A Letter to President Obama
Dear President Obama:
This letter is written by an American for the future of America. It is hoped that I could get a few minutes of your time to discuss the state of renewable energy in America. Why renewable energy? For over a generation, our government has declared clean energy one of the underpinnings of national security, energy security and environmental sustainability.
So who am I to request a meeting with you to discuss these issues? Undoubtedly, I am not on the stature of any of your preeminent political and energy advisors. However, as stated in Wikipedia, I am an American scientist, author, business developer and entrepreneur in technology-driven enterprises. I have dedicated my life in ways most would not to the adoption of clean energy. On one level, some may say I am a globally recognized expert and spokesman for renewables, flying under the radar.
While America has accomplished a lot in clean energy, much work is yet to be done. Nevertheless, EIA’s Short-Term Energy Outlook report, September 7, 2011 states some alarming statistics:
• U.S. consumption of crude oil is projected to increase 1.7% from 2010 to 2012.
• Net oil imports increased 51% from 1992 to 2012 (projected).
• Net oil imports shall remain relatively stable over the next few years.
Furthermore, the Energy Department’s FY2012 budget request to Congress of $29.5 billion allocates only 3.9% ($1.16 billion) to all seven renewable energy programs. It seems logical to question if this level of spending has the critical mass to continue the work that lies ahead.
Though not entirely bleak, improvements have been made in U.S. electricity generation sector, where about 5% of all electricity consumed in the U.S. is generated from renewable energy sources, hydropower not included. However, the outlook for continued growth is uncertain.
The primary impediment to growth is the high cost of solar and wind power generation plants and the low rate of return from revenues derived from the sale of electrons and/or secondary Renewable Energy Certificates (“REC”), which represent the environmental and social benefits of renewable energy. Though the renewable fuel such as solar or wind is free, the cost to capture it is high. Growth is further constrained by the risky and lengthy regulatory approval process.
Without incentives such as the H.R. 1603 Federal Renewable Energy Grant Program and predicable valuation of the RECs, utility-scale renewable energy electricity generation stations are simply not competitive to conventional coal- and gas-fired plants. While costs for solar and wind plants are decreasing, the drop is not fast enough to make a significant difference in the near-term.
Herein lies the issues and the core of our discussion. Once the capital cost of a renewable energy plant has been amortize, like nuclear, the cost of generating electricity is more than competitive. Though fossil fuel-fired plants benefit from lower construction costs, the business case is further enhanced by the low cost of fuel supplies. Should the cost of fossil fuels rise, then like a teeter totter, the cost advantage may swing towards renewable energy.
The primary question then becomes, is the price of renewable energy actually on a level playing field with other more conventional fuels such as gas and petroleum. If incentives are stripped from renewables, then on the same token subsidies should be eliminated for fossil fuels?
In this respect, the great unanswered question is what is the true price of petroleum? The most obvious component to the artificially low price of petroleum is the subsidies. These costs are tangible and can be handled in a more eloquent manner. Other hidden costs, which are more intangible and complex, include the costs to protect our overseas oil supply lines by the Department of Defense, the cost of added health-care due to environmental pollution and climatic changes, and the cost of the short- and long-term damage to the environment.
Removal of just the subsidies to the oil industry would go a long way in making renewables competitive in the marketplace. The need to incentivize renewables would be eliminated or substantially reduced. I am not delusionary, politically naïve or socially obtuse not to recognize the economic impact of skyrocketing fuel costs. Without exception this is an issue. But one way or another, these hidden costs need to be addressed and recognized as an ongoing cost to the taxpayer.
The real fear is the track we are on. In the end we must be honest with one another. If what we are doing is the sum total of America’s energy policy, it would be fitting and proper to let Americans know that for the foreseeable future we cannot become energy independent, we must continue to purchase foreign oil, and are at the zenith of environmental protection.
In the end what could be achieved by this meeting? Possibly a grass roots understanding that the time has come to set in motion common sense objectives and plans. It’s time for leadership, it’s time for courage, it’s time for truly constructive measures, and it’s finally time to do the right thing. It can be done. There is a solution. Thank God I do not have your job.
I look forward to discussing with your our energy direction