Japan’s Nuclear Lesson: Expensive Energy Hurts The Economy

Despite public protest, Japan is going nuclear—again.

Following the March 2011 accident at the Fukushima nuclear plant, all of Japan’s nuclear reactors were gradually switched off for inspections. Meanwhile, new regulatory standards have been developed. Reactors are undergoing inspections.

Prior to 2011, nuclear power provided nearly one third of Japan’s electricity. Lost power-generation capacity has been replaced by importing pricey fossil fuels. Japan has few natural resources of its own. The Wall Street Journal (WSJ) reports: “Japan imports more than 90% of its fossil fuels, and is particularly dependent on the Middle East for oil and natural gas.”

The loss of nuclear power has raised household utility bills and made it harder for industry to operate profitably.

The economic impact of shifting from nuclear power to imported fossil fuels is evident in Japan’s trade deficits. In OilPrice.com, John Manfreda sees a direct correlation. He says: “Before the Fukushima accident occurred, Japan’s economy was driven by its large trade surpluses, which it achieved year after year. However, since Fukushima, Japan reversed that trend, and began posting trade deficits on a yearly basis.”

Japan’s fourth Basic Energy Plan, approved in June 2015, concludes: “Nuclear power is an ‘important power source that supports the stability of our energy supply and demand structure.’” The plan increases nuclear energy from current levels by restarting most of the idle plants, while calling for an approximate 10 percent reduction from the pre-Fukushima level of 30 percent. WSJ adds: “Japan also plans to continue its use of coal, the cheapest of its energy imports. … Already this year, the nation’s utilities have announced the construction of seven new coal-fired power plants.”

Addressing Japan’s plan, World Nuclear News states: nuclear power “gives stable power, operates inexpensively and has a low greenhouse gas profile.”

Japanese Prime Minister Shinzo Abe’s government reportedly wants to operate as many nuclear plants as possible “to meet the nation’s energy needs and grow the economy.” Twenty-five reactors are seeking a restart.

“There is no greater issue for the health of the Japanese economy,” Robert Feldman, managing director of Morgan Stanley’s MUFG Securities Co., opined in WSJ, “than energy.”

Japan is restarting its nuclear program. Iran, supposedly, wants nuclear power. Driven by the need for clean reliable power, to bolster energy security, and to reduce dependence on imported fuels, many other countries are pursuing nuclear power. Russia has eight reactors under construction—which will double its nuclear capacity. China has 26 reactors in operation and 24 under construction, and is now building identical power plants that allow for cost efficiencies that come with mass production. Many new plants, such as the reactors being built in the U.S., utilize “third-generation designs that improve safety and cut costs,” E&E News reports. Fourth-generation reactors, which use different coolants and fuels, are in the proposal stages.

The lesson here is less about nuclear power and more about the need for energy that is cost-effective, reliable, and secure.

In a country such as Japan, with limited natural resources, nuclear power meets the need. In the U.S., where we are rich in coal, oil, natural gas, and uranium (the fuel for nuclear power), we have more options and should select the energy source that is right for specific needs and locales. As Japan has learned, energy is one of the most important components of the economy; and expensive energy has hurt it.

In the U.S., instead of having an energy plan, we drive up costs by regulating away our energy advantage and throwing money at expensive energy. It is time for America to really evaluate our energy needs and maximize our advantage.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Solar Energy’s ‘Stunning Growth': 99% Pays, 1% Benefits

If you live in the United States, vote, pay taxes, and get your electricity from a utility company, you’ve helped the solar power industry through a variety of tax and regulatory policies—voted in by politicians you elected—that favor it over other lower-cost forms of electricity generation.

When you read headlines such as CNBC’s touting “Solar power’s stunning growth,” realize that it’s thanks to you—even if you’ve never even thought of putting solar panels on your roof or live in an apartment where you couldn’t install them if you wanted to.

Hoping to benefit from the “stunning growth,” Sunrun Inc., on June 25, filed its initial public offering. The Wall Street Journal summarizes: “Sunrun installs solar panels on residential homes either for no upfront cost or at low cost. Sunrun owns the solar panels and receives monthly payments from homeowners for the power generated by the panels. It also receives government tax incentives to cover its costs.”

