‘Clean’ Energy Subsid…

‘Clean’ Energy Subsidies / Mandates Help the Economy

The whole caboodle and much more. As a “geezer” who is also a retired economist I strongly disagree with “Gisser” the retired economist. His facts are often misleading and his assertions, while often not supported, are arguable without much difficulty. Since Mr. Gisser is regularly publish in the Journal it is fair to assume everyone knows his background. Not so with me. Just a few facts so you know the ground I stand on. I am spent much of my career as a financial economist, including teaching government finance, which means I have a macro leaning which is opposite of Mr. Gisser’s micro view of the economic world. I have also dabbled in public regulatory hearings while my PhD is in Regional Environment Economics (a long time ago).

Let me begin on what Mr. Gisser has said or implied and I agree with. He implied there is global warming, which in turn causes climate change. Said change would see increased temperatures in some areas, more violent storms, and extreme droughts. He goes further to write that this is caused by increased CO2, which I think he is saying is caused by human activity. If it is caused by a geological cycle I don’t think he, and certainly not I, would advocate human activity to reverse or lessen the CO2 increase. No one should mess with Mother Nature. Since it is human caused we agree that something should be done. The difference in opinion is then WHEN, not IF. Mr. Gisser writes to wait 80-100 years and I couldn’t disagree more.

Let me start with Mr. Gisser’s data on how coal is so cheap while solar & wind are so expensive. PNM reports that San Juan is 4.8 cents per kWh which is true. But, check your electrical bill for starters. I pay 7.33 cents for the first 200 kWh and 10.09 cents for everything after. I’ll ignore the taxes on top of that. But that is not the main point. San Juan is a “Base Load” generator. The issue, especially when comparing solar, is what are the marginal costs of the “Peak” Generators. If PNM has to buy from the “Spot Market” or crank up diesel generators the costs are double plus. It is exactly the peak times of day that solar is producing electricity.

Mr. Gisser writes that the cost of solar is 13.5 cents and wind is 8.3 cents per kWh. PNM is buying my solar for 10 cents per kWh (Yes, I have panels) and soon they will be buying at 9 cents per kWh from others. Even though PNM will drop its payment to me to 7 cents per kWh down the line my estimate of ROI on this investment is still in excess of 10%. PNM is heavy into purchasing wind and has a Blue Sky program where people voluntarily pay more (I’m also enrolled in that).

There is no environmentalist who supports government subsidies of ethanol. I was born, raised, and went to undergraduate school in Iowa where Corn is King. I taught and lived in the Upper Midwest for a long time. Check the voting records of both parties and the new “tea baggers” from the corn belt states. Not a one of them is supporting the removal of the ethanol subsidies despite all the scientific evidence on the boondoggle that it is. Where are the fiscal conservatives in the House of Representatives with regard to ethanol when it comes to reducing our federal deficit?

And then Mr. Gisser brings up the BIC argument. We shouldn’t reduce our emissions because Brazil, Indian, and China won’t. First, that isn’t necessarily true and if they did reduce is Mr. Gisser ready to advocate the USA do something now? Second, it is a bit like a smoker saying he/she won’t quit until everyone else does because of the damage caused by second hand smoke. First hand pollution is bad also. The coal plants emit more than particulate matter. There are sizeable emissions of CO2 and NO2 that cause regional health problems, the Navaho Indian Reservation being a prime example. Finally there is a moral issue. If something is bad we should stop doing it. The European Community is way ahead of the USA in all of these matters.

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About newmexicoreflections

Retired Economist
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