When (and why) should an energy subsidy end?

A German-made 900kWh PowerWind56 wind turbine dominates the summit of Mount Institute in Hawley, Mass. It provides, says a ski industry website, 100 percent of the electricity needs of Berkshire East. That’s the ski area, formerly known as Thunder Mountain, at which I learned to ski. From the valley floor, the brilliant white blades seem to lazily rotate at up to 28 revolutions per minute. But that’s visually misleading: When the wind blows sufficiently atop the 1,538-foot peak, the tips of the 91-foot blades slash through the air at 175 mph.

About eight miles northwest of the Berkshire East wind turbine lie the remnants of the Yankee Rowe Nuclear Power Station. That’s New England’s first commercial nuclear power plant, constructed in 1960 for less than $50 million. During the years I reported on the utility industry in the Northeast, I toured the 185-megawatt plant many times. It served electricity customers for 31 years until it was shut down (“decommissioned” is the industry’s preferred argot) in February 1992 because of embrittlement — the result of three decades’ bombardment by sub-atomic neurons of its 8-inch-thick steel shell that houses the reactor’s core.

Neither Berkshire East’s wind turbine nor Yankee Rowe represent full cost acceptance by their respective industries. Both represent generous government subsidy, albeit on different scales. Both impose external costs, some economically intangible yet psychologically tangible, beyond their physical structures. Both suffer from an American governmental myopia that has failed to produce a coherent energy policy since World War II. And both technologies cost utility ratepayers or taxpayers a boatload of money.

Saving a ski area

Berkshire East has a financially challenged past. It is a family business bought by Roy Schaefer nearly four decades ago — a span in which nearly half of American ski areas folded, largely due to rising energy costs. Mount Institute is a minor peak among the Berkshires in western Massachusetts. Snowfall there varies unpredictably from year to year, and mild temperatures do not always permit consistent snowmaking. Move the mountain 100 miles north into Vermont, raise it another 500 feet, and Berkshire East would make a ton of money.

The $3 million wind turbine project has stabilized the ski area’s finances. This one turbine for this one business has been a fiscal lifeline.

But this turbine is not the product of an efficient market for energy that fully covers its costs. In 2008, Massachusetts enacted the Green Jobs Act. That act created the Massachusetts Clean Energy Center. In 2009, Gov. Deval Patrick signed another bill that transferred the state’s Renewable Energy Trust Fund, created by the Legislature in 1998, to MassCEC. That fund’s money comes from the ratepayers of investor-owned utilities that have elected to participate in the trust fund. According to MassCEC, ratepayers statewide on average paid 29 cents a month to the trust fund.

MassCEC contributed $440,000 to the Berkshire East turbine project. That money “paid for the turbine’s feasibility study, some design … as well as construction.” Hats off to the Schaefers for getting utility ratepayers who do not benefit directly from this project to pay for part of that turbine project.

Wind energy externalities?

Wind turbines generally present external costs not borne by their owners. Externalities are “costs … not included in consumer utility or gas bills, nor are they paid for by the companies that produce or sell the energy.” For example, do turbines such as Berkshire East’s kill thousands of birds and bats as critics claim? If so, that’s a negative external cost. (It should not be overlooked that externalities can be both positive or negative.)

A fossil-fuel plant, for example, has such external costs:

These include human health problems caused by air pollution from the burning of coal and oil; damage to land from coal mining and to miners from black lung disease; environmental degradation caused by global warming, acid rain, and water pollution; and national security costs, such as protecting foreign sources of oil.

Machines powered by wind avoid many of these external costs but incur their own:

The most commonly discussed impacts on people are acoustic noise and visual intrusion. Visual intrusion of the turbines along with ancillary systems in the landscape and noise are considered as amenity impacts of the technology. Other impacts include indirect pollution from the production of components and construction of the turbine; the collision of birds in flight with turbines and bird behavioral disturbance from blade avoidance …

Is wind energy ‘effective’?

