Frary: Adventurous Investments

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By Prof. John Frary — I was amazed to hear recently about a wealthy New Yorker who converted all his assets into stocks in cutting-edge green energy companies. The boldness, even recklessness, of this decision dazzled me. Then I learned that he was a legislator and amazement ceased – I knew then the story was false. Elected officials don’t invest their own money in risky ventures. They invest the tax payer’s money.

Mind you, anyone who invests in a wind or solar power company that succeeds in producing electricity at competitive rates without subsidies will make a pile, but the extreme risk in all futuristic energy investments arises from the variety of potential energy solutions. A reminder of this just came with the arrival of Quest: Research News from PPPL, a supplement enclosed in my Princeton University Alumni magazine. There I read about the Princeton Plasma Physics Laboratory’s “new paths to fusion energy” and “advancing fusion theory.”

PPPL director, Stewart Prager, explains that “Fusion powers the sun and stars, and harnessing its power on Earth could provide a safe, clean, and virtually limitless way to meet global energy needs.” If Princeton’s wizards and its international partners achieve a fusion energy solution every other energy investment will suffer a steep loss. Many, or most, will sink without a trace.

The “could” is the rub. Quest can’t promise fusion energy. It can only promise that the millions it receives from the U.S. Department of Energy will produce research. Some of this will certainly prove valuable, but the fusion break-through the PPPL seeks may never happen.

When I ran for Congress in 2008 I spent a lot of time educating myself on energy issues. That was not enough to make me an expert, but it was enough to acquire some knowledge about the basics. The aspect which impressed me above all others was the huge number and variety of innovative production and conservation projects then under consideration.

One website, nextenergynews.com, attempted a comprehensive overview of these innovations. There were many other sites to examine, but this one provided a continuous stream of reports on energy developments under thirteen separate headings: aerospace, alternate fuels, batteries, electronics, fuel cells, hydrogen, hydro/water, nuclear, solar cells, thermal, vehicles, waste power, wind power.

The Aerospace category, which seemed a little odd at first glance, included an article entitled “SkyHook Develops Heavy Payload, Remote Transport Helium Blimp” about a Canadian company’s development of a new aircraft, “filled with helium and powered by four rotors, which will be used to move materials in remote areas including the Canadian North.” Another article, entitled “Construction Begins of the 200 mph, Solar Powered Turtle Airship,” described a demonstration model of a new form of lighter-than-air airships by Turtle Airships Company. It’s solar powered and can reach speeds of 200 mph. The company’s release boasts that “We can save over $100 billion each year on fuel costs alone, another several hundred billion dollars in airport construction, and eliminate a major source of carbon emissions. Airships are a trillion dollar industry, still in its’ infancy, that will grow for decades.”

This is not a recommendation to invest in SkyHook International or Turtle Airships. They may very well turn out to be frauds or failures. These examples simply serve to show that the number of innovative projects and developments in the energy sector is huge. Some envision billions of dollars in energy savings, others millions. Some are visionary, e.g. “New Electric Solar Wind Sail Could Power the Earth From Space;” others concern niche industries, e.g., “World’s Smallest Helicopter To Make Demonstration Flight in Italy.”

Many of these innovations and the companies initiating or investigating them will fail. Some may make billions. Some will make a small difference, others a huge difference. The central point is that the possibilities seem almost infinite in number. There are dozens under the “Aerospace” heading alone just for the years 2007 and 2008.

The most authoritative website is the one maintained by the U.S. government’s Energy Information Administration which spends over one hundred million dollars a year to collect relevant information on all energy production factors and issues an Annual Energy Outlook (AEO) report containing projections and analyses of energy topics. A comparison of AEO 2008 (from the same year Maine’s Democratic legislative majority enacted the Wind Energy Act) with AEO 2013 is instructive. Five years ago the EIA estimated that coal would produce over forty percent of America’s energy by 2035. This year it projects that energy generation from coal will fall to 35 percent as natural gas generation rises to 30 percent. And it presents an alternate scenario in which coal will amount to 27 percent of total generation as natural gas rises to 43 percent.

I found no information on shale gas or fracking in the AEO 2008 calculations. These unforeseen developments forced an enormous revision in projections. We can’t fault the EIA for this. It can only project from available technologies and regulations. It has no prophetic powers enabling it to foretell which novel technologies will succeed and which will fail. If the PPPL suddenly succeeds all its long-term projections fall apart.

We might have expected the environmentalists to welcome news that natural gas has the potential to displace coal. In fact, they seem to obsess about anything and everything that could go wrong that scenario. They might at least acknowledge the finding by Duke University’s Nicholas School of Environmental Studies that there was no groundwater contamination from gas fracking in Arkansas, or that Pennsylvania’s Department of Environmental Protection has concluded that naturally occurring shallow gas was responsible for the contamination of well water in three private homes that recently excited them.

