succumb to the neo-colonialist agenda presented at the UN Climate Summit in Copenhagen – not least because of the inconvenient truth that there has been no global warming since 1998.

Environmentalists still hold a trump card, though: the EPA’s new power to crack down on carbon emissions, without the help of Congress. The Supreme Court decided last year that that the EPA could regulate CO2 as a pollutant under the Clean Air Act, and it is pushing forward with its plans, so there’s still a chance of fully-blown climate madness in the U.S..

But while the EPA could still go off the deep end, regulating carbon emissions – and everything from lead weights used to balance car tires and the use of lead fishing sinkers – the new “utilities first” approach to energy policy could wind up stripping it of its newfound authority.

Those in the business world who hope sanity will prevail over the White House Office of Energy and Climate Change Policy will be encouraged by the news that Obama’s Administration has urged the Supreme Court to throw out a ruling in the case of American Electric Power versus a coalition of states, environmental groups, and New York City – which would allow big emitters of greenhouse gas emissions to be sued under the law of public nuisance.

From the start, Obama has led from behind on climate change – allowing the zealots to proceed, as a sop to the left of the Democratic party. The White House has refused to come up with specifics to guide the effort to cap carbon pollution, and it now appears to have abandoned the fight for meaningful climate legislation altogether.

Stunning climate advocates, Obama did not even mention the words “carbon” or “emissions” or “greenhouse” after the BP oil spill. Perhaps Obama has never truly been a ‘friend’ of the environment. Or perhaps he has simply been listening to industry, and his economic advisers, about the folly of crippling America’s ability to compete. No wonder the attorney representing the plaintiffs suing American Electric Power said, “With friends like this who needs enemies?”

Disclosure: No positions