As a source of energy sufficiency, a single turbine tied to one objective — save a ski area — works, albeit with a taxpayer- or ratepayer-provided subsidy. As an industry, it is fair to ask whether wind power has failed to reach a tipping point in the reliable production of energy. In 2011, consumption of wind-generated energy amounted to 1.2 percent of the nation’s total energy consumption, according to Energy Information Administration data.

Is production of wind energy increasing? Yes. According to EIA, U.S. generation of wind power has increased from about 3,000 megawatts in 1997 to about 120,000 MW in 2011.

It’s easy to find supporters who tout global wind energy production of electricity as a rapidly rising percentage of all global electricity. Six years ago, Greenpeace posted an estimate that a third of the world’s population — that’s more than 2 billion people — could be served by wind energy. (Greenpeace estimates are often overly fueled by fervent optimism — or pessimism, depending on the issue.)

An industry group — the Global Wind Energy Council — touts the presumed success of wind energy in several ways, especially in terms of installed capacity. But wind power succeeds or fails on total kilowatt-hours produced.

Wind energy’s ‘issues’

But thus far, two key issues remain. Wind energy produced as a percentage of all U.S. electricity generated — about 2.3 percent — lags behind other sources.

The other issue is taxpayer or ratepayer subsidy. A federal tax credit that makes wind energy competitive is set to expire Dec. 31. That’s worth $1 billion to the wind energy industry. Arguably, it helps keep the industry fiscally afloat.

Development of wind energy technologies, indeed, most alternative energy technologies (solar, geothermal, etc.), has been aided by government support. Purchase of wind energy technologies has been aided by tax credits.

But the wind energy industry in the United States has been buffeted by competition. The booming shale gas industry has driven down the price of natural gas. Wind power, even with a taxpayer subsidy, has difficulty competing on price — even if it can compete on greenhouse-gas emissions. The tax credit is under attack in Congress, and wind energy component manufacturers have been shedding jobs. Nearly 40,000 wind energy jobs have vanished as the energy retrenches in the face of an almost certain loss of the tax credit.

Government has long played a necessary role in nurturing new technologies. The logic? A little seed money may provide economic and social dividends in the long run — new jobs, higher incomes, and increased revenues for the Treasury. Enticing investors when risks of success are difficult to estimate is an appropriate reason for government to offer subsidies to new technological enterprises.

But how long should government underwrite the costs of externalities that an industry cannot cover with its own revenues? Has the wind power industry simply failed to produce quantifiably satisfactory results (and who defines that standard?) or otherwise failed to demonstrate it can stand alone without subsidies? A reading of congressional tea leaves suggests the industry has run out of time to politically and economically validate its technologies. It should have matured by now, critics argue. And a mature industry should have no need of tax breaks or other subsidies, right?

If that’s the case for ending subsidies for wind energy, why isn’t it also the case for ending the same for nuclear power?

Subsidies for the nukes

The nuclear-power industry in the United States is a mature industry. Electricity has been generated commercially by nuclear plants since the mid-1950s as a product of President Eisenhower’s Atoms for Peace program. That’s well more than half a century for industry maturation. Yet the commercial nuclear industry, which provides 20 percent of the electricity Americans consume, does not cover all its external costs. The Union of Concerned Scientists in 2011 identified “more than 30 subsidies [that] have supported every stage of the nuclear fuel cycle, from uranium mining to long-term waste storage. Added together, these subsidies often have exceeded the average market price of the power produced.”

Nuclear power’s most visible and contentious issue may be its inability to deal with more than a half century’s production of radioactive waste. The Nuclear Energy Institute, which bills itself as the “policy organization for the nuclear technologies industry,” says nuclear power is No. 1 in the United States in “emission-free electricity.” It is not: It emits tons of spent fuel, and the cost of finding ways to dispose of it is in large measure borne by the federal government — the taxpayers.