They don’t seem interested. I’m guessing they consider Josh Fox’s horror films Gasland I and Gasland II more reliable and interesting. Anyway they can console themselves with the new BP Statistical Review of World Energy which shows renewables (good renewables like solar and and wind, not those damn dams) experiencing a 180 percent growth in total output during 2005-2012, with coal growing only 27 percent. On the other hand that surge in renewables will leave them with a minuscule fraction of total energy production, even as the world’s economic dependence on coal grows.

Governor LePage clearly sees Maine’s high energy costs as the primary drag on the state’s economic development, He is open to all possible solutions but is focused on facilitating the use of natural gas and removing the obstacles to tapping into HydroQuebec’s cheap and abundant supply of electricity by removing the obstacles embodied in our Renewable Portfolio Standards (RPS).

The Democrats’ emphasis appears to be on greener rather than cheaper energy, although they may hope that innovations in wind power generation will make it cheaper in time. The five years which have elapsed since the Wind Power Act have brought some advances but they have also brought news that European nations have pulled back from those projects. In the meantime there’s no denying that the RPS mandates, based on the state of technology now five years old, have made energy more expensive.

The reaction of the Democrats and their allies among the environmental “advocates” to the huge developments in shale gas production is exemplified the law enacted in Vermont last year banning fracking in that state. This won’t affect energy prices anywhere since the only known natural gas in that state is found in propane tanks. Nevertheless, Governor Shumlin is hopeful that his state’s ban, the nation’s first, will set an example for the rest of the nation.

Word reaches me that the Vermont has indeed inspired some of the Democratic party’s newcomers in our legislature to hope for a similar ban here in Maine, although Texans, Pennsylvanians, Arkansans,  and North Dakotans remain indifferent. They seem to like cheap energy and the royalty income shale gas exploitation brings to their state treasuries.

Confident predictions about our energy future may be foolish, but I will make one prediction with absolute certainty. If those thousands of wind-power projects end as rusting derelicts no politician or advocate who supported them will suffer for it; no one will be held accountable. Politically motivated investments are the most risk-free ventures known to man.

Readers interested in shale gas developments will find a huge amount of information on shaleblog.com. Envirogeeks are warned off. They will not find the bad news they hunger for there.

Professor John Frary of Farmington, Maine is a former US Congress candidate and retired history professor, a Board Member of Maine Taxpayers United and publisher of www.fraryhomecompanion.com and can be reached at: jfrary8070@aol.com

16 COMMENTS

  1. The EIA’s full International Energy Outlook 2013 report will be available on July 30 in PDF. The next report will be released in July 2015.
    http://www.eia.gov/forecasts/ieo/

    From the partial report released on July 25:
    “Renewable energy and nuclear power are the world’s fastest-growing energy sources, each increasing by 2.5 percent per year. However, fossil fuels continue to supply almost 80 percent of world energy use through 2040. Natural gas is the fastest-growing fossil fuel in the outlook. Global natural gas consumption increases by 1.7 percent per year. Increasing supplies of tight gas, shale gas, and coalbed methane support growth in projected worldwide natural gas use. Coal use grows faster than petroleum and other liquid fuel use until after 2030, mostly because of increases in China’s consumption of coal and tepid growth in liquids demand attributed to slow growth in the OECD regions and high sustained oil prices.”.

  2. once again opinion is opinion ; people like John cannot look to the future only to the past. These same thoughts were said about the horseless buggy, the light bulb, the telephone, the airplane but 100 years later when we look at the original invention and what we have today we realize these nay sayers were simply xxoxox cleaned up wrong! as they so often are! oil is not the only source of energy! as horses were not the only mode of travel! thank god we are moving away from oil!

  3. I’m sure that many are uninformed at how badly we are missing out developing new jobs for our youth as our infasturcture crumbles and our leaders ignore the rapid changing world we live in. here is an example of a forward thinking country moving in the right direction(read about Germany, France, Africa and others moving forward)Many industrialized nations have installed significant solar power capacity into their grids to supplement or provide an alternative to other sources. Long distance transmission allows remote renewable energy resources to displace fossil fuel consumption. Solar power plants use one of two technologies:
    Arrays of photovoltaic (PV) modules, mounted on buildings or ground mounted ‘solar parks’.
    Solar thermal energy plants, using concentrated solar energy to make steam. The steam is converted by a turbine to electricity.

    Germany is the world’s top photovoltaics (PV) installer, with a solar PV capacity as of December 2012 of more than 32.3 gigawatts (GW).[1][2] The German new solar PV installations increased by about 7.6 GW in 2012, and solar PV provided 18 TWh (billion kilowatt-hours) of electricity in 2011, about 3% of total electricity.[3] Some market analysts expect this could reach 25 percent by 2050.[4] Germany has a goal of producing 35% of electricity from renewable sources by 2020 and 100% by 2050.[5] Large PV power plants in Germany include Senftenberg Solarpark, Finsterwalde Solar Park, Lieberose Photovoltaic Park, Strasskirchen Solar Park, Waldpolenz Solar Park, and Köthen Solar Park.

  4. Joe Mac’s response makes a perfect counterpart to the information supplied above. He’s seen the future and it’s solar power. He has no patience for, or curiosity about alternative scenarios. They just make him mad.

