green energy

$7 Billion or More in New Taxes for Virginians Under EPA Mandate

by Hans Bader on December 1, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Environment

The EPA told Virginia earlier that it would impose costly measures on Virginia Counties, measures so costly that they would result in record property tax increases in places like Fairfax County Virginia. The measures were designed to make the Chesapeake Bay cleaner. The EPA left open the door to less costly measures to achieve the same goal if Virginia could suggest any to the EPA’s liking.

Virginia has now attempted to do just that, submitting a $7 billion plan to make water going into the Chesapeake Bay purer. But The Washington Examiner reports that the EPA will likely reject it in favor of more costly measures.

So it looks like Virginia taxpayers will be paying at least $7 billion, probably a lot more, to comply with the EPA’s costly mandates. (Virginia, like most states — but unlike the federal government — has a constitutional requirement that it maintain a balanced budget, so it can’t just borrow and spend the $7 billion, it has to raise taxes to pay for it, or dump the cost on its municipal governments to raise themselves through higher property taxes.)

Virginia officials have been critical of the EPA’s proposed measures, calling them a “massive unfunded federal mandate.” 

In addition to higher property taxes, homeowners in liberal Washington suburbs face costly new “green building” regulations at the hands of local governments. For example, the Arlington County Board is also mulling new energy regulations that could increase the cost of home renovations by as much as 40 percent.

Taxpayers in Maryland counties like Montgomery may also end up paying increased taxes due to the EPA’s Chesapeake Bay regulations.

China Might Halt Rare Earth Exports

by Brian McGraw on October 19, 2010

in Trade

The New York Times reports: “China Said to Halt Some Mineral Shipments.”

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further ratchet up already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle.

China had previously signaled that they were going to be keeping increasing amounts of the rare earths (a misnomer, they are abundant just expensive to refine), though halting exports is quite different. Might this be retaliation for the continued attacks politicians have been making towards China, the currency accusations and more recently the investigation over illegal green-energy subsidies?

The irony is that the United States used to be the largest producer of rare earths in the world, at the Mountain Pass rare earth mine in California. Wikipedia claims that the mine closed due to China’s entrance into the market (and low environmental standards, etc.), though an article featuring the owner of Molycorp Minerals (the company that owns the mine) indicates that the mine closed in 2002 because of little demand for rare earths and environmental concerns. The mine is expected to re-open in 2011.

However this plays out, the U.S. might want to reconsider the ramifications of continually pushing an economy we are interdependent on.

China Mocks U.S. Over Subsidy Investigation

by Brian McGraw on October 18, 2010

in International, Trade

An update to Friday’s post:

Bloomberg (and the The New York Times) reported this weekend on China’s response to U.S. accusations over Chinese green energy subsidies. Zhang Guobao, a top energy official in China, directed a number of blunt comments towards the Obama administration:

Should the Americans pursue the subsidy issue with the World Trade Organization, Mr. Zhang said, “the only ones who will be humiliated are themselves.”

“What America is blaming us for is exactly what they do themselves,” Mr. Zhang said. “Chinese subsidies to new energy companies are much smaller than those of the U.S. government. If the U.S. government can subsidize companies, then why can’t we?”

Mr. Zhang accused American trade officials of repeatedly delaying talks over the same issues that the White House now wanted to investigate and suggested the administration was playing election season politics.

Mr. Zhang called the Steelworkers’ complaint unfounded, saying the Obama administration had proposed subsidies totaling $60 billion for clean energy industries, adding that the American government had placed domestic-content provisions — so-called Buy American clauses — on certain clean energy products.

“I have been thinking: What do the Americans want?” said Mr. Zhang, the vice chairman of the government’s National Development and Reform Commission. “Do they want fair trade? Or an earnest dialogue? Or transparent information? I don’t think they want any of this. I think more likely, the Americans just want votes.”

He makes a number of very obvious points: this case is likely without merit as the U.S. heavily subsidizes our domestic green energy industry, and that the Obama administration is misdirecting U.S. anger over the economy towards China.