In October the Nuclear Regulatory Commission extended exemptions that allow Yankee Rowe — which has not generated electricity (or revenue) for more than two decades — to continue to store more than 500 spent fuel rod assemblies on site. That’s just one nuclear facility. Consider the radioactive impact from 104 reactors at 65 nuclear plants (and nuclear-powered naval vessels) with no method to permanently deal with spent nuclear fuel.

In 2005, Sen. Pete Domenici, chair of the Senate Energy Committee, told a hearing:

Each year, American commercial reactors continue to produce 2,000 more metric tons of spent fuel. Right now, more than 55,000 metric tons of spent nuclear fuel and high-level radioactive waste is now stored at more than 121 sites in 39 states. Even now the Nuclear Regulatory Commission permits nuclear plant owners to re-rack spent fuel rod pools to allow increased storage of spent fuel rods.

The continuing cost of such temporary storage, and the nearly $100 billion needed for “research, construction and operation of the geologic repository over a 150 year period” at Yucca Mountain, is a subsidy for the nuclear industry.

Insuring the nukes

Nuclear power plants, in terms of accidents, are (presumably) low-risk, high-consequence facilities. (Just consider Japan’s recent experience and the nightmare of insurance obligations). Thus insurance costs are high. So the federal government, since 1957, has indemnified the industry against insurance payouts above a certain amount. That is a subsidy valued at between $237 million and $3.5 billion a year. Over the decades, the liability limit for commercial nuclear plants has reached about $12 billion. After that, it’s up to Congress to cover additional liability.

During the nuclear industry’s nascency following World War II, such a subsidy was necessary. Investors and utilities could not be expected to undertake the enormous and then-unquantified risks associated with the private, commercial production of energy with nuclear technology. But after six decades of commercial nuclear power generation, why is the taxpayer still on the hook for that insurance liability? (And don’t just lean on the old saw that electricity rates would skyrocket.)

More nukes — and more subsidies in the future?

Federal financial subsidy of the nuclear industry is substantial.

[T]he government remains more involved in commercial nuclear power than in any other industry in the USA. … The US government, through its own national research laboratories and projects at university and industry facilities, is the main source of funding for advanced reactor and fuel cycle research. It also promises to provide incentives for building new plants through loan guarantees and tax credits, although owners have to raise their own capital. [emphasis added]

No nuclear plants have been constructed in the United States since 1996. The Obama administration, seeking to jump-start the use of new, modular reactor technology for a new generation of nuclear plants, has provided more than $8 billion in new federal loan guarantees to build two nuclear reactors in Georgia. That is a subsidy.

If Congress intends to end subsidies for alternative energy technologies on the basis of industry maturation without viable production, who defines viable? Is it percentage of all electricity generated? How is that standard articulated? And by whom?

To what extent, if any, will federal regulators and Congress factor in the role of reducing carbon dioxide emissions in assessing what types of electricity generation to subsidize? These subsidies cannot be viewed solely through an economic lens. Cooling off an overheated planet remains a moral imperative for critics of fossil fuel generation. They see alternative energy technologies, such as wind power, as an ethical response to global warming.

Nuclear presumably avoids that carbon-dioxide externality — but the continued generation of nuclear waste without secure, permanent storage remains that industry’s subsidized Achilles heel.

Fifty-five thousand tons of spent fuel rods, with no permanent home in sight, suggest nuclear subsidies will continue. But before Congress, presumably with White House “cooperation,” ends any energy subsidy, perhaps they’ll take time out from their internecine bickering to actually produce a coherent national energy policy that reflects all available technologies and considers the viability of energy technologies in light of fossil fuel emissions decimating the global climate.

Meanwhile, the lights will stay on at Berkshire East, thanks to its subsidized turbine. And Yankee Rowe will continue to monitor and keep secure its dry casks of radioactive waste — thanks to ratepayer or taxpayer subsidy.

