Cooler Heads Digest 12 October 2012

12 October 2012

In the News

U.S. Biofuel Expansion Cost Developing Countries $6.6 Billion: Tufts
Marlo Lewis,, 12 October 2012

Big Bird vs. Coal
Ben Howe, Red State, 12 October 2012

House Committee Launches Another Probe into Green Bank at Energy Department
Michael Sandoval, Scribe, 11 October 2012

German Green Tax To Rise to $.07 kWh—More than 50% Average U.S. Electricity Rate!
Tom Kaeckenhoff, Reuters, 10 October 2012

DOE Is Hiding Truth about Bankrupt Abound Solar’s Defective Panels
Paul Chesser, National Legal and Policy Center, 10 October 2012

Global Coalification
Terence Corcoran, Financial Post, 10 October 2012

Europe Rejects Ban on Arctic Drilling
Arthur Nelson, Guardian, 10 October 2012

The Wind Production Tax Credit: Just the Facts
Robert Bradley, Jr., Master Resource, 9 October 2012

Electric Cars Hurt the Environment
Walter Russell Mead, American Interest, 6 October 2012

News You Can Use
How Al Gore Got Rich

According to a profile in this week’s Washington Post, Al Gore’s green energy investments have increased his worth from $2 million in 2001 to $100 million today. The article noted that much of this success is due to government subsidies for renewable energy.   

Inside the Beltway

Obama Administration Imposes Self-Defeating Tariffs on Chinese Solar Panels

On Wednesday, the Commerce Department levied tariffs from 18 percent to 240 percent on solar panels imported from China. At best, this silly policy will increase the price of electricity in America; at worst, it could be the first salvo in a harmful trade war.

Renewable energy sources like solar and wind power are expensive and unreliable, so they cannot compete with conventional energy sources in the electricity market. Instead, demand for green energy is established by Soviet-style production quotas, known as renewable energy standards. More than 30 states have enacted such standards, which force consumers to use increasing amounts of green energy.

The cheapest way to achieve these solar energy consumption mandates is to import Chinese solar panels, due to the simple fact that solar panels manufactured in China are cheaper than solar panels manufactured in America. By adding an import tax on Chinese solar panels, the Obama administration is making electricity more expensive for citizens subject to renewable energy quotas.

And that’s the best case! Invariably, trade tariffs are tit-for-tat measures. China is likely to respond in kind. This is the slippery slope to trade wars, the impact of which would be devastating to the fragile global economy.

Proponents of the import duties claim that they are necessary so that the U.S. can win a race with China to capture global market share for green energy manufacturing. This reasoning is ridiculous. As I explained above, the market for green energy is wholly a function of government favors. Unfortunately for the green energy industry, political winds are quick to change. As costs mount, politicians will rescind the government’s support, and markets will crash. It’s already happened elsewhere. Now, it’s happening here: The American wind industry claims that it will shed half its workforce if the Congress allows a single tax credit to expire.

Plainly, so-called “sustainable” energy is reliant on unsustainable government support. It should go without saying that this is a poor business model. When the renewable energy bubble bursts, the global industry leader will be the biggest loser. With that in mind, the supposed race with China for green technological supremacy is one the U.S. would be wise to forfeit.

Across the States

Despite Deficit, California Gives $10 Million to Troubled Green Car Company

California, which faces a $16 billion budget shortfall, this week committed $10 million in taxpayer funds to Tesla Motors, a manufacturer of luxury electric vehicles. Recent news reports suggest the State’s investment is a big risk.  According to a New York Times article last Friday, Tesla Motors had to restructure a stimulus-backed loan from the Department of Energy, in order to cope with an apparent cash crunch.

Around the World

Ethanol Is Making Food More Expensive for Poor People

This week ActionAid released a new report, “Fueling the Food Crisis,” on how U.S. ethanol policy is making it harder for the world's poorest people to feed themselves. According to the study, American farmers are diverting almost 40 percent of the country’s corn crop into biofuel production, which has resulted in $11.6 billion in higher food prices for corn-importing countries over the last six years. More than half ($6.6 billion) of that was borne by developing nations, where a high percentage of household income is spent on food.

The reason that American motorists are burning food for fuel is a 2007 law enacted by the Congress that established an ethanol production quota known as the Renewable Fuels Standard. This year, the law mandates that 13 billion gallons of ethanol—equal to about 150 billion pounds of corn—be incorporated into the U.S. fuel supply. In addition to making food more expensive, the ethanol mandate also harms the U.S. livestock industry. To read more about the ills of U.S. ethanol policy, read these comments submitted to the EPA this week by CEI Senior Fellow Marlo Lewis.

The Cooler Heads Digest is the weekly e-mail publication of the Cooler Heads Coalition. For the latest news and commentary, check out the Coalition’s website,