Calvin Frost10.14.16
Several weeks after I sent my last column to our editor, Steve Katz, a flurry of articles on energy appeared in three different newspapers. I happened to catch them all, and they caused me to rethink my column on “circular economy.” I’ll save that for the next issue. These articles, you see, were so relevant to my earlier columns on the demise of coal and the growth of renewables. One was about wind energy in Wyoming, and it frustrated and eventually angered me. Another was about the growth of wind and solar in Texas, a state that we have come to know for its oil and gas production. The third talked about the issues of replacing coal with renewables and suggested that America, Germany (the green of greenest country), China and others will have to move more slowly in the switch to renewables. The reason: the loss of jobs. Displacing thousands of coal miners will create more issues because of joblessness. Because of these three different accounts, I thought it fitting to add a post script column dedicated to Lester Brown and his work, The Great Transition.
Brown is convinced that governments, industries and society support the transition because of the reduction of CO2 emissions, which will improve our quality of life, improve our health, reduce medical costs and slow climate change.
I was incredulous when I read a column in the Chicago Tribune titled, “Who Owns the Wind?” subtitled, “We do, Wyoming says, and it’s taxing those who use it.” I mean, let’s be real! The reason for the tax which, trust me, will be argued and debated for a long time, is the loss of revenue from coal being produced in the Power River Basin (PRB) region. The PRB is one of the largest coal producing regions in the world and tax revenue has helped balance the Wyoming budget for years. Now the PRB is running at about 40% of capacity, and this has hurt tax revenue significantly. I shared my frustration with Lee and Autumn, two pioneers in renewables who have been battling the odds for years and have become more and more cynical about America’s commitment to change. (Join the group!). The action by the Wyoming legislature pits tax revenue against environmental change. It just confirms that, at the end of the day, the almighty dollar rules and the hell with environmental change.
Historically, train load after train load of coal moved daily out of the PRB region to utilities all over the US that were using coal-fired boilers. Every ton of coal was taxed. And, of course, PRB provided jobs. Everyone was fat and happy except those who were affected by the noxious emissions of CO2, sulphur, mercury, chlorine, etc. And remember, at the same time, the coal industry was receiving substantial federal subsidies. Irony of ironies – supporting an industry that ultimately increases the cost to the taxpayer because of increased health care issues. The State of Wyoming theorized it owned the wind, and, like the PRB, it could capture tax revenue. Who owns the wind? What a great question. In my mind, it sure isn’t the State of Wyoming.
Sadly, projects like the Choke Cherry and Sierra Madre that I mentioned in my last column may not happen because of this new tax. The tax makes the project in Wyoming less viable, and I suspect more friendly locations will be explored. The incongruity of all of this is Wyoming is losing an opportunity to be a leader in replacing fossil energy with renewables.
A little further south there’s a completely different story. In Texas, of all places, renewables have grown very quickly. In a Wall Street Journal column, I was surprised to learn that the growth of renewables started in 1998 when then Governor George W. Bush (can you believe it?) overhauled the Texas power markets. He introduced a regulation plan that broke the grip of monopoly utilities that controlled generation, transmission and retail sales of electricity. He introduced competitive auctions for wholesale power. “Part of the plan was that there was an imposed government regulation/requirement that there must be at least 2,000 megawatts of renewable generating capacity by 2009. Texas achieved that in 2005 and Governor Rick Perry, who replaced Bush, raised the bar to 10,000 megawatts by 2025. Texas hit that goal in 2011. In April of this year, the state was generating more than 19,000 megawatts with more capacity to be added. That’s enough power for four million homes. Interestingly, Jimmy Glotfelty, Mr. Bush’s policy director, said, ‘climate change was not the driver for renewables. Rather it was a belief in free markets and entrepreneurs’.”
The growth of renewables in Texas hasn’t come without debate: “Debate is raging between political parties over climate change, and critics charge that ‘green energy’ is little more than a government creation. Texas has taken an approach that works within the state’s free-market-based electricity system. State officials say wind and solar are almost certain to play a significant and growing role in the state’s energy future even when federal subsidies decline in coming years.”