• Berkshire East’s 900kWh wind turbine
• The Yankee Rowe nuclear plant prior to decommissioning
• Brazos Wind Farm in the plains of West Texas
• spent fuel pool at the shut-down Caorso Nuclear Power Plant
• Yucca Mountain main tunnel shaft

Two years adrift in the blogosphere and no land in sight

We have just marked my second anniversary as a blogger. It’s not clear what I thought I was getting into when I approached S&R for a tryout. But over the last two years I have produced 85 posts. An average post is about 800 words, so that’s close to 70,000 words, a respectable book. It feels like it, too. I know something about what it takes to write a book—I’ve written seven good ones, five of which have been published and two of which are being shopped. I have also written one more that should be buried in the back yard at midnight on a moonless night.

I’ve learned a lot over the course of this. I’ve learned that no matter how hard you work to get the words just right, someone will misunderstand it. I’ve learned that there are some people so cantankerous you can’t even agree with them without setting them off. (Yes, gun nuts, that’s you.) I’ve learned that I shouldn’t do rants. What I think is sharp and funny comes off as acrid and nasty. I’ve also learned that I won’t do series or thematic pieces, like my colleagues Sammy, Russ and Brian. I am good for five or so on a topic, then like Ferdinand the Bull, I wander away and lay down to smell the flowers. Odd, eh? You’d think a novelist would have more stick-to-it-tiveness than that.

Not that I don’t have hobby horses to ride. 80% of my posts have fallen into three categories: Politics (40%,) social commentary (25%,) and Sarah Palin and Tim Tebow (15%.) (For what it’s worth, I was a little worried when Sarah started fading, but I prayed and God sent me another Christian idiot to replace her, Little Tim. Praise to His name. Amen. I guess with Alabama and Texas God must have an unlimited supply of these buffoons. But I digress.)

The remainder of the posts were carved up between the occasional non-Tebow sports piece, book reviews, travel pieces and odds and sods. When I went back over the list, though, I was pleasantly surprised that for the most part the pieces were all fresh and new and distinct both from each other and from what others out there were saying.

As I look down my list of titles, there are not many regrets. But there are a few.

I wish I’d recognized that I suck at rants before I tried to do them. There’s an art to those. When you see Frank take off on a hilarious wild-eyed riff, know it ain’t as easy as it looks. By comparison, my attempts look like the humor column in a high school newspaper.

I wish I had never taken on the issue of obesity as a choice. My position was right, but this is one of those issues that people cannot think clearly and rationally about. Quite a few people got their feelings hurt and I am not sure I really changed anyone’s opinion. I also wrote a post that I meant to be a salute to a charity that was closing its doors, and for reasons I have still not quite figured out, the charity saw it as patronizing and hurtful. I meant well, but I goofed. I wish I’d never agreed to review a book called Sweet Heaven Before I Die. I make a practice only to review books I like. I know what a nasty review feels like. I can’t quote any of the hundred or so great reviews I’ve gotten over the years, but I can tell you word for word the gratuitous nut-shot that Publishers Weekly gave me for my second novel. But I agreed to review Sweet Heaven and at the end, had to be honest about what I’d found.

So out of those 85 blog posts, I’d say I can hold my head up about 80 of them. I’d rather be perfect, but the nature of blogging means that I will never be, and it looks like my personal Oops Factor is about 6%.

There are some things I am genuinely proud of. I called the Republican primary virtually blow for blow months before it started. My accuracy rate was better than any of the pros who work at the big organizations. I got out way ahead of the educational loan scandal and I can even argue that one of my early posts on the topic, “University of Ponzi,” helped accelerate the national conversation. I am also proud of my travel posts about Palau, Costa Rica, Berlin and Galapagos. Others who have been there tell me I captured the essence of those places pretty well.

For the most part, Otherwise is intended to be savage humor, but occasionally I broke from that to write about personal topics, ranging from my painful childhood (A long way from Waycross, Georgia) to the guilt of growing up Southern (The 9:1 Ratio) to grappling with my own latent racism (Would I have voted for Barack if he’d been white?) For the most part, readers were very kind when I put myself out there.

