All Of The Above: Strategy or Cop Out at the 2014 State of the Union?

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Most viewers of the 2014 State of the Union address, delivered last night by President Barrack Obama, should be praised for having the wherewithal to persevere through such a sleep-inducing collection of strung together sentences — although, among the mind-numbing were a fair share of surprisingly spritely, humorous notes.

Regardless, for those green enthusiasts out there, hoping to learn more about initiatives in the way of sustainability, clean energy, and alternative fuels, there was relatively little mention of such, and with even less value behind it.  Far from a laughing matter.

View the enhanced speech on demand –which is by far better than the
live broadcast– if you don’t believe me (tune in around the 15:40 mark).
[youtube http://www.youtube.com/watch?v=arhBRouSmWs&w=560&h=315&start=940]

Unfortunately, the most prolific takeaway for such enthusiasts was a regurgitation of the All-Of-The-Above Energy Strategy, originally introduced several years prior.  And let me be clear (pun intended) — by “regurgitation” I don’t mean Mr. Obama repeated himself per se, but I do mean that it was just a simple spewing of what “we” have already accomplished over the past several years’ time.

Some of the facts and statistics used in the accompanying supplemental presentation seem randomly curated and desperately included, almost in some form of a last-ditch attempt to appear arguably progressive.  And be careful not to blink when watching the address, you may miss the just-over-four minutes the Pres took to speak to the notions of this All-Of-The-Above plan.

Nonetheless, a brief recap is in order, to point potential non-viewers in the direction of the few notions splayed upon last nights audiences:

  • America is closer to energy independence today than we have been in decades.  I hope this is self-explanatory.
  • Natural gas is being extracted safely. This was an obvious reference to hydraulic fracturing, or fracking, something we have written about in the past and something which environmentalists everywhere denounce.
  • Companies are planning to build new plants that use natural gas.  President Obama made clear the fact that he wants to promote this via tax and other programs for these manufacturers who indeed increasingly move toward natural gas as a replacement means of production (instead of oil).
  • America will continue “strengthening protection of our air, our water, our communities,” and “protect more of our pristine federal lands for future generations” to come.  By definition, probably the closest we’ve come thus far to targeting sustainability, but still not compelling.  This just seems like some general commentary that could have been used years ago to describe our state, and which seem to be added only because they sound better to the heart than to the mind, once processed.
  • We are becoming a global leader in solar — “every four minutes, another American home or business goes solar.”  This is a great stat, assuming its factually accurate.  Bravo, Mr. President.  And his use was impeccable, directly relating solar’s ongoing push to economic job growth by referencing that men (and women) physically installing pieces of such equipment is not outsource-able.
  • GOAL: continue to invest in fuels of the future.  Check.  This should go unsaid — it’s something that would be done regardless of who is in office, be it oval or congressional.  Next.
  • We can continue to reduce energy we consume. He referenced the new standards for the auto industry, implemented after the bailout, to make vehicles more efficient.  Good example, yes, but we have been there and done that, so where else could this be actionable moving forward?  Another prospective example would have been beautifully refreshing.
  • The US is the leading nation in reducing carbon footprints.  Impressive, but how about we explore how we will maintain that role modeling… right?
  • We need to legislate new standards on the amount of pollution our power plants are permitted to dump into the air.  Air pollution is important, I get it.  And as we’ve seen in places like Mexico City and eastern Chinese cities like Beijing, it can quickly get so out of hand as to realizably affect the day-to-day quality of life for area inhabitants.  The future can only get worse, if not attended to, so let’s hope something of action can become of this verbiage.
  • “The debate is settled: Climate Change Is A Fact!”  Again, self explanatory, but a headline-grabbing quote all enthusiasts can be mildly happy about.

Now, that brief recap above contains literally every point I could imaginably pluck from the whole discussion of ecological sustainability, and most of it spoke solely of vague past accomplishments and emptily bottomless comments surrounding the overall direction we are headed. Personally, as someone truly interested in hearing what particulars could lay on the horizon, I was extremely underwhelmed by the President’s words, or complete lack thereof with respect to true governmental policy.  This could have been a chance for Mr. Obama to openly target specific goals and initiatives on one of the broadest stages possible, to really put the pressure on Congress to do something about the potential headliners — an opportunity blown.

As one US News and World Report describes fairly well, the State of the Union was predicted to be and then turned out to be unsustainable.  The article describes, quite adequately, that sustainability is the focus of making sure our living our lives does not hinder the ability of the generations to come from living theirs.  While the State of the Union contained moments wherein the glimmer of hope for the future verged on addressing some social or economic sustainability, environmental sustainability was not allowed to shine in its full brilliance.  There was clearly insufficient forethought and future initiatives relayed from the President — no true future plans were outlined for environmental policy.

All of this being said, I must concede that it is not all President Obama’s fault, that the entire State of the Union address seemed monotonous and archaically pointless.  In actuality, it is just that, and by inevitability.  The State of the Union was originally put into policy as a way for the President of the United States to relay his views on the current status and future agenda of the country to the US Congress.  This is especially needless in today’s society of technological advancement, what with all the instantaneous newsfeeds at our constant disposal via push notices to our pocket devices.

Overall, Obama’s address was only half-baked, nearly ignoring future sustainability, clean energy, and alternative fuel plans altogether.  But that’s just my opinion.

Got some time to share your opinions?  We’d love to hear them!
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The Dirtier Side to Clean Energy

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“We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy — sun, wind and tide. … I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.[1]” – Thomas Edison

In that 1931 conversation with Henry Ford and Harvey Firestone, Edison prophetically described the potential of solar energy to be used to supply society’s energy requirements. And with the help of government subsidies and a greater emphasis on the importance of sustainability by the Obama administration, the solar industry is off to a fast start in 2013 as ETF’s Guggenheim Solar and Market Vectors Solar Energy are up 20% this year.[2]

There are many attractive features of solar energy, led primarily by the almost infinite amount of raw energy provided by that thing called the sun. In addition, solar panels are becoming cheaper to manufacture and last around two decades, which creates a tremendous amount of value over the life of the product (not to mention the tax advantages of owning a solar paneled system). Lastly, solar energy panels provide a clean source of energy to power your entire home without the expense to the environment – at least so we thought.

According to a recent yahoo article, the solar industry may have a dirtier side after first glance. Because of government subsidies, solar panel manufactures are incentivized to produce as many units as possible. However, one of the major downsides to this is amount of sludge and contaminated water from the manufacturing process.[3] And because a majority of these companies are startups with huge overhead costs and are heavily invested in research and development, firms are unable to build storage facilities for this waste, which forces them to ship the contaminants across state lines to waste facilities hundreds and sometimes thousands of miles away.[4]  Lastly and most shockingly is the fact that the transport of the waste is not calculated into the products’ carbon footprint, which is the quantitative figure assessing the product’s ecological impact across the timespan of its inception to its destruction. It is a bit hypocritical for companies, which have a green initiative as an alternative energy source, to be so nonchalant about a green calculation with such great significance.

What is also striking is the industry-wide lack of transparency regarding the carbon footprint of the solar companies. “The Silicon Valley Toxics Coalition, a watchdog group created in 1982 in response to severe environmental problems associated with the valley’s electronics industry, is now trying to keep the solar industry from making similar mistakes through a voluntary waste reporting “scorecard.” So far, only 14 of 114 companies contacted have replied.[5]”

That being said, as an alternative energy source, solar energy is still the cleanest and most reliable. Compared to coal and natural gas derived energy, solar produces ten times less pollutants, and as mentioned previously, with a twenty year life expectancy for panels, provides a great source of energy for a significant length of time. The oversight of not including transportation costs may be a harmless and overlooked nuance that has not jeopardized lives. Yet, as a writer for an information sharing blog, the lack of transparency leaves a bad taste in my mouth and changes need to be made to provide consumers with the most up-to-date information. The solar industry as a result of this report cannot hide behind the veil of purity in doing green work, while simultaneously producing inefficient carbon footprint “scorecards”.  Only when the industry makes amends to change its behavior in reporting information can we as consumers feel confident in living green, and being green.

[1] http://en.wikiquote.org/wiki/Thomas_Edison

[2] http://finance.yahoo.com/news/solar-industry-impressing-investors-gains-132000140.html;_ylt=A2KJ2UiI.h9RZ0gAlDbQtDMD

[3] “In many cases, a toxic sludge is created when metals and other toxins are removed from water used in the manufacturing process. If a company doesn’t have its own treatment equipment, then it will send contaminated water to be stored at an approved dump.”

[4] http://news.yahoo.com/solar-industry-grapples-hazardous-wastes-184756813.html;_ylt=A2KJ2UZE9h9RPGoAWB3QtDMD

[5] See id no. 4

The Oracle of Omaha Looks To The Skies

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Warren Buffett speaking to a group of students...

Warren Buffett speaking to a group of students from the Kansas University School of Business (Photo credit: Wikipedia)

It is noteworthy that Warren Buffett, one of the principal investors of our era, has turned his investment attention to solar energy.  Even if you do not follow the markets you, likely know are familiar with Warren Buffett. Whether it is from the fact that he was the world’s richest man for an impressive period of time or from frequent discussion regarding his famous frugal lifestyle or his witty comments on our nation’s politics, you know two things about him, namely, he is very rich and incredibly successful. As one could imagine, these two things go hand in hand. Mr. Buffett accomplished this by becoming, “arguably the greatest value investor the world has ever seen. His investment holding company, Berkshire Hathaway (NYSE: BRK.A), has averaged a compounded annual gain of 19.8% since 1964”.[1] When Mr. Buffet speaks, the world listens, and when he takes action, we take heed. Mr. Buffet is known, in particular, for his style of investment, the long haul. He will take large positions in companies and hold them for a long time. When Mr. Buffet decides to purchase stock in a company, he is not looking to make a few quick dollars. He is looking for something with inherent value that he feels is undervalued and can produce long term success. That is why many ears perked when it was announced that, “Mr. Buffet’s MidAmerican Energy Holdings Company has acquired two SunPower solar photovoltaic power  plant projects in California for between $2 billion and $2.5 billion. The adjacent Antelope Valley Solar Projects will be built in Los Angeles and Kern counties and will generate 579 megawatts of electricity for utility Southern California Edison. At peak output that’s the equivalent of a big fossil fuel power plant”.[2]

To understand why Mr. Buffet made this purchase, we only need to look at one of his recent purchases and to abroad to understand the future he sees. Let us first look at Mr. Buffet’s purchase of Burlington North Santa Fe Railway in February 2010. When they looked at the railroad industry they saw that, “fuel prices were up 120% since the March 2009 lows[,] unemployment stubbornly hovered around 9% in most areas[,] [and] shipping rates, as measured by the Baltic Dry Index, were 1/10th of their 2008 highs”.1 Many people enjoy quoting FDR’s line, “we have nothing to fear but fear itself”, but do not grasp the context of the words. We recognize the meaning behind the words but tend to fail to see the world to which they were spoken. They were words spoken in the thralls of the Great Depression, reaching out to a world in the grip of compounding fear. Fear, like many traumatizing forces, tends to have a multiplier effect and a perceivable impact on outcomes. People were living in a world where there did not seem to be a light at the end of the tunnel, but what they failed to recognize is that they were the ones who had to dig to the light. Mr. Buffet not only recognized that the light was there, but also comprehended what was necessary to reach that light.  Now he is reaping the rewards: “the freight railway industry is enjoying its biggest building boom in nearly a century…Profit in the industry has doubled since 2003, and stock prices have soared…Fortune has even dropped a “green” gift in the industry’s lap. A train can haul a ton of freight 423 miles on a gallon of diesel fuel, about a 3-to-1 fuel-efficiency advantage over 18-wheelers, and the railroad industry is increasingly promoting itself as an eco-friendly alternative”.[3] What we have found buried in this purchase is a sound decision that showed vision and an in-depth understanding of the intersection of both environmental concerns and the drive for profit. How successful was this purchase for Mr. Buffet? In the first nine months of 2012, BNSF accounted for roughly a quarter of Berkshire’s profits. To put that in context, Berkshire owns roughly eighty companies.[4] When Mr. Buffet undertook this purchase, he followed the wisdom of his own words: “‘In business I look for economic castles protected by unbreakable ‘moats.’’”1 Now he turns his gaze to the solar industry, and to understand why, we must turn our gaze abroad.