The New York Times also published this weekend a China bashing op-ed by Senator Sherrod Brown (D-Ohio). Senator Brown, no stranger to criticizing U.S. trade policy, has written a book — Myths of Free Trade — covering it. Departing from the almost universal consensus of economists across the political spectrum, Brown argues that no one outside of rich investors benefit from what he calls “unregulated trade” and that  free trade has led to global economic stagnation. Despite what the Times might tell you, denying reality is a time-honored tradition shared by politicians across the political spectrum.

“Illegal” Green Energy Subsidies

by Brian McGraw on October 15, 2010

in Energy, Trade

In a move that surprised no one, The New York Times reported today that the U.S. agreed to go ahead and formally investigate a complaint filed by the United Steelworkers in early September, accusing China of illegally subsidizing their green energy industry. The original story on the filing of the case is here. A summary of the complaint is here.

Two quotes from the summary, emphasis mine:

The USW petition details the broad range of WTO-inconsistent policies that China has employed to vault ahead of the United States as a leading producer and exporter of green technologies. These practices include discriminatory laws and regulations, technology transfer requirements, restrictions on access to critical materials, and massive subsidies that have caused serious prejudice to U.S. interests. Together, these practices have given Chinese producers an upper hand in accessing investment, technology, raw materials and markets, while foreclosing these same opportunities to U.S. producers. The Chinese government has invested hundreds of billions of dollars to unfairly advantage its producers and exporters, undercutting U.S. companies and workers and distorting billions of dollars of world trade.

China’s massive domestic subsidies to green technology are distorting trade and harming producers in other countries. In its economic stimulus package, for example, China gave more than $216 billion to subsidize green technologies – more than twice as much as the U.S. spent in the sector and nearly half of the total “green” stimulus spent worldwide. These subsidies are helping Chinese producers ramp up production, seize market share, drive down prices, and put global competitors out of business.

The USW are angry that China is subsidizing green energy MORE than the U.S. does. Their language is unclear, but they agree that the U.S. subsidizes green energy, unfortunately just not to the extent that the Chinese do. This article indicates that the stimulus package reserved $43 billion for renewable energy.

The Energy Information Administration estimated that in 2008 annual subsidies for the renewable energy industry were 4.87 billion (and this group makes a convincing case that their estimates are far lower than reality). Does the WTO account for subsidy levels versus total population? If China has four times the population of the United States, can they give a subsidy that’s larger in absolute terms but smaller in relative terms?

I am not a lawyer; it’s possible that certain types of subsidies are legal while others aren’t. Regardless, it is pretty clear that the U.S. has been on the wrong side of numerous international trade violations — and even if not wrong legally, is wrong in spirit here. See the dispute over Mexican trucks, the international gambling ban, the U.S. Brazilian cotton dispute, and many others.

Regardless of how you feel about the accusations of a weak currency (see CEI’s Fran Smith on the issue here), the U.S. cannot with a straight face accuse China of illegally subsidizing its green energy sector. Until the case is resolved, or goes away, this will be another great talking point for politicians who are more than willing to cater to protectionist fears. Nancy Pelosi has already seized the opportunity.

Finally, this is another great time to look at the mission statement of the USTR:

American trade policy works toward opening markets throughout the world to create new opportunities and higher living standards for families, farmers, manufacturers, workers, consumers, and businesses. The United States is party to numerous trade agreements with other countries, and is participating in negotiations for new trade agreements with a number of countries and regions of the world.

The Office of the U.S. Trade Representative (USTR) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues.

The relevant parts are the first paragraph, where they forgot to include “politically favored” when describing businesses and manufacturers (they could also delete consumers from the list and stop pretending). The relevant part of the second paragraph is where they reveal that the USTR is nothing more than a tool of the Obama administration, who has been depressingly bad on trade issues.