Of course, the thing that drives every blogger crazy is when you work for weeks on something that you think is important and exciting, and it sinks without a trace. I had a lot of those—the vote for Barack piece, my series on the apocalypse, my Dick and Jane primer on Rick Perry. Sadly, I didn’t have a lot of the reverse, unlike my colleagues Sam, Denny, Chris and Wufnik who have seen small pieces on everything from Johnny Rotten to postage stamps to zombies go viral and rack up huge hits. I am like so envious.

It’s not clear what’s next for Otherwise. It’s clear to me that writing blogs has made me a better writer, but it’s not clear that it made the world a better place, which is what we all do this for. I have recently started on a new degree and am stuck into my next novel, and how much time I have for blogifying remains to be seen. Still, writing is the best process known for sorting out your own thinking. Many times I have started a blog and ended up having to rewrite the thing because the logic made me change my position completely. Thank you for helping me think through what it is I really think. Thank you for reading.

Tournament of Rock IV: Stevie Nicks vs. Duran Duran #NSFW

UPDATE: Due to intense interest, we’re going to extend voting an extra day in this match. Polls close at midnight tonight (MST). Get your votes in.


I keep predicting close matches and I keep being wrong. Way wrong. In the last match Bon Jovi absolutely stomped Boston, corralling 82% of the vote. I’m not surprised that Bon Jovi got a lot of votes, but I am surprised that Boston got so little love. Shows what I know. So in the next match I’m going to predict a blowout. Since I think Duran Duran ought to beat Stevie Nicks, I’m picking Stevie in a landslide. Take that.

fikshun: Stevie beat Ozzy. Stevie has more solo hits than all the members of Duran Duran combined. Neither artist has sponsored a commercial product. Duran Duran isn’t on speaking terms with their former guitarist. It’s an open question whether the same is true with Stevie. This could get interesting.

Bonesparkle: I’ve decided to cast my vote based on hotness. In this round, Nick Rhodes is way prettier than Stevie Nicks.

Me: Some people slur Stevie by saying she slept her way to the top, which is totally unfair. You don’t think Simon LeBon would have slept his way to the top given half a chance?

Up first, it’s a shame that whole sparkly vampire thing didn’t come around 25 years sooner.

I selected the uncensored version of Duran Duran’s “Girls on Film” because I’m very interested in photography. That’s the only reason. (#NSFW)

Click to vote.

Here’s the up-to-date bracket.

Ravi Shankar: 1920-2012

Ravi Shankar, arguably the greatest sitarist in Indian music’s history and certainly its most famous musician, has died at age 92. 

Shankar’s contributions to Indian music are myriad, from his composing and performing of complex ragas to his popularizing of Indian musical forms with Western audiences. And he leaves behind two immensely talented daughters, Anoushka Shankar and Norah Jones.

But to most Europeans and especially Americans, Shankar’s claim to fame was through his relationship with Beatle George Harrison and to others of sixties rock royalty. Brian Jones and Donovan Leitch as well as Harrison took  sitar lessons from him. Harrison, famously, embraced not only Indian music but Indian culture and religion, too, and he and Shankar were lifelong friends.  Shankar accompanied and assisted Olivia and Dhani Harrison when Harrison’s ashes were sprinkled on the Ganges. From Shankar Harrison learned much about Hindu religion and its focus on tranquility and humility.

An anecdote about Shankar and Donovan illustrates Shankar’s well known humility – and wit. Continue reading

Five reasons why soccer will eventually surpass football in the US – #3: Soccer is already blowing up in America

Part three in a series.

Thanks to expanding TV deals, smart entrepreneurs in the MLS and a Millennial-fueled supporter culture, soccer is the fastest growing spectator sport in the country. 

There has been a good bit of talk over what pro soccer in the US will do now that Becks has departed the Galaxy. It is a little hard to fathom how much he did for the visibility of MLS, but there’s no question they got good value for their $250 million (or whatever insane sum of money they invested in him). Overnight it went from being a third-tier league to respectability. No, MLS can’t yet attract top world stars in their prime, but it can attract outstanding developing talent and established world stars who aren’t yet ready for the glue factory. Beckham, as we saw, still had some good years when he came over (and will probably be viable for a couple more, depending on where he goes).

