Creating jobs from Smart Energy Policy

Some choice pieces from an opinion piece by Carl Pope.

At the moment, America lacks any real plan for bringing smart energy solutions into the mainstream, and it's missing out on major job opportunities as a result. Consider the manufacturing of wind turbines as just one telling example. Iron ore mined in northern Minnesota gets shipped abroad to make steel. Danish, German, and Spanish companies then use that steel to make wind turbines. These turbines are then shipped back to the United States on boats through the Great Lakes to Duluth, where they are placed on trucks and hauled to Iowa and other states with great wind resources. America provides the raw material and pays for the finished product but gets almost none of the economic benefit, foregoing increasingly dear manufacturing jobs. As if that isn't enough, NASA invented the technology itself.
Hmm, strange how capitalism can come back and bite you in the ass, eh? Free markets can indeed strip the championing nation of its wealth. But if we were to embrace the future of energy rather than hide behind the slick curtain that will prevent us from maintaining our leadership in the world, then we are only to blame.

America does not have a national plan that requires utilities to produce any power with renewable energy, but it could. And there's no reason why the United States couldn't decide to power 10 million homes with solar roofing. To be most effective, such policies ought to be matched with incentives and publicly assisted financing to get domestic manufacturers on their feet. In fact, there are many, many things this country could be doing to create a home-grown, renewable energy economy. It's been too busy giving subsidies to oil companies to do most of them.
I would second the call placed by Carl to generally plan for our nation's energy future. Do so, and invest the money here, in research and development, manufacturing, sales, and maintenance, and you will create a hybrid industry from the energy/engineering/environmental sectors which will have a market niche and room to grow. There are some states that have already started playing this game.

It's no coincidence that California has set a goal of producing 20 percent of its energy from renewable sources, and that Governor Arnold Schwarzenegger has an ambitious initiative aimed at putting solar power on a million roofs in the Golden State in the next 10 years. The state also makes a point of investing its state pension funds in companies that push the green envelope. Earlier this year, Nanosolar, which has seed money from Google executives, announced that it would build the world's largest solar manufacturing facility near San Francisco, creating several hundred new jobs in the process.
If only the rest of the nation could be on board. As a whole, the federal government could wield a huge power, should they chose to, and spark this green revolution off in a positive direction. Here's hoping the tide turns soon.

Green CEOs

Steven Milloy of foxnews.com wants you to believe that being a CEO in favor of green business is bad for business. In his most recent column, he gives three "examples" of how CEOs of major companies, by trying to move in a greener route, have sparked a decline in their own company's future value. He picks the specious cases of Ford, British Petroleum, and the upcoming "crisis" in General Electric. However, if you read what he has to write, he is simply not making any sense.

Ford's choice of CEO may have not been the wisest choice in the world, but the 5-year reign of Bill Ford did not have the disasterous effect that Millor wants you to believe. His reasoning is that, since Bill actively sought to turn his company down a greener road, the 2/3 loss of stock value that the company has endured is his fault. Instead, it was a company's reliance on trucks and SUVS - which consume huge amounts of gas - that dragged them down, and their unwillingness to change. Look at Ford's compatriot, General Motors. A company similarly laden down with the same burdens, has not had an environmentalist at the helm but still has managed to shed the majority of its value. In stark contrast, Toyota got on board the green vehicle bus very early, and is currently reaping in the benefits from it (note: here in California the waiting list for a Prius was, at one point, 7 months... how many cars would you willingly pay for in advance, and then wait 7 months for it to be delivered? not many). Honda is also there, and they have a good corner on the solar panel manufacturring market to bolster them up. So it was not these last 5 years that have doomed Ford, it has been decades of negligence and unwillingness to act or recognize changes down the road.

Negligence reminds me of Milloy's comments about BP's CEO Lord John Browne. Milloy states that, while Browne is trying to turn a new leaf in the company's long and sometimes turbid history, he has neglected "core business needs and has given the company a black-eye." What is evidence for this accusation? "A March 2005 explosion at BP’s Texas City, Texas, refinery complex killed 15 workers and injured many more. Poor maintenance at BP’s Alaskan oil pipeline caused the largest-ever oil spill on the North Slope in March 2006. A BP oil rig damaged by Hurricane Katrina still leaks one year later." Now the pipeline corrosion is a condition that builds up over years, if not decades, making recent decisions by the CEO hardly relevant. Even more important, the pipeline is soon to be back online,by BP's estimates. Explosions and hurricanes, while unfortunate, happen, at great cost to lives, money, and the environment. But these are pitfalls in any company, and freak acts like those do not necessarily reflect upon the CEO in question. Instad, trying to push BP into a new generation of companies working with alternative fuels, helping California's governor work with a new global-warming initiative, and work with partners like Greenpeace are constructive steps that more companies should take.

The truth of the matter is that green companies are starting to turn a profit, and make a lot of sense. Forbes magazine opines, "Evidence is mounting that what is good for the environment is also good for the price of a company's stock. Contrary to the widely accepted belief that environmental regulations are a drain on profitability, research demonstrates that being environmentally effective can add value to a company, and potentially benefit its shareholders. By taking advantage of environmental opportunities, companies can gain a competitive advantage over their peers through cost reductions, quality improvements, increased profitability and access to new and growing markets. Environmentally responsible companies also have less risk of environmental liability, which could have a major impact on future stock prices." And that was two years ago, before a lot of green businesses that exist today are even in place.

According to the Carbon Disclosure Project, "More than 70 percent of the world's largest 500 companies (FT 500) are now addressing climate change in their corporate reporting, according to the Carbon Disclosure Project. In addition, 90 percent of those companies flagged climate change as posing commercial risks and/or opportunities to their business." Toyota's hybrid cars have certainly been a boost for that company, as mentioned above. Portfolio 21's top 10 green companies for 2005 returned anywhere from 52% to 120%, hardly shabby growth by any metric.

Milloy's comments are not merely obtuse, but blatantly misleading. He chooses such abominable examples to base his case around that it could be hardly considered journalism. As I have shown, most of his accusations are not the result of one man's actions, as those take longer to matriculate in a large corporate atmosphere. Instead, CEOs who think green and act green should be encouraged to continue what they are doing, for it will benefit their shareholders, their customers, and society in general. Milloy should stop pandering and slandering and write about something about which he actually understands.

Destructive Protectivism

The United States seems to be heading in a rather worrisome direction in terms of how the government handles competition from abroad. This is not about outsourcing, but it is about free-marked capitalism, a tenet of our economic society that our current President fiercely endorses (his notable refusal to bail out the auto industry is one such indication). With this passionate stance, it is hard to imagine that this same administration, indeed the entire US government, has been slowly trying to interfere with the markets, especially when it concerns products from other countries Too often, the knee-jerk reaction in the government at all levels has been to block moves, to impose tariffs, to ban products when it is contrary to what a large American corporation/industry desires The examples go on and on.

2002:The Bush administration places a tariff on the majority of steel imports from Europe, Asia, and South America that lasts for 20 months The range of the tariffs ran between 8 and 30 percent. These were imposed for two reasons, it seems. One was to protect the last remaining steel facilities in the Eastern United States from cheaper, better products from overseas. It was also done to gain political capital in the Rust Belt, which is a crucial battlefield in recent Presidential elections. The move was ruled illegal by the World Trade Organization, but that did nothing to stop the administration. It was only after the European Union and Japan announced they would impose sanctions on billions of dollars of US exports that the administration backed down from its claims.

2004:California begins the process to be the first state in the nation to allow hybrid vehicles to utilize the carpool lane with only a driver. This was to encourage people to buy and use hybrids, which dramatically reduce the amount of exhaust as well as gasoline consumption. At the time, the vast majority of the hybrid vehicles were supplied by Japanese companies, notably Toyota and Honda. The American auto industry responded with an intended lawsuit, claiming that this gave Toyota and Honda, who spent years developing this beneficial technology, an unfair advantage in the marketplace. Luckily, the suit never got far, and the hybrid exemption for the carpool lanes is now in effect.

1990s-2005:In one of the most egregious cases of tariffs, the catfish industry took a scathing response to the rise in quality and demand for Vietnamese catfish. The catfish industry in Vietnam had been growing slowly but surely since the Vietnam War, and by the 1990s they had begun to export their catfish across the world, including the United States. They had soon dominated over a fifth of the market in frozen catfish. The US catfish industry wouldn’t stand for that, so they went to their government for protectionist legislation. Boy did they get it. First, Sen. Trent Lott, R-MS, adds an amendment to an unrelated appropriations bill saying that only American catfish can be termed, “catfish”. The Vietnamese fish have to be called, “basra>” or “tra” despite the fact that they’re nearly identical fish. Rep. Marion Berry, D-AR went even further, insinuating that Vietnamese catfish are contaminated with Agent Orange. Haha. Then, the industry filed an anti-dumping suit against the Vietnamese catfisheries. This law usually works for industries that demonstrate an unfair competitive advantage, usually by subsidies. However, the US Commerce Department couldn’t find evidence that there was any heavily subsidizing of the catfish industry in Vietnam. Nevertheless, they bowed to pressure and declared that all Vietnamese industries – all of them – were by nature anti-competitive.

However, the Vietnamese catfish must have been that good, as a 2005 poll in Mississippi concluded that American consumers preferred the Vietnamese “basra” by a margin of 3 to 1. Similar, though slimmer, margins were found by a survey in Louisiana. This wouldn’t stand, so in August of 2005, largely under the radar of media attention, Alabama and Louisiana declared an out-right ban against catfish from Vietnam. Their reasoning rested on the case of the catfish possessing a “bioterrorist” threat to United States consumers. Wow.

These are but a few examples of the types of tariffs that the government has been trying to implement, or that industry has been pressuring them to advance. It is a natural feeling to want to protect our own industries, but these measures take nativist thinking to a new, and dangerous, level. Such extended forms of economic isolationism and protectivism have never really worked. Europe in the few decades preceding the 1990s relied on such an approach in their auto industry, when faced with competition from leaner, cheaper Japanese models. The US stood against them and forced themselves to adapt and change. The resultEurope’s market share fell dramatically, while the US survived and began a new era of car manufacturing that could rival Japan’s. And, in the new era of globalization, such measures are not likely to be tolerated by other areas of the world. As exemplified by the response to steel tariffs by both the EU and Japan, protectivism will only lead to further economic rivalries, tariffs, embargoes, and complications. It is counter-intuitive to the notion of a free market to combat improvements in an industry with such backwards thinking. It reflects poorly on our own industries, as well as a combative attitude of our government. That is not conducive to this new world of global trade. I hope we can rise above this current trend to show the world we are still the masters of innovation, and of the free market economy.