Reading through the 234 pages of fine print in Sunrun’s form S-1, it becomes clear that growth comes from government policies. Page 104, under the heading “Government Regulation,” brags that Sunrun maintains a “policy team to focus on the key regulatory and legislative issues impacting our entire industry.” The “policy team” consists of lobbyists whose job is to ensure policy favorable to its business model.

Under the heading “Policies and Incentives,” the S-1, on page 89, outlines several specific “federal, state, and local policies” that have “been strong factors affecting the market for distributed solar generation.”

The S-1 states: “Tax incentives have accelerated growth in U.S. solar energy system installations.” Under today’s policy, businesses and homeowners who install a solar system can receive a tax credit worth up to 30 percent of the system’s cost—though it is scheduled to drop to 10 percent on January 1, 2017. In bold print, page 18 states: “Our business currently depends on the availability of utility rebates, tax credits and other financial incentives in addition to other tax benefits. The expiration, elimination, or reduction of these rebates and incentives could adversely impact our business.” Extending the Federal Investment Tax Credit is likely a top priority of the “policy team.”

All U.S. taxpayers, then, are paying for solar’s “stunning growth.”

Net metering, according to page 18, provides “homeowners with a one-for-one full retail credit within a monthly billing period for electricity that the solar energy system exports to the electric grid.” Interestingly, the only states where Sunrun operates are those states that have “adopted net metering policies.” Sunrun’s S-1 acknowledges that “we rely on net metering and related policies to offer competitive pricing to homeowners,” and “changes in net metering policies may significantly reduce demand for electricity from our solar service offerings.”

It is net-metering policies that have made all ratepayers shoulder the tab for solar’s “stunning growth.” As the S-1 points out, homeowners get “a one-for-one full retail credit” for the electricity the system generates. What it doesn’t make clear is that the policy requires the utility to pay the retail rate for the excess electricity generated from the homeowners solar system, even though it can get lower-priced electricity from existing conventional sources. To stay in business, the utility has to raise rates on all its customers so that the few can benefit. Page 88 points out: “Residential solar has penetrated less than 1% of the 83 million single family detached homes in the United States.”

If you are tired of your tax dollars raising your electricity costs—benefiting the 1 percent while the 99 percent pays twice—your best investment may come at the ballot box.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Will 2015 Be The Year Of Renewable Fuel Standard Reform?

The Senate Homeland Security and Government Affairs Committee attacking the Environmental Protection Agency’s (EPA) management—er, mismanagement—of the federal renewable fuel standard (RFS) is indicative of growing frustration over both the agency and the RFS itself.

At the June 18 hearing, Senators grilled EPA’s Acting Assistant Administrator, Janet McCabe. Senator James Lankford (R-OK), who chaired the Subcommittee on Regulatory Affairs and Federal Management, opened the hearing by calling the RFS “unworkable in its current form.” In her comments, Senator Heidi Heitkamp (D-ND) claimed that the EPA’s management of the RFS ignored “congressional intent,” while creating “uncertainty” and costing “investment.”

In addressing concerns from a different energy era, Congress passed the Energy Policy Act in 2005, which established the first renewable-fuel volume mandate. Two years later, through the Energy Independence and Security Act, the RFS program was expanded.

The EPA administers the RFS and is required to finalize proposed fuel volumes by November 30 of each year—something it has failed to do every year since 2009.

One day before the hearing on “Re-examining EPA’s Management of the RFS Program,” the American Petroleum Institute held a press call in which an unlikely coalition of RFS opponents—the American Motorcyclist Association, the Environmental Working Group, and the National Council of Chain Restaurants—sounded optimistic that 2015 is the year for RFS reform.

While the EPA’s renewable-fuel volumes, released May 29, don’t meet the law’s target of 22.25 billion gallons for 2016, they do increase year after year—with the 2016 target being an increase over current use. Addressing the EPA’s new numbers, USNews reports: “The update calls for a 27 percent increase in what the EPA calls ‘advanced biofuels’ from 2014 through 2016, a catch-all category that includes cellulosic ethanol made from corn stalks, husks and other leftovers from a harvest, plus fuel converted from sugar cane, soybean oil, and waste oils and greases, such as from fast-food restaurants. Combined with conventional corn ethanol, the proposed volumes overall rise 9 percent.”

