I’ve asked a friend working for Powersouth if there’s a place we can go to find Powersouth’s Newsletter, I look forward to their CEOs comment, and I think others might enjoy his common sense as well.
For the moment, I post His comment in Feb 2011 edition of the company’s newsletter, the rest of the letter is full of good info.
Who really pays for incentives?
CEO Gary Smith discusses funding for renewable projects, his comment follows:
I am a huge fan of the Seinfeld Show. I like it because it takes everyday things, blows them out of proportion and makes them humorous — at times hilarious. It may not be a ‘show about nothing,’ but it is a show about the little things of everyday life that most people don’t notice.
One of my favorite Seinfeld episodes has Kramer coaching Jerry on how to get money for his stereo by tearing it up, insuring it through the post office, shipping it to himself and making an insurance claim for the loss. When Jerry questions Kramer about who will pay for the stereo, he responds, “…they will write it off.” After a discussion of what “writing it off” means, Jerry accuses Kramer, “… you don’t even know what a write off is, do you!”
I can’t help but think of that episode and dialogue whenever I hear the debate about government incentives and subsidies, especially subsidies and incentives for green energy or green power.
You hear a lot about green power and how it will reduce the amount of carbon dioxide released into the atmosphere, thereby mitigating global warming, reducing our dependency on foreign oil, creating a new economy based on green jobs, lowering our energy costs and generally improving our standard of living.
You also hear a lot about the need to provide government incentives to “jump start” the green economy. Just last month, U.S. Secretary of Energy, Steven Chu, and the President’s Council of Advisors on Science and Technology (PCAST) — how did we ever live without acronyms? — urged a substantial increase in the U.S. government’s investment in green energy-related research and development of $16 billion per year so we can maintain pace with China in energy innovation. That investment is in addition to the billions of dollars in government subsidies and incentives the ethanol program, the wind power program, the solar energy program and any other program that claims to be green already gets from the government.
Advocates of green energy encourage even more subsidies and incentives for green energy than those proposed by Secretary Chu and PCAST. They argue that without subsidies and incentives, renewable and green power projects cannot develop, thrive or expand. Why would that be?
The answer is that almost all renewable or green energy costs more, and most green energy costs substantially more than conventional fossil fired energy. Green energy is simply not cost competitive, and those green energy developers would go bankrupt without government subsidies and incentives. And they will not be competitive until the price of conventional fossil energy approximately doubles from its current levels.
Also, government subsidies and incentives allow the government to pick winners and losers. If they like a certain type of technology or if the developer of a project was a rather large political contributor, a technology or project may be favored.
But didn’t government subsidies and incentives help promote nuclear power and combustion turbine technology? They did, but now that the research and development is complete, those technologies are run by the private sector with private investment. But what research is being done on wind and solar? They just need the subsidies and incentives to stay afloat.
Finally, who pays for the government subsidies and incentives for renewable or green energy projects? If they are government subsidies, of course the government does.
This is where the Seinfeld episode comes into play: Do you know what a government subsidy or incentive is? The government takes your money from taxes — and we all pay taxes, whether income, property or sales taxes — and decides who gets the free government handout of subsidies and incentives.
So in the end, the government takes your money and gives it to developers of solar projects, wind farms and ethanol projects, which will increase your cost of electricity. So you pay at least twice. You pay the higher cost of power from green sources and you also pay taxes for the government to subsidize and incentivize those green projects. If you didn’t know that you paid, you are like Kramer, you don’t really know what a government subsidy or incentive is.
George Comment Follows.
Some of you might recognize Powersouth as having the only CAES ‘Compressed Air Energy Storage System’ in North America. http://www.powersouth.com/mcintosh_power_plant/compressed_air_energy
Note on this above link, there’s a youtube link, I’ve signed up as a subscriber, and I will ask if we can get information as to where we can go to get the CEO’s monthly comment online.
added note! if you look at the blog link, you can find Gary Smith’s comment… look here: http://powersouth.wordpress.com/
Now I don’t suggest that CEO Gary Smith holds many of my views, but I certainly respect his, and after having some time to reflect on his comments above, I think we might have reason to add to our vocabulary of popular and trendy terms. Many of us have come to recognize the term ‘Clown Car’ as being a small and impractical car, we note that clown cars are most often purchased by people wanting to make a statement versus expecting a return on investment. An example might be the not so SMARTcar when we compare it to a 4 passenger Chevy Metro or similar car and compare prices, economy, an practical use and more.
But now, we might add the ‘Kramer Car’. The People most attracted to the car will think it’s magic, they’ll buy it because of the incentives. Government Motors knows it’ll be a hard sell because it’s VERY expensive, and those who have invested in Government Motors and the philosophy might recommend we allow the incentives to double and ‘encourage’ entities to make easy loans, so folks can drive what they can’t afford.
Kramer Cars may become the heart of the REPO business once the new owners figure out their monthly payments for the car and what it cost to install an ample charging system. Insurance, the surcharge soon to levied State Road Tax you no longer pay at the gas pump, and who knows what else? It won’t be long and the Kramers of the world will quit making payments, and of course the loan and all of the subsidies will fall on the backs of the public as it so often has lately.
Remember… if it’s a good idea, you won’t need a subsidy to sell it!
One last thought, for you Kramers out there.. do note that PowerSouth really does make power for the grid out of thin Air! Imagine that…..