Bluewater Wind – monoblogue

Denying the market

To be honest, I’m not sure if I was sent this to provoke a comment or if I just happen to be on a list that gubernatorial candidate Heather Mizeur doesn’t use all that often. I think most observers know I have an interest in energy issues, and this definitely falls into one of them. You just have to ask yourself why Mizeur counts herself among the Democrats are so insistent on denying the opportunity for shovel-ready jobs and investment – I thought that was what they were all about.

First of all, this is what Mizeur had to say about the proposed Cove Point LNG export facility.

(Yesterday), Delegate Heather Mizeur (D-Montgomery), candidate for governor, called on Governor O’Malley to join her in opposition to the Dominion Resources liquefied natural gas (LNG) export facility at Cove Point in Calvert County. She made the announcement during a speech at the Stop Cove Point Rally in downtown Baltimore City earlier today.

“I am calling on Gov. O’Malley to take a stand with us today to reject Cove Point,” Mizeur told the audience. “You cannot leave a legacy on addressing climate change and be silent on Cove Point. It’s time for Gov. O’Malley to break the silence and join us in saying no to Cove Point.”

The rally, which was attended by 500 people, was organized by climate, health and anti-fracking activists from across the state, and was one of the largest environmental rallies ever in Baltimore City. It came as the state Public Service Commission begins official hearings on the project.

Mizeur is currently the only gubernatorial candidate to state her opposition to the project. When she announced her opposition in December, both Lieutenant Governor Brown and Attorney General Gansler – the two other Democratic candidates in the race for governor – expressed a desire to build the project without environmental damage, but failed to explain how such a plan would be possible.

Dominion Resources, a Virginia-based energy company, is pursuing the construction of a $3.8 billion facility to serve as a collection point for fracked natural gas from throughout the Mid-Atlantic region, where cargo tankers would then ship it throughout the world.

But the Cove Point facility would release 3.3 million tons of carbon dioxide and other harmful greenhouse gases into the air annually, making it a serious setback to achieving the state’s goals on fighting climate change, including a plan for a 25% reduction of greenhouse gases by 2020.

Mizeur has also called on Dominion Resources to invest $3.8 billion – the construction cost of the proposed facility – in the state’s renewable energy sector. According to the U.S. Department of Energy, clean energy investments create more permanent jobs than exporting fracked gas.

Obviously Mizeur is an adherent to the religion of manmade climate change, a belief system which fails to address why none of the climate models have predicted the lack of warming this century. The fact that they managed to get just 500 people to a climate change rally shows how small the cadre of believers really is – a good Second Amendment or TEA Party rally can rustle up similar numbers without really trying. If this is “one of the largest environmental protests in state history” then we really are letting a tiny minority dictate policy.

But let’s say these guys are really serious – I suppose living in a state foolish enough to believe that artificially limiting its carbon emissions will have an effect on our overall global climate will do that to you. Even if the point source of 3.3 million tons is correct, it doesn’t take into account the reduction in emissions at destination points abroad. Natural gas is cleaner burning than coal, and until we figured out that fracking was a way to supercharge the moribund domestic natural gas market it was a fossil fuel environmentalists weren’t uncomfortable with. To show how the market has changed, the Cove Point facility was originally built in the 1970s as an import facility because the domestic natural gas market was thought to be in an irreversible decline.

On the other hand, the point source investment of $3.8 billion will have a positive effect on the regional and state economies. Last year, in announcing its filing, Dominion claimed the project will create up to 4,000 jobs during the construction phase and perhaps over 14,000 jobs overall, not to mention billions in royalty payments. Because most of the supply would come from regional producers, the entire mid-Atlantic area would benefit (except Maryland and New York, which currently have bans on fracking.) The facility would also provide a needed boost to our export tally to address a persistent American trade deficit, as the LNG is already contracted out to distributors in Japan and India.

Finally, Mizeur complains that the $3.8 billion Dominion is willing to invest in the project could be better spent in the renewable energy sector. Does the name “Solyndra” ring a bell? Despite its best efforts to create a market for offshore wind, companies aren’t willing to make the investment in that area – remember Bluewater Wind? In the area of solar energy, it took billions in taxpayer-guaranteed loans – and mandated renewable energy portfolios such as the one Maryland is saddled with – to get that market off the ground, yet it still produces but a tiny fraction of our electricity needs at a cost several times the going rate for electricity produced from coal or natural gas.

And it’s funny that Mizeur worries about the cost of natural gas going up due to exports, but had no problem with raising the gasoline tax on a perpetual basis. So much for supporting hard-working Marylanders.

So the choices are either zero or $3.8 billion; that’s reality. We can take advantage of proven resources we already have or listen to alarmists whose real goal is to foster dependence on government under the guise of saving the planet. It’s just too bad our little sandbar is energy-poor, unless you deign to call chicken manure an energy gold mine, and even the proponents concede its not as efficient as natural gas.

Tax credits blown away?

A sideline of mine – besides the frequent discussions of Maryland politics I write – is discussing energy issues. I didn’t seek out that aspect of the universe to write on, but I find it fascinating and quite important at the same time.

Today was a monumental day in Congress for the wind industry – yes, wind blows every day but those who profit from collecting the energy created and converting it (albeit somewhat clumsily and inefficiently) to electricity had their day in Congress today. Their goal: maintaining their cherished production tax credit at a hearing of the Oversight and Government Reform Committee.

Yet a large group of conservative and pro-liberty organizations are urging Congress to dump this credit, with the Competitive Enterprise Institute a leading voice. They co-wrote a letter last month calling on Congress to dump the subsidy, and followed up with further guidance today from CEI’s Myron Ebell:

Congress should not renew the Wind Production Tax Credit for another year and thereby upset the planned phase-out that was passed just last year.

The wind energy lobbyists spend more time seeking handouts than in trying to make their product competitive. The tax credit amounts to the worst kind of cronyism, costing taxpayers billions, foisting mandates on states and driving up electricity rates for consumers and manufacturers.

Over the course of the last several years, efforts in both Maryland and Delaware to harness the wind have fizzled out, most notably the lockdown of the much-ballyhooed Bluewater Wind project. And while Maryland is attempting to jumpstart that market with a public subsidy effective this fiscal year, it’s questionable whether anyone will attempt to build the turbines, even with the set-aside put in place.

Unfortunately, while the wind blows for free, the places where it blows the best tend to be difficult locations for infrastructure. Moreover, as we all know, those hot, humid days during the summer when we could use the cooling breeze rarely have enough wind to blow a scrap of paper around, let alone turn a turbine. It’s one of many good points made by Dr. Robert J. Michaels, a professor of economics at Cal State – Fullerton and Senior Fellow at the Institute for Energy Research.

Surely some will counter with the fact that fossil fuel industries have their own set of tax benefits and these subsidies for wind energy are simply a matter of leveling the playing field. But consider the number of jobs in these fossil fuel industries everywhere in the process – everything from working at the point of extraction to transport to conversion into electricity. In many cases, these jobs are among the most lucrative in their respective fields despite the fact the raw material is relatively cheap compared to the cost of wind energy.

It’s also worth pointing out that the “market” for wind energy is a relatively artificial one thanks to those states which have a carveout for a renewable energy portfolio, including Maryland. Generally, since neither the cost-effectiveness nor the necessary infrastructure is in place, the laws simply serve as another form of taxation of already-beleaguered utility companies because non-compliance carries a monetary cost. On the other hand, no one is saying that any proportion of our electricity has to come from coal or natural gas nor is it necessary because the market price dictates the direction utilities prefer to go.

With any luck, the production tax credits will become a thing of the past at the end of the year. Like zombies, they were resurrected from the dead at the end of last year thanks to a Congressional deal but maybe this year their time will run out.