Canada’s Green Energy and Jobs Programs Butt Up Against WTO Rules, says Japan

by Fran Smith on September 22, 2010 · 2 comments

in Energy, Environment, Global Warming, International, Trade

Do green energy and green jobs mandates run counter to World Trade Organization rules?  Japan says “yes” in relation to Canada’s program for renewable energy generation and green jobs in Ontario. Japan is complaining to the WTO that Canadian measures that mandate domestic content requirements for renewable energy generation equipment are inconsistent with WTO rules because they discriminate against equipment produced outside of Ontario and also represent a subsidy prohibited by the WTO. The country has asked the WTO for a formal consultation with Canada on the issues it raises in its September 13, 2010 filing. Consultations are often the first step in trying to resolve an issue before a country opens an official case with the WTO’s dispute settlement body.

Primarily Japan’s complaint hits Canada’s domestic content requirements in its “feed-in tariff” (FIT) program for Ontario, which requires that the renewable energy equipment, such as solar panels, wind turbines, biomass, and waterpower generation equipment, be produced in Ontario in whole or in part. (Feed-in tariffs are renewable energy payments that electric grid utilities obligate themselves to pay to purchase electricity generated from renewable sources.)  Under the program guaranteed prices for renewable energy electricity production are provided through long-term contracts.

According to a provincial government backgrounder on FIT, the domestic content requirements are intended to support “new green jobs in Ontario”:

Domestic content requirements for both FIT and microFIT projects are intended to help support the creation of 50,000 new green jobs in Ontario. MicroFIT projects will help create new local businesses and green jobs as demand grows for technologies such as solar panels, wind turbines, biomass and waterpower generation equipment, and for Ontarians who can design, build, install, operate and maintain these technologies.

And the domestic content requirements can be very specific (and somewhat ridiculous).   Here, for instance, is the one for silicon ingots and wafers:

Silicon ingots and wafer, where silicon ingots have been cast in Ontario, and wafers have been cut from the castings by a saw in Ontario.

From my quick review of the Canadian program, Japan seems to have a real cause for its complaint. Other countries looking to follow Canada’s example for green jobs creation should be wary about including their own protectionist measures.

H/T/ Julie Walsh

When White House Correspondents Go Green, Follow the Money

by Richard Morrison on April 30, 2010

in Environment, Global Warming

In the Politico today, there’s a story about how the Natural Resources Defense Council is advising the White House Correspondents’ Association on how to “go green” with their annual dinner. They seem to be taking this very seriously:

Every two weeks, the greening team — including [NRDC senior scientist Allen] Hershkowitz and representatives from the Hilton — held a conference call to make sure every procurement decision and operation at the event would be as green as possible.

The story goes on to explain that they will be offsetting all of the energy use associated with the dinner – including the private jet to fly host Jay Leno out from L.A. and back. With advice from the Portland-based nonprofit the Bonneville Environmental Foundation, they’ve purchased an undisclosed amount of carbon credits. According to Politico‘s Lisa Lerer, “Credits purchased for the dinner will help fund the Tatanka Wind Farm on the North Dakota-South Dakota border.”

So far, so good. Except that the Tatanka Wind Farm is already up and running – it went online in July of 2008. The project’s $381 million budget was financed by GE Energy Financial Services and Wachovia. And it’s operated by Acciona Energy, a multi-billion dollar Spanish conglomerate with 40,000 employees and operations in 30 countries.

So, my question is, who is getting the White House Correspondents’ Association’s money? The shareholders of Acciona? GE and Wachovia (now Wells Fargo)? It’s one thing for carbon offset money to, for example, fund a nonprofit organization in the developing world to manage a reforestation project, but how does it make any sense to pay money to a Spanish corporation for operating a wind farm that’s already been privately financed and has been producing energy for almost two years? Am I missing something here?

LibertyWeek 90: Jerry Brito’s Surprisingly Free

by Richard Morrison on April 26, 2010

in CEI Projects, Features, Podcast, Zeitgeist

Richard Morrison, Jeremy Lott, and Jerry Brito bring you Episode 90 of the LibertyWeek podcast. We take a look at immigration in Arizona, expanding finance regulations, myths about green energy, porn at the SEC and Jerry’s Mercatus Center technology project, Surprisingly Free.

