Big Thinking at Fortune's "Brainstorm Green": Why Are We Politicizing Good, New Ideas?
During Fortune's recent "Brainstorm Green" conference, a panel of biofuel executives discussed the scalability of algae fuel technologies, which present an exciting new(ish) front in the energy equation. Richard Branson thinks that commercializing the fuels for use in jets would be "not so difficult" and both United and Continental Airlines, among others, have flown jets powered by an algae-fuel mix. Sapphire Energy, whose CEO, CJ Warner, spoke on the panel, manufactures an algae-based crude oil that can been refined into gasoline, diesel and jet fuel (it was used in the aforementioned Continental flight). A refined fuel developed from Sapphire's "Green Crude" was used in the world's first cross-country trip by a gasoline vehicle powered by a replacement fuel.
Sadly, rather than applauding this type of innovation, we're instead stranded in a political culture that seems hell bent on demonizing it. Certainly, the development of alternative energy technologies has seen its mistakes and miscalculations but what industry hasn't? The banking sector recently failed us, for instance, sparking strident debate over whether or how to regulate what many consider certain of its excesses; still, no credible policymaker has suggested that we simply stop entrusting strangers with our money.
Yet the Solyndra and Fisker debacles seem to have fueled calls that we turn our backs on the development of new energy technologies; in North Carolina, for instance, the Senate is moving forward (over strident opposition) with a bill that would eliminate the state's requirement that utilities procure a portion of the power they sell from renewable sources. Renewable energy failures get a lot of attention and generate a lot of (usually spastic) activity. The successes, not so much. (Sapphire, whose name may not be on as many lips as Solyndra, already has paid back the loan for which it had received a guaranty under the U.S. Department of Agriculture Biorefinery Assistance Program. It had 30 years but decided it would pay the money back early.)
Many of those who oppose government efforts to promote renewable energy sources usually invoke the well-worn refrain that government shouldn't be in the business of "picking winners and losers." If throwing the economic and political might of the U.S. government behind a technology is what they mean by "picking winners," then they'll be distressed to know that the government has been in that business for a long time:
- In the nineteenth century, for instance, the government made land grants to the timber industry, in amounts that would equate to roughly $25 billion per year as an equivalent percentage of today's budgets.
- It has also imposed tariffs on imported coal to protect the national coal industry and allowed owners of coal mining rights to classify income that ordinarily would be subject to income tax as "royalty" payments instead, which allowed for a reduced rate.
- The "no-winner-picking" government has granted the nuclear industry around $3.5 billion per year insubsidiesbetween 1947 and 1999 and the oil industry gets about $4 billion a year.
(By the way, for all of the abuse heaped on the oil industry, there were a lot of good reasons for the government to "pick" that winner -- especially since at the time of the industry's inception the nation was lacking a consistent source of light. Oil deposits often were located in rustic and undeveloped areas that made it difficult to establish drilling infrastructure, so the government passed tax incentives which sought to encourage the risky work.)
Spurring the development of these technologies made sense, so why the discrimination against renewables? Making gas out of domestically cultivated algae seems to be at least as good an idea as cutting down trees.
The participants in the Brainstorm Green biofuels panel weren't complaining about their lot vis-à-vis that of well-subsidized and much-moneyed conventional energy companies but were instead talking about what they were doing to bring another big, new American idea to market. Sapphire Energy, for example, projects that by 2018 it will be producing between 5,000 and 10,000 barrels of its Green Crude per day. And some well-subsidized and much-moneyed conventional energy companies were there too, making clear that they don't give short shrift to these projects that some have described as unfeasible or from "fantasyland."
The cowgirls and cowboys making strides in the alternative energy arena do so without the certainty of consistent standards and without the benefit of the largesse bestowed upon, for example, the most profitable industry in the history of capitalism. They do, of course, get some federal help, but it is dwarfed by the subsidies that were provided to conventional energy companies: federal subsidies for oil and gas were five times more than those for renewables during the first 15 years of each of those subsidies and the number skyrockets to ten times higher for nuclear. For more on this, read Nancy Pfund and Ben Healy's excellent paper, "What Would Jefferson Do," referenced above. Still, a number of them are doing pretty well at the game. And for all of the ways in which their work has become a yardage marker in the game of political football, they weren't at all political. They were just talking about new ways of making new stuff. And isn't that the whole point?
Republished with the author's permission from Huffington Post
Tuesday, 7 May 2013