We turn to Germany which has been making waves lately with its energy reports. Their numbers from this past summer show us why Mr. Buffet was attracted towards solar:

“Renewables now account for 25 percent of energy production, up from 21 percent last year, the country’s energy industry association (BDEW) said in a statement that reinforced Germany’s position as a leader in green technology…Solar energy saw the biggest increase, up 47 percent from the previous year”.[5]

Germany is no small fish; it is a member of the G8 and has a GDP of $3.479 trillion, with a GDP per capita of $42, 625.[6] As such, Germany is quite comparable and offers a viable alternative for America. As of 2011, renewables only accounted for 9% of US energy consumption, with solar only accounting for 2% of that.[7] Unfortunately for the renewables sector, there are many barriers to entry into the energy market in America. Most notable are the huge subsidies given to fossil fuel companies that artificially lower prices. Despite these obstacles, renewables are making inroads. Science has for the most part always been on their side but now the economics are beginning to adjust as well with, “the cost of PV modules, currently the single largest part of system cost, and [falling] 74% in the last twenty years”.7

Still, however, one must question Mr. Buffet’s wisdom. Why would he invest in solar, which makes up such a small percentage of an already small percentage, when he could invest in oil? Oil, already, accounts for 36% of total US energy consumption 7 and the US is set become a net energy exporter in the next few years.[8] Mr. Buffet recognizes that despite the fact oil production is on the rise, we are no longer simply paying prices based on our demand, but on world demand. As such, we no longer solely determine the price.

So then what do we make of Mr. Buffet’s decision? Mr. Buffet, in my opinion, merely did what he has always done. He saw an undervalued industry that has room for growth and decreasing costs. With his purchase he bought a company which not only, “will build and operate the projects for MidAmerican Renewables, and the energy will be sold to Southern California Edison in accordance with two long-term agreements that have received approval from the California Public Utilities Commission”[9],  but will print the blueprint of a way forward in America. Germany has already shown us that despite the common argument, it is possible to put yourself on a renewable energy track, while maintaining a high standard of living.  We have a castle for a model, but we still need the moats. The moats, of course, are the inherent failures of the fossil fuels, both economically and environmentally. People enjoy stability and control in their lives, and a country whose energy consumption is reliant on fossil fuels can expect neither. In the end, we are left with an industry with growing demand and shrinking costs. Furthermore, we have an administration that has made its support for renewables crystal clear. Mr. Buffet is in this for the long haul and in the long haul, the sun is always going to be there.  Warren Buffett clearly recognizes the economic value of investing in alternative energy that helps us live green, be green.