Thierry Henry is playing the back nine of his career, but again, is nowhere near done. Robbie Keane is a right Spurs bastard, but there are a lot of teams in Europe that would love to have him right now. The rumor mill says that Kaka, just a few years removed from being the most terrifying attacking midfielder on the planet, is on his way to LA to replace Beckham. Or maybe it will be Chelsea’s Super Frank Lampard. Who knows? In any case, while MLS isn’t yet a top league, it has certainly become a credible league in a nation not driven by a long, deeply entrenched culture of proper football. Considering that it’s not yet 20 years old, that’s significant, if not outright remarkable.

While nobody is yet doling out NFL-type dollars, the major TV networks are clearly interested. In recent years FOX and ESPN have fought it out for rights to televise both MLS and European matches in the US (and both have been recently blindsided by new entrant beIN Sport. None of these deals holds a candle to the latest, though, as NBC has jumped into the fray with a $250M bid for the English Premiership. Whereas previous packages have offered American viewers a game or three each week (on one channel, for the most part), NBC plans to use all of its properties to show most, if not all the Prem games (and this, it is expected, might even include live matches on NBC proper).

Give this piece from ESPN FC a read, and as you do, pay attention to something. The jewels of MLS are obviously the two biggest clubs in the two biggest cities: Galaxy in LA and the perennially underperforming Red Bulls in New York. But that’s not where the backbone of the league’s future necessarily lies. It will avail nothing to build a couple of rich sides if everybody else is the Washington Generals, and it’s the emerging entrepreneurship in places like Portland and Kansas City that are shining the light forward.

But in towns like Portland and Kansas City, soccer has become a cacophonous totem of local pride. Young fans attracted by an intoxicating supporter culture and intimate soccer-specific stadiums have themselves become symbols of the self-confidence and momentum surging behind the game in the United States.

Whereas pioneering owners Lamar Hunt and Anschutz Entertainment gamely propped up a gaggle of teams in the league’s early days, the new energy in MLS has been catalyzed by the arrival of a new breed of young entrepreneurial investors — hands-on leaders who fuse strategy and vision with a passion that reflects their teams’ rabid supporter cultures.

Would you like to go see a Portland Timbers game? Good luck. They seem to be permanently sold out, and that supporters club – the Timbers Army – is the equal of anything in Europe for enthusiasm. (Sit next to one of them on a cross-country flight sometime, like I did earlier this year, and make sure he knows you like soccer. Let me know what you learn.) Pan around the crowd on game day – you’d be hard pressed to tell much difference between them and all but the largest clubs across the pond.

In July, several of us from the Rocky Mountain Blues Chelsea FC Supporters Club tripped up to Seattle to see our beloved Blues take on the Sounders as part of their pre-season tour. It was quite an event. Wherever we went the day before the match, the locals were clearly clued in: “are you here for the Chelsea match?” Everyone in town knew, not just the diehards. And we were well represented. I’m not sure how many of us Chelsea interlopers there were in the north stands, but we acquitted ourselves pretty nicely.

Still, the total attendance at the game was in excess of 53,000, mostly Seattle loyalists. The game was held in CenturyLink Field, where the Seahawks play, a remarkable showing for an exhibition match. The Sounders feature some of the best organized fans in MLS, and it’s worth noting that very few stadia in England are large enough to hold that many attendees.

Sporting Kansas City’s Robb Heineman is ambitious: “Our business plan will allow us to be one of the world’s four or five best leagues within the course of the next eight years.” Hmmm. Well, based on current realities, that means behind England, Spain, Germany, Italy and France, but ahead of Holland and Portugal. Seriously ambitious. But maybe not out of the question, depending on what criteria you use to define “best.”

Tomorrow: The children are the future…

Image Credits: The Roar, Rocky Mountain Blues