Then there is the issue of subsidies. Wind projects get hefty federal payouts whenever they generate electricity. At auctions, this means they can sometimes pay the state to take their electricity and still make money, undercutting the business model of fossil-fuel generators.
So Bush and his team opened the market to deregulation and competition, and as a result renewables blossomed.
Eat your heart out, Wyoming!
The final column that caught my eye appeared in the International New York Times. It noted that for all our efforts to replace coal with renewables to meet goals that have, in some cases, been legislated, we need to be practical and make changes carefully. The author, Eduardo Porter, noted, “it won’t be easy to get rid of coal.” For example, Germany has a 2020 target to drastically cut emissions of CO2. Last year, it proposed a tax on lignite coal, also known as brown coal and really dirty. However, it’s also Germany’s main source of electricity. At the same time, Germany is phasing out nuclear energy. Between the loss of jobs in the coal industry and nuclear power, the tax became so controversial that the government had to pull back and replace it with a subsidy. It’s amazing the power that labor unions and local governments in coal regions have. Environmentalists were furious: “Instead of being fined for polluting by the proposed new climate levy, utilities will instead get paid for keeping their oldest and most inefficient lignite plants on standby,” noted a report on Germany’s energy policies by the environmental think-tank E3G for the nonprofit Oxfam. It “amounts to a golden handshake for utilities at the expense of taxpayers and consumers.” And that wasn’t all. The chancellery also rejected a push by Barbara Hendricks, the environment minister, to establish a road map to the total phase-out of coal, hoping to postpone timing decisions until after national elections next year.
Germany has 65,000 organized coal workers, and they are very powerful. By comparison, America has 50,000. Mrs. Clinton says we’re going to shut the mines down, but we’ll give the industry $30 billion over 10 years. (Where’s that going to come from? Surely you know: us!). Mr. Trump is going to support the industry, at the expense of the environment. Who wins this one? (P.S., Trump doesn’t believe in global warming.)
And the problem is, of course, worse in China. There are 2.5 million coal workers, and the government plans to cut 1.3 million coal jobs. I don’t think so. If this happens, there will be another revolution.
The column concludes that it is going to be quite a while before coal disappears. “The world’s energy transition cannot be portrayed simply as ‘Big coal vs. vivacious wind and solar.’ Horrible as it might sound to economists – who believe in taxing polluters, not rewarding them – the energy transitions may require paying the dirtiest generators as Germany has done to stick around.
Change, transition, is complex and like everything, patience, careful thinking and balance are required. Balance, that word balance again!
Another Letter from the Earth.
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is
cfrost@channeledresources.com.
Brown is convinced that governments, industries and society support the transition because of the reduction of CO2 emissions, which will improve our quality of life, improve our health, reduce medical costs and slow climate change.
I was incredulous when I read a column in the Chicago Tribune titled, “Who Owns the Wind?” subtitled, “We do, Wyoming says, and it’s taxing those who use it.” I mean, let’s be real! The reason for the tax which, trust me, will be argued and debated for a long time, is the loss of revenue from coal being produced in the Power River Basin (PRB) region. The PRB is one of the largest coal producing regions in the world and tax revenue has helped balance the Wyoming budget for years. Now the PRB is running at about 40% of capacity, and this has hurt tax revenue significantly. I shared my frustration with Lee and Autumn, two pioneers in renewables who have been battling the odds for years and have become more and more cynical about America’s commitment to change. (Join the group!). The action by the Wyoming legislature pits tax revenue against environmental change. It just confirms that, at the end of the day, the almighty dollar rules and the hell with environmental change.
Historically, train load after train load of coal moved daily out of the PRB region to utilities all over the US that were using coal-fired boilers. Every ton of coal was taxed. And, of course, PRB provided jobs. Everyone was fat and happy except those who were affected by the noxious emissions of CO2, sulphur, mercury, chlorine, etc. And remember, at the same time, the coal industry was receiving substantial federal subsidies. Irony of ironies – supporting an industry that ultimately increases the cost to the taxpayer because of increased health care issues. The State of Wyoming theorized it owned the wind, and, like the PRB, it could capture tax revenue. Who owns the wind? What a great question. In my mind, it sure isn’t the State of Wyoming.