In pressing McCabe on the RFS and the consistently missed deadlines, Lankford asked: “How does RFS get back on schedule? Or, has Congress put a requirement on EPA that it can’t fulfill?” McCabe promised they were working on it and offered some vague explanations. Lankford then asked: “I assume you would agree there’s no chance we will hit the target for 2017 based on the statute required for 2017, so we’ll have to reset it…unless there is a tremendous amount of cellulosic ethanol that comes on board.” Lankford continued, discussing the way the law was written to decrease corn ethanol use and increase cellulosic fuel, which he pointed out isn’t “possible based on production.” McCabe agreed that the cellulosic number would need to be decreased by at least 50 percent.

Later in the hearing, Lankford called cellulosic fuels “great in theory,” but acknowledged that “No one has been able to make it in a quantity that is affordable yet.” He alluded to the fact that the cellulosic industry has struggled—with the largest manufacturer of cellulosic product going bankrupt. He said: “No one can seem to crack the code to be able to make this in a way that’s actually affordable.”

Clearly, the RFS is a program that can’t be fulfilled. No wonder it has so many who see the EPA’s failures as proof that 2015 is the year for RFS reform. Senator Jim Inhofe (R-OK), chairman of the Environment and Public Works Committee, says: “The mandate is in need of significant reform and oversight.”

Maybe 2015 will be the year.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

To Win, Republican Candidates Must Be Strong On Energy

New polling indicates large majorities of Republicans favor key energy issues—but voters of every ideological stripe say energy will be an important part of their voting decisions.

Hickman Analytics Inc., for the Consumer Energy Alliance (CEA), has done polling on energy issues in several key states: Iowa, New Hampshire, North Carolina, South Carolina, Virginia, and West Virginia. While the questions asked are not identical in each state, the responses are so similar that assumptions can be made.

For the 2016 presidential candidates, lessons should be learned—to win, Republican candidates must be strong on energy.

In all states polled, the majority of respondents indicated that energy issues will be at or near the top when asked: “Looking ahead, how important are energy issues in terms of how you will vote in the Presidential election next year?” In each state, except West Virginia, 80 percent or more answered: “very important” or “somewhat important.” In West Virginia, while still a majority, the percentage is 54—though a smaller percentage of West Virginians, 10 percent, claim energy issues will be “not very important” or “not important at all.”

The polling took place in Iowa and New Hampshire in April, South Carolina in May, and in Virginia, West Virginia, and North Carolina in June.

In Iowa, New Hampshire, and South Carolina, Hickman asked residents how they feel about “allowing offshore oil and natural gas drilling north of Alaska, in U.S. waters inside the Arctic Circle.” Overall, a majority of registered voters support it; but opposition is higher among Democrats.

The numbers on Arctic drilling break out this way:

  Iowa New Hampshire South Carolina
Republicans 74% support, 10% oppose 70% support, 18% oppose 76% support, 16% oppose
Independents 48% support, 38% oppose 54% support, 35% oppose 60% support, 32% oppose
Democrats 34% support, 49% oppose 34% support, 54% oppose 51% support, 29% oppose

 

In Virginia, West Virginia, and North Carolina, Hickman asked about the Atlantic Coast pipeline project—a 550-mile pipeline that will bring natural gas from West Virginia through Virginia and North Carolina—and found that support is strong and extends across almost every group. As with Arctic drilling, Hickman found that support for this important energy infrastructure project is stronger among Republicans; but even among those who self-identify as liberal, more support than oppose it.

Here are the numbers on the Atlantic Coast pipeline project:

  Virginia West Virginia North Carolina
Republicans 74% support, 12% oppose 79% support, 12% oppose 76% support, 9% oppose
Independents 54% support, 24% oppose 66% support, 25% oppose 56% support, 25% oppose
Democrats 43% support, 38% oppose 67% support, 20% oppose 41% support, 37% oppose

 

When asked why they support the Atlantic Coast pipeline project, “jobs” was mentioned most frequently, with “a positive impact on the economy” being next. “Contribution to energy independence” was also mentioned.

Presidential candidates can learn from the Virginia, West Virginia, and North Carolina numbers; and a similar response could be assumed in Iowa, New Hampshire, and South Carolina—though they were not asked a parallel question on Arctic drilling.