Free as the wind?

I thought wind was free. So why will electric bills go up $1.50 or more a month to provide us with wind power?

That seems to be the direction Maryland is going after the Senate approved its version of offshore wind on a 30-15 vote, with Republicans providing most of the sanity. The same was true in the House, but this hot air and rhetoric still passed there 86-48. And as I read the proposed law, the $1.50 monthly limit only applies through June 30, 2016. It’s covered in Section 3, and as Section 10 states:

AND BE IT FURTHER ENACTED, That Section 3 of this Act shall take effect June 1, 2013. It shall remain effective for a period of 3 years and 1 month and, at the end of June 30, 2016, with no further action required by the General Assembly, Section 3 of this Act shall be abrogated and of no force and effect.

A pricing schedule can always be changed, but the portfolio requirement that 2.5% of Maryland’s electricity be created by offshore wind isn’t part of that restriction. If history is any guide, the percentage will be increased in order to try and coerce the market into building this offshore boondoggle 10 to 30 miles off Ocean City.

In his usual “bull in a china shop” fashion, Delegate Pat McDonough blasted O’Malley’s scheme and made a little wager:

I know this story may be hard to believe, but the Governor wants to construct 40 wind turbines that are 80 stories high (think: Baltimore’s tallest building) and 20 miles out in the ocean. This has never been done before. The cost of this green pork scheme is currently calculated to be $2 billion. I believe that estimate is very shallow compared to the eventual real costs. Of course, the usual ATM machines, meaning the people of Maryland, will be mandated to pay for these monstrosities through another new surcharge. The surcharge will be about $2 per month for consumers and unlimited for the business community. I will purchase a free crab cake for every rate payer in the State if this project costs $2 billion or less.

Someone else can have my crab cake as I don’t care much for them – not that I expect dinner on McDonough anytime soon. A more reasoned criticism was delivered by experienced O’Malley needler Larry Hogan of Change Maryland:

It seems Martin O’Malley’s priority is to make electricity and motor fuels more expensive. He wants an increase in the gasoline tax while simultaneously pushing a wind energy policy that is not cost effective and guarantees that electricity will be more expensive for rate payers. The timing couldn’t be worse.

There are no assurances that this offshore wind proposal will not devolve into crony capitalism that reward friends of the governor and political donors.

While there may be political support for offshore wind among narrow special interest groups, 96% of Marylanders are opposed to higher taxes. And make no mistake, the Governor’s offshore wind proposal is simply a tax by another name.

This governor has raised taxes and fees 24 times, taking $2.4 billion out of the economy each year. That is likely soon to be at least 25 with top-elected officials including the Governor rigidly adhering to increasing the motor fuel tax and adding charges to consumers’ electric bills.

Actually, Larry, O’Malley’s priority seems to be that of making life itself more expensive.

It just boggles my mind that we have a governor who “can’t imagine” using proven resources and technology to drill for oil offshore or explore for natural gas under the hills of western Maryland yet wants to go into an area with limited experience and a lack of reliability. You know those howling winds we’ve had the last few days with our most recent winter storm some thought was a “second Sandy“? Wind turbines don’t work in those conditions, nor do they have a history of reliability. Who pays if one of these 400-foot behemoths tumbles over in the middle of a hurricane?

If a private investor thinks it’s a grand idea to put up a wind farm and capture the free energy thought to be blowing around out there over Davy Jones’ locker, I say knock yourself out. Just don’t make the rest of us pay for it.

If it were such a great idea, one would think they wouldn’t need the coercing force of law to make it so. Bluewater Wind failed to make it, and that should be the clue our illustrious governor buys.

Three bills worth testifying for

Thanks to Dee Hodges and the Maryland Taxpayers Association for alerting me to the fact there are three bills worth testifying over next week. This is a slightly edited summary of what’s coming up.

