Subsidies to Green tech.

[luckytxn 2,265]

Great news: Green-jobs subsidies created 1 job for every $4.85 million spent

Today’s Washington Post acknowledges what everyone already knows, and whatSpain learned the hard way as well — green-jobs subsidies are sinkholes. When Barack Obama loaded his 2009 Porkulus with nearly $40 billion in subsidies to the green-tech industry, he promised that it would produce an explosion of jobs in a new, green US economy, starting with 65,000 directly created from his largesse. With half of the money gone, how many jobs has Obama’s investment created?

A

$38.6 billion loan guarantee program

that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show.

The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to

Energy Department

tallies. …

Obama’s efforts to create green jobs are lagging behind expectations at a time of persistently high unemployment. Many economists say that because alternative-­energy projects are so expensive and slow to ramp up, they are not the most efficient way to stimulate the economy.

That may be the understatement of the year. Even with Obama’s initial promise of 65,000 jobs created (or “saved,” which makes zero sense in this context), that would still come to $593,846 per job, which is hardly an efficient use of capital. If a private-sector business had that kind of capital, it could easily create five jobs from that amount with $100,000 in compensation each, with enough left over for a substantial profit margin.

But the actual results in this case are much worse. With $17.2 billion spent on these programs, the cost per actual job created comes to $4.853 million. That kind of capital could launch entire new businesses, let alone multiple jobs. Any company that ate through $4.853 million to create a job would shortly become a formercompany … kind of like Solyndra, where $535 million disappeared and took 1,000 jobs along with it.

Inefficiency isn’t the only problem with this model, either. Taxpayers will have to pay off the bonds created to give away this cash, which means the cost won’t just be the $4.853 million, but also the interest we have to pay on each $4.853 million over the next ten years or so. We also have to count the opportunity costs as well. Had we not borrowed this money to feed Obama’s green-jobs-explosion delusions, taxpayers in the future would have that capital to invest, expand and create businesses, and create jobs that make far more efficient use of the capital than $4.853 million per worker. We have not only failed in the present, we have set ourselves up for failure in the future as American capital has to get redirected into paying off the debt Obama hung on us for his green-jobs subsidy program.

That’s Obamanomics in a nutshell. Which is, by the way, exactly where it belongs.

[luckytxn 2,265]

Subsidy Risk’ in Green Tech

Posted by Jim Harper

Two-and-a-half years ago, I attended a venture capital conference that focused a good deal on “clean tech.” I wasn’t impressed.

[T]he current vogue for “clean tech” differs from the information technology revolution that has done so much for the economy and society. Venture investors may be turning to government subsidy and regulatory advantage for their portfolio businesses, rather than producing to meet a market demand. “Going green” may mean “going red” in at least two senses—a more socialist political economy and a government even deeper in debt.

Essaying to instill some doubts among investors who were banking on “political will,” I asked pointedly how VCs assessed subsidy risk and the vagaries of public policy. The responses weren’t insightful or memorable.

Some vindication of my doubts comes in an article called “The Crisis in Clean Energy” ($) by David Victor and Kassia Yanosek in the July/August Foreign Affairs.

In the United States, most clean-energy subsidies come from the federal government, which makes them especially volatile. Every few years, key federal subsidies for most sources of clean energy expire. Investment freezes until, usually in the final hours of budget negotiations, Congress finds the money to renew the incentives—and investors rush in again. As a result, most investors favor low-risk conventional clean-energy technologies that can be built quickly, before the next bust.

Elsewhere, they write, “With clean energy suffering from long time horizons, high capital intensity, and a heavy dependence on fickle public policies, some Silicon Valley venture firms are scaling back or even canceling their ‘clean tech’ investment arms.”

Alas, Victor and Yanosek don’t call for the federal government to clear the field so entrepreneurialism can flourish. They offer three bland “shifts in approach” that amount to more of the same. Until the federal government does clear the field, watch for the subsidy muddle in green tech to suppress profound innovations while government-directed investment brings modest returns to investors/tax-consumers at the expense of taxpayers.