Republican and Independent voters understand that energy projects create jobs as well as help the economy and energy security.

In Virginia, West Virginia, and North Carolina, Hickman asked about other energy issues, such as coal-fueled power plants, the Keystone pipeline, offshore drilling, and hydraulic fracturing. Again, support among Republicans and Independents is strong on a wide range of energy issues.

As we head into the important 2016 election, it is imperative that whoever becomes the 45th president understands energy. Gratefully, as the Hickman/CEA polling indicates, the American public understands the importance of energy and is prepared to vote accordingly.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

The Ex-Im Bank: By Doing Nothing, Congress Sides With Taxpayers And Basic Market Principles

After more than three-quarters of a century, the Export-Import Bank (Ex-Im) could close its doors on June 30.

Ex-Im was created by Executive Order in 1934 by Franklin D. Roosevelt. With the Export-Import Bank Act of 1945, Congress made Ex-Im an independent agency and required that Ex-Im be reauthorized every four to five years. Ex-Im’s current authorization expires at month’s end.

Ex-Im has historically enjoyed bipartisan support. However, the need to cut spending—coupled with watchdog reporting—brings reauthorization into question. Under the Obama Administration, Ex-Im lending has increased 248 percent. Taxpayers now hold nearly $140 billion in Ex-Im exposure.

The Ex-Im website states: “EXIM Bank is more critical than ever to small businesses.” However, a recent report from American Transparency (AT), the Federal Transfer Report – Export- Import Bank, found that while 90 percent of Ex-Im loans do go to small businesses, 85 percent of the money goes to big business—10 percent of the transactions get 85 percent of the money.

The AT report, released on May 30, analyzed the $172 billion in Ex-Im loans, guarantees, and activity since 2007.

Boeing is Ex-Im’s number one customer.

However, a just-released addendum to the AT report highlights Ex-Im’s involvement in funding many of the green-energy projects I’ve covered in the past few years.

The addendum points to $3 billion green energy companies received from Ex-Im. There are more than $140 million worth of failures within the financial transaction portfolio—though “additional time, resources and further research would turn up much more.”

Solyndra is on the list. Just six months before its infamous bankruptcy, Ex-Im approved $10.3 million in long-term credit to Solyndra’s exports to Belgium.

Spanish solar company Abengoa, which is under investigation for a variety of violations, has an interesting connection to Ex-Im: former New Mexico governor Bill Richardson is an advisory board member to Ex-Im and sits on Abengoa’s advisory board. The addendum states: “Abengoa has obligations of over $225 million in Ex-Im support.”

Other examples include Amonix, Evergreen Solar, Abound Solar, SolFocus, Calisolar/Silicor Materials, and Willard & Kelsey Solar Group—all received Ex-Im support and failed.

But, our taxpayer dollars didn’t just go to failing green-energy projects; they also went to foreign companies. In addition to Spain-based Abengoa, Germany-based Siemens Energy has been the recipient of $709.53 million in Ex-Im financing. Switzerland-based ABB got $89.22 million. France-based Areva Solar North America received nearly $54 million in Ex-Im support. China’s troubled Hanergy owns MiaSole, which received $9 million in “working capital” funding from Ex-Im.

Green-energy companies are not the only ones in the energy sector to take advantage of the low-cost, taxpayer-funded financing. Multinational oil company Exxon Mobil and oil industry service companies Halliburton and Schlumberger also received billions.

It is tough to chastise these companies for making wise business decisions in finding low-cost funding—but we can criticize Congress for allowing our taxpayer dollars to be given to them.

Ex-Im supporters claim that failure to reauthorize would threaten jobs. Siemens, GE, ExxonMobil, Halliburton, and Schlumberger—just to mention some of the big businesses in the energy sector—should all be able to continue without Ex-Im.

Addressing Ex-Im’s future, Adam Andrzejewski, Chairman of American Transparency and the report’s author says: “The fate of the bank is an important test that will show whether Congress is on the side of taxpayers, and basic market principles, or special interests that are capable of bending markets in their direction.”

Ex-Im is one case where a “do-nothing Congress” is a good thing. If they do nothing, Ex-Im’s authorization expires on June 30; and we, the taxpayers, will no longer be responsible for funding this corporate welfare.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth