Further Down the Renewable Energy Rabbit Hole …

By John Sykes

Still have any doubts about the effects of food crop and financial subsidies for the energy industry? There are two must-read editorials in today’s Wall Street Journal.

Examining a policy that will soon become immoral, Amber Waves of Ethanol states:

The nearby chart, based on data from the Department of Agriculture, shows the remarkable trend over a decade. In 2001, only 7% of U.S. corn went for ethanol, or about 707 million bushels. By 2010, the ethanol share was 39.4%, or nearly five billion bushels out of total U.S. production of 12.45 billion bushels. Four of every 10 rows of corn now go to produce fuel for American cars or trucks, not food or feed.

This trend is the deliberate result of policies designed to subsidize ethanol. Note the surge in the middle of the last decade when Congress began to legislate renewable fuel mandates and many states banned MTBE, which had competed with ethanol but ran afoul of the green and corn lobbies.

This carve out of nearly half of the U.S. corn crop to fuel is increasing even as global food supply is struggling to meet rising demand. U.S. farmers account for about 39% of global corn production and about 16% of that crop is exported, so U.S. corn stocks can influence the world price. Chicago Board of Trade corn March futures recently hit 30-month highs of $6.67 a bushel, up from $4 a bushel a year ago. Read it all here…

When considering applying for research funds being offered by the federal government in the late 1970s for ethanol from corn, my family business quickly determined that there was absolutely nothing positive to be gained in converting corn to ethanol.  The food cost and diversion of productive acreage would be an economic sin. Neither the press nor the government was interested in that factual position.

From Solar Spectacle, the WSJ takes off on “Renewable energy's state capitalists”:

Mr. Resch more or less avoids our previous editorial point that the closure of Evergreen Solar's Massachusetts plant will cost Bay State taxpayers upwards of $50 million in fruitless subsidies. Instead, he pivots to make as raw a plea as you'll find for more taxpayer cash from Washington.

The reason? Well, China subsidizes its solar companies, so America should too. Mr. Resch overlooks that the U.S. already subsidizes solar power to the tune of $24.34 a megawatt hour, according to an Energy Information Administration study based on 2007 data. That compares with subsidies of $23.37 that year for wind, 44 cents for coal, 25 cents for natural gas and $1.59 for nuclear power. We'd expect the subsidy gap would be even greater today between solar and wind power and other energy sources. Read the rest here…

The best conclusion for this piece also comes from Solar Spectacle: “Capitalism is supposed to be about risk-taking and bearing the consequences, win or lose. Lobbyists like Mr. Resch—and his industry bosses—give capitalists a bad name.”

And, of course, Barack Obama will attempt to send us even further down the renewable energy rabbit hole when he calls for more such spending in his State of the Union address Tuesday!