[luckytxn 2,265]

Government subsidies hamper green technology

House Republicans spent much of last week looking to spin the bankruptcy of Solyndra , a solar-panel firm that left the U.S. Treasury holding the bag on $535 million loan guarantee, as a traditional Washington scandal. This makes for fun political theater, but in the end it misses a much bigger issue.

Green energy ought to appeal to anyone who has been to the gas pump recently. In 1998 a barrel of crude oil sold for an average of $11.91. Today the price is over $85 per barrel. Furthermore the price of oil — despite the periodic demonization of "speculators" — is driven by two factors that aren't going away. The first is political instability in the places that produce oil. The second is rising demand, as China, India and other poor countries increase their standard of living and, with it, energy consumption.

Given the cost of energy, finding more efficient ways of producing and using it makes good sense. Even those who are generally hostile to tree huggers ought to support the search for greater energy efficiency. This is precisely, however, why it is a bad idea for the government to subsidize green energy firms like Solyndra.

Governments are good at solving relatively simple problems that require the mobilization of massive resources. Blowing up lots of really big objects on the far side of the planet is a good example. On the other hand, they don't do a very good job dealing with dynamic, complex challenges. The problem isn't government mendacity. It's government information.

Nobody really knows which technologies are likely to provide workable solutions to the rising costs of energy. In the end we'll need innovation, trial and error, and a fair amount of blind chance. This is precisely the kind of problem that markets do a very good job at solving. Given the proper incentives — like oil prices north of $80 per barrel — the dispersed processes of markets can work wonders. They allow thousands of experiments and create a feedback mechanism that rewards successes and weeds out failures.

Investors provide that feedback mechanism. Looking for the best return on their capital, they will make bets on new technologies and flee those that prove ineffective. Over time the result will be firms that produce cost-effective solutions to our difficulties.

When a company receives a guarantee from the federal government, it lowers the firm's borrowing costs, allowing it to increase its leverage, which in turn increases the returns for investors. Private capital flows into the firm, chasing the higher returns. The problem, however, is that this capital is no longer part of the feedback loop that weeds out investment in bad technologies. Rather, it is chasing profits generated by the government.

Continued:

The evidence suggests that the White House pushed regulators to approve the Solyndra loan without adequately investigating the firm, and some Republicans have sought to make political hay from the fact that a major Obama fundraiser was associated with the company. The search for scandal, however, is a distraction.

The government is not full of crooks. Rather, it is full of well-meaning bureaucrats who have no better information about green technology than ordinary investors and frequently have considerably less knowledge than their private counterparts. Unlike ordinary investors, however, the effects of the bureaucrats' bets are massively amplified by the financial heft of the U.S. Treasury. This is not good.

Those who are serious about finding energy solutions should want investors that aggressively monitor green technology firms on the basis of the cost-effectiveness of their products. Subsidies distract investors, encouraging them to chase firms with access to cheap government money. Unfortunately, a market muddied by distorting subsidies is likely to produce Solyndras rather than solutions.

[luckytxn 2,265]

Bravo.

Phasing Out ‘Green’ Subsidies Makes Sense

Government subsidies for "green" technology may slow its development, a Carnegie Mellon University expert has pointed out. That is just one more reason for taxpayers to object to sending billions of their dollars to the solar, wind power and other "alternative" energy industries.

"Green" advocates are upset the state of Pennsylvania is phasing out subsidies for home and business owners who install solar energy equipment. Since 2008, the program has handed out about $100 million.

But M. Granger Morgan, head of the Department of Engineering and Public Policy at Carnegie Mellon in Pittsburgh, questions whether the subsidies make sense.

Photovoltaic systems generating electricity from sun light are far more expensive in Pennsylvania than use of conventional fuels or wind power, Morgan told The Associated Press.

He pointed out another concern, noting that improving photovoltaic technology is important. But to "subsidize the daylights out of the existing industry" may not be the best way to do that, he added.

Morgan is right. Incentives to develop new, improved products are lessened greatly if government is willing to pay for existing technology.

Phasing out subsidies actually may result in better, more affordable solar power technology in the future.

[Ban Hammer 13,746]

someone get the jumper cables, steven needs a restart.

[luckytxn 2,265]

someone get the jumper cables, steven needs a restart.

LOL.