Sadly, projects like the Choke Cherry and Sierra Madre that I mentioned in my last column may not happen because of this new tax. The tax makes the project in Wyoming less viable, and I suspect more friendly locations will be explored. The incongruity of all of this is Wyoming is losing an opportunity to be a leader in replacing fossil energy with renewables.
A little further south there’s a completely different story. In Texas, of all places, renewables have grown very quickly. In a Wall Street Journal column, I was surprised to learn that the growth of renewables started in 1998 when then Governor George W. Bush (can you believe it?) overhauled the Texas power markets. He introduced a regulation plan that broke the grip of monopoly utilities that controlled generation, transmission and retail sales of electricity. He introduced competitive auctions for wholesale power. “Part of the plan was that there was an imposed government regulation/requirement that there must be at least 2,000 megawatts of renewable generating capacity by 2009. Texas achieved that in 2005 and Governor Rick Perry, who replaced Bush, raised the bar to 10,000 megawatts by 2025. Texas hit that goal in 2011. In April of this year, the state was generating more than 19,000 megawatts with more capacity to be added. That’s enough power for four million homes. Interestingly, Jimmy Glotfelty, Mr. Bush’s policy director, said, ‘climate change was not the driver for renewables. Rather it was a belief in free markets and entrepreneurs’.”
The growth of renewables in Texas hasn’t come without debate: “Debate is raging between political parties over climate change, and critics charge that ‘green energy’ is little more than a government creation. Texas has taken an approach that works within the state’s free-market-based electricity system. State officials say wind and solar are almost certain to play a significant and growing role in the state’s energy future even when federal subsidies decline in coming years.”
Then there is the issue of subsidies. Wind projects get hefty federal payouts whenever they generate electricity. At auctions, this means they can sometimes pay the state to take their electricity and still make money, undercutting the business model of fossil-fuel generators.
So Bush and his team opened the market to deregulation and competition, and as a result renewables blossomed.
Eat your heart out, Wyoming!
The final column that caught my eye appeared in the International New York Times. It noted that for all our efforts to replace coal with renewables to meet goals that have, in some cases, been legislated, we need to be practical and make changes carefully. The author, Eduardo Porter, noted, “it won’t be easy to get rid of coal.” For example, Germany has a 2020 target to drastically cut emissions of CO2. Last year, it proposed a tax on lignite coal, also known as brown coal and really dirty. However, it’s also Germany’s main source of electricity. At the same time, Germany is phasing out nuclear energy. Between the loss of jobs in the coal industry and nuclear power, the tax became so controversial that the government had to pull back and replace it with a subsidy. It’s amazing the power that labor unions and local governments in coal regions have. Environmentalists were furious: “Instead of being fined for polluting by the proposed new climate levy, utilities will instead get paid for keeping their oldest and most inefficient lignite plants on standby,” noted a report on Germany’s energy policies by the environmental think-tank E3G for the nonprofit Oxfam. It “amounts to a golden handshake for utilities at the expense of taxpayers and consumers.” And that wasn’t all. The chancellery also rejected a push by Barbara Hendricks, the environment minister, to establish a road map to the total phase-out of coal, hoping to postpone timing decisions until after national elections next year.
Germany has 65,000 organized coal workers, and they are very powerful. By comparison, America has 50,000. Mrs. Clinton says we’re going to shut the mines down, but we’ll give the industry $30 billion over 10 years. (Where’s that going to come from? Surely you know: us!). Mr. Trump is going to support the industry, at the expense of the environment. Who wins this one? (P.S., Trump doesn’t believe in global warming.)
And the problem is, of course, worse in China. There are 2.5 million coal workers, and the government plans to cut 1.3 million coal jobs. I don’t think so. If this happens, there will be another revolution.
The column concludes that it is going to be quite a while before coal disappears. “The world’s energy transition cannot be portrayed simply as ‘Big coal vs. vivacious wind and solar.’ Horrible as it might sound to economists – who believe in taxing polluters, not rewarding them – the energy transitions may require paying the dirtiest generators as Germany has done to stick around.
Change, transition, is complex and like everything, patience, careful thinking and balance are required. Balance, that word balance again!
Another Letter from the Earth.
Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is
cfrost@channeledresources.com.