Tuesday, Feb. 12: SB 391 – Repeal of Sustainable Growth and Agricultural Preservation Act of 2012, sponsored by Senator E.J. Pipkin, in Senate Education, Health and Environmental Affairs. This bill isn’t likely to pass – but it should. The act itself is about constraining farmers from being able to sell or develop their own property. The intent is to crowd people into the central cities. The obvious eventual result will be that costs go up, housing especially, while rural property will gradually become worthless. Even more people will choose not to live and work in MD. This is all in the name of preserving agricultural lands while other environmental laws and regulations are making it more and more difficult to farm.

Wednesday, Feb. 13: SB 275 – Offshore Windmills, sponsored by the President of the Senate (on behalf of the Governor), in Senate Finance. This bill has been rigged to pass out of this committee by the transfer of Senator Muse (a Democratic offshore wind opponent) to another committee. This is a bad bill which will prove excessively costly in future utility bills. Other states bordering the Atlantic have been at this for a number of years and still have not started construction. Outside consultants in New Jersey expressed high negatives about cost effectiveness several years ago. Some outside investors have been reluctant to invest in these projects so that they can move forward. A cost-benefit analysis has, to date, not been presented to legislators. All of these items should spark concern about committing to offshore windmills. Legislators, especially those on the Finance Committee, would be failing in their fiduciary responsibilities to the citizens they represent to pass this bill out of committee without complete and satisfactory answers. Call or write or email everyone on this committee.

Thursday, Feb. 14: SB 276 – Death Penalty Repeal, also sponsored by the President of the Senate (on behalf of the Governor). Will repeal mean our prisons will suffer from the restiveness of a growing population of inmates with no possibility of parole? What other obstacles will repeal present to our judicial system?

I’ve already spoken at length and provided testimony about the cross-filed companion to SB391, so I may just send along the same document to Senator Pipkin.

Meanwhile, we have played around with the concept of offshore wind for the last half-decade and have made no progress. The reason this effort is stalled isn’t because of lack of effort, but lack of economic sense. It’s the same reason Bluewater Wind pulled the plug in late 2011, according to NRG Energy President and CEO David Crane, who said in a release at the time:

Our people have worked hard and we’ve made a considerable financial investment in the Wind Park, but that effort cannot overcome the difficult and unfortunate realities of the current market. We’re not giving up, but at this moment we can’t rationally justify further investment in this project without the prospect that it can move forward within a reasonable timeframe.

Translation: it’s an economic loser the market won’t touch with a ten-foot pole, and the supposed $1.50 per month rate increase won’t cover the costs to the utility. At the very end of the fiscal note it’s worth pointing out that two similar projects are running (in current prices) between 18.7 and 24.4 cents per kWh, compared to the national average of around a dime per kWh.

Lastly, we have the death penalty, which is already been eradicated in a de facto way by Maryland’s refusal to execute any of the five death row inmates we have. Since Martin O’Malley doesn’t believe in the law, he won’t carry it out and instead wants to change it. (Gee, too bad we can’t do that with our tax burden.)

Now I’ve heard the argument that executions are more expensive than keeping the criminal in prison for the rest of his or her life. Yet the reason this occurs is the enormous cost of endless appeals in the process. If we limit the appeals to one per appellate level, that would do more to contain costs. And it seems to me that, if the government puts its mind to it, executions can occur in a relative hurry. (Timothy McVeigh was unavailable for comment.)

On the other hand, one also has to ask: what if you get a Chris Dorner situation, but he’s taken alive. Shouldn’t we have the death penalty as a deterrent and example? Why take it off the books?

I look at it this way: I am pro-life, but pro-death penalty. To explain away this apparent contradiction is easy: by making the conscious decision to kill another without provocation, in a premeditated fashion as part of the commission of a crime, is to forfeit your right to life. Whereas an unborn baby has no choice in the matter, the perpetrator does.

In a well-run state, the first bill would pass and the latter two would be laughed out of the General Assembly. Unfortunately, we don’t have a well-run state yet so the best we can do is stop the bleeding.