Regulation of the Day 78: Green Energy Subsidies

by Ryan Young on December 4, 2009

in Economy, Energy, Environment, Ethanol, Global Warming, Regulation, Regulation of the Day, Stimulus to Nowhere

Today’s New York Times has a classic dog-bites-man story. The green energy sector is shedding jobs, despite being given billions of taxpayers’ dollars by Presidents Bush and Obama.

As so often happens, regulators’ efforts to change people’s behaviors aren’t working as hoped.

To paraphrase Jerry Taylor and Peter Van Doren’s work on ethanol subsidies: if it’s commercially viable, then it doesn’t need any subsidies. If it isn’t, no amount of subsidy will make it so.

The Right to a Green Job?

by Iain Murray on August 4, 2009 · 1 comment

in Economy, Employment, Energy, Environment, Global Warming, International, Zeitgeist

Demand for wind turbine blades in Europe has slipped, apparently, so a British company that makes them, Vestas, has plans to let go 625 workers (or, in the formulaic language of British news reports, “axe 625 jobs“).  So some of those being “axed” have decided to barricade themselves into the factory, in the unorthodox but apparent hope that this will stimulate demand.

What is perhaps most interesting about this story is not so much what it reveals about the impermanence of green jobs as the British labor unions’ attitude to them:

“The court has made its decision, but we will continue with our campaign and the right to work on green energy jobs.”

So it seems that on the British left there is now a substantive right to a green job. What a happy world this will be, when everyone is paid for saving the planet.  Presumably this right will be secured by a tax on the productive workers, but one has to wonder, just who will they be in this world?

Iain Murray on the Anti-Stimulus

by Richard Morrison on February 12, 2009

in Deregulate to Stimulate, Economy, Stimulus to Nowhere

On behalf of my distinguished colleague Iain Murray, who is busy speaking at a very important press conference this morning, let me present his prepared remarks on the impending stimulus bill:

Remarks of Iain Murray, Director of Projects and Analysis, Competitive Enterprise Institute

Good morning. Others have already told you what an unutterable waste of money this so-called stimulus package is. I just want to make two points. First, that the American people have been misled about the nature of the bill, and been sold a pig in a poke. Second, that if you really want to stimulate economic activity, there is a very simple way to do it that doesn’t cost a penny; we call it “liberate to stimulate.”

The American people were told that this bill would give Americans jobs as a result of great public works projects. It won’t. Congress and the Agencies have between them made it very difficult to undertake great infrastructure projects, and impossible to do it quickly. That’s why almost all the supposed “shovel-ready” projects in the bill are maintenance projects and the like. If you thought Americans would be building roads, only 3 percent of the Senate stimulus package is for roads. Only 7 percent is for new infrastructure in general.

As for so-called “green energy,” the much-vaunted aim of doubling alternative energy can be achieved by business-as-usual, so little energy is provided by wind and solar. My colleague Jonathan Tolman and I also worked out that the House bill contains just about $6.4 billion aimed at creating “green jobs,” and only 70,000 would be created. This bill is not what was advertised.

So how can we stimulate the economy? As I mentioned, Congress has made it very difficult to build infrastructure. It needs to lift those restrictions. Gov. Schwarzenegger and three former California governors have all complained about the restrictions of the National Environmental Policy Act causing misallocations of infrastructure funding. Those restrictions need to be removed, as Gov. Schwarzenegger has asked. Similarly, we need clean electric power, and we need large amounts of it, but it takes ten years or more to break ground on a nuclear power plant. If the regulators sped up the permitting process like they’re doing in the UK, then we could get moving on new nuclear build very quickly. Those sorts of reforms don’t cost anything, and can get America back to work, which is what we all want to see.

Check out more on the topic under the “Deregulate to Stimulate” category.

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