By Sean Patrick Maguire

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[1] http://www.investmentu.com/warren-buffetts-railroad.html

[2] http://www.forbes.com/sites/toddwoody/2013/01/02/warren-buffett-in-2-billion-solar-deal/

[3] http://www.dispatch.com/content/stories/business/2008/04/30/railroads.ART_ART_04-30-08_C8_5RA29I0.html

[4] http://blogs.star-telegram.com/dfwjobs/2012/11/bnsf-continues-to-be-a-profit-leader-for-berkshire-hathaway.html

[5] http://www.reuters.com/article/2012/07/26/germany-renewables-idUSL6E8IQIA720120726

[6] http://www.gfmag.com/gdp-data-country-reports/268-germany-gdp-country-report.html#axzz2Hh9Mj2kK

[7] http://css.snre.umich.edu/css_doc/CSS03-12.pdf

[8] http://www.aljazeera.com/indepth/features/2013/01/20131514160576297.html

[9] http://inhabitat.com/warren-buffet-buys-worlds-largest-solar-plant-for-just-over-2-billion/

SunPower Corporation

SunPower Corporation (Photo credit: Wikipedia)

The Fiscal Cliff & Our Environment

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Much has been made of the potential sequester the U.S. faces this New Years’ Eve, which the masses have affectionately labeled the “fiscal cliff.”  Well, with the possibility of large impacts to the average person and small business, rightly so.  However, what has not been rightly emphasized, in our opinion, is the potentially devastating effects this cliff could have on our nation’s environmental sector.  The cliff would lead to higher taxes and governmental budget cuts in the defense department, yes.  But what is less well-known is that the governmental cuts will also most likely include environmental victims.

For one, the energy industry could be significantly hurt, both at governmental and private sector levels.  Solar energy contractors who rely on receiving current 1603 cash grants for installation projects will not see those cash grants should the US see the cliff.  This could strongly hinder the financing of solar energy projects, depleting a relatively small but significant portion of the necessary cash for such projects.

Moreover, the cliff would trigger a $148 million retraction of funds from the US Energy Efficiency and Renewable Energy program.  To help put this into perspective, this loss is the equivalent of cutting the US Department of Energy’s solar energy program completely in half.  These cuts to agencies like the Department of Energy threaten not only a decrease in energy development, but also a decrease in energy usage, as programs would lose funding for research and loans used now for innovation projects.  The future would be increasingly questionable.

A second instance would have harmful effects for the US National Parks, National Forests, wildlife refuges, and other public lands.  For instance, the 258,000 jobs scattered among US National Parks and the 35,000 jobs among wildlife refuges could be jeopardized by the expected cuts in science and law enforcement positions at these establishments.  Similarly, the 2 million plus jobs within the Bureau of Land Management, which oversees the US National Forests could also find themselves in limbo, as awaited budget cuts loom large.  The National Oceanic and Atmospheric Association, which employs 66 million scientists, educators, researchers, and technicians, among others, could see devastating effects, as well.

As the list goes on, the bottom line remains ever evident.  In cutting governmental agencies’ budgets, the environmental agencies will surely be among those who see drastic cuts.  Further, those cuts could prove disastrous, and at the very least, detrimental to the US’s management, protection, and research of the environment.  There are millions of jobs at risk, in addition to the health and lives of the organisms living among the zones over which these agencies keep watch.

Overall, based on the observations and predictions surrounding the seemingly imminent sequester our government currently wrestles, there could be hampering effects on government agencies who will see severe cuts, US citizens who will see layoffs, and wildlife who will see the harmful effects of increased neglect.  So God Speed to our government representatives, in hopes that their efforts add up to a reasonable solution that can avoid harmful cuts to the essential beings of such agencies, people, and wildlife.

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Sources for More Reading:
http://www.greentechmedia.com/articles/read/guest-post-what-would-the-fiscal-cliff-mean-for-the-u.s.-solar-market
http://www.governing.com/news/state/gov-fiscal-cliff-full-coverage.html
http://www.forbes.com/sites/eco-nomics/2012/11/15/the-fiscal-cliff-and-the-environment/
http://blog.cleanwateraction.org/2012/12/06/dont-let-the-fiscal-cliff-devastate-our-environment/