  5. Prof. Frary, I must say that the economy is booming along under Obama’s management, all the while few jobs are being created and those that are often part-time and min. wage; all while Black youth suffer from a very high unemployment rate.

    Have to wonder is there an Obama who is shepherding Harvard’s investment portfolio; while the other Obama is preaching woe from previous administrations to the middle class and ordinary Black folk……He says he wants peace, yet over 1,000 people died in Iraq last month and the Navy’s billion dollar ship building program sails right along…….. the results speak for themselves.

  6. Sorry John but I have been hawking alternative energy for years! I like hydro, wind , solar and sugar cane. The one they haven’t harness yet is magnification which I think might end up the least expensive! And it seems the right have done their hardest to stop it.

  7. adKoch-Sponsored Misinformation
    The latter groups in particular had to face down a barrage of misinformation from Americans for Prosperity (AFP), an organization founded and underwritten by the billionaire Koch brothers, whose predecessor organization, Citizens for a Sound Economy, virtually founded the Tea Party itself. AFP’s Georgia chapter mounted a scare campaign against solar power in Georgia that, as usual, supported the Koch’s bottom line as fossil fuel magnates even as it played fast and loose with the facts.

    Virginia Galloway, director of AFP’s Georgia chapter, for instance, warned the group’s 50,000 members that the solar proposal would “reduce the reliability of every appliance and electronics gadget in your home” and could increase Georgia electricity rates by up to 40 percent. As the Associated Press pointed out, neither of these claims bore much resemblance to the truth. In fact, at the hearing before the vote, Kevin Greene, Georgia Power’s attorney, said that the utility didn’t believe the solar requirement would cause any increase in electricity prices for ratepayers.

    All of which underscores the really surprising part: even the Tea Party faithful didn’t seem to be buying the AFP line this time around. Despite the mass emails, handouts, and phone calls put out by AFP’s Georgia chapter, when the group held a protest during the Public Service Commission deliberations, hardly anyone showed up.
    d this to the previous comment:

  8. a little fact about the rest of the country:With partisan politics trumping science-based solutions all too often these days, it’s especially heartening when people overcome political differences to let solid data point the way toward practical solutions. That’s what happened in Georgia last month when state regulators voted to require Georgia Power — the state’s sole investor-owned electricity provider — to expand the use of solar power in its energy mix.

    Regulators on the all-Republican commission voted 3-2 in favor of a plan that requires Atlanta-based Georgia Power Co. to increase its solar power capacity by 525 megawatts by the end of 2016. The decision comes on the heels of the announcement that Georgia Power, a subsidiary of Southern Co., is planning to retire more than 2,000 megawatts worth of coal-fired generating capacity.

    The vote in Georgia is notable not just for the commonsense outcome of adding more cost-effective renewable energy in a state ranked fifth in the nation for solar potential but just 21st for installed solar capacity. The real surprise here, after more than a year of often acrimonious debate, is the nearly unprecedented coalition that made the decision possible — a mixture of not just environmentalists and solar advocates but also conservative lawmakers and Tea Party members.

  9. add this to the previous comment: What’s more, a separate branch of the Tea Party in Georgia, known as the Tea Party Patriots, came out strongly in favor of more solar power in the state. Debbie Dooley, national coordinator of the Tea Party Patriots told the press: “AFP Georgia is putting out absolutely false data,” that doesn’t take into account the fact that “solar prices have plummeted” in recent years. Dooley quipped that her group was forming “a Green Tea Coalition” because it saw the proposed solar expansion as a free market issue that “gives consumers more choice.”

    Solar Power is Growing for Good Reason.
    Michael Jacobs, a senior energy analyst at the Union of Concerned Scientists, says the facts in the energy sector speak for themselves. As Georgia regulators wisely recognized, he says, the price of coal has risen, while prices for solar panels have dropped some 60 percent since 2011.

    The fact is, solar has been one of the nation’s fastest growing industries for the past several years, now supporting more than 100,000 jobs at 5,600 companies operating in every state in the nation. With the rate of utility solar installations more than doubling since 2012, the United States is now on track to add another 4,400 megawatts of photovoltaic power in 2013.

    All of which has been noted with considerable alarm by some electric utilities. A recent report distributed by the Edison Electric Institute, the industry’s main trade group, for instance, calls the growth of small-scale solar systems the “largest near-term threat” to the industry and warns of a disruption to the industry similar to the one wrought by cell phones on the landline telephone industry.

  10. as one can see this is sure to get the neggies texting and calling that well known corporate funded mis-information unit to work their propaganda formula overtime>(you know the one that 71% call the two apples and a pair of puppets =the sour grape remedy) roflmao is tabor next? woodcock who? hardy who? Webster who? cebra who?

  11. Apparently, Gerald Weinand (Dirigo Blue) is unable to grasp the point of the article. While Joe Mac inevitably invokes the Koch Bros—the universal spiders spinning webs everywhere, even under his very bed, the fons et origo of a ll political evil. The point of the article they cannot grasp, or unable to dispujte: confident predictions about our energy future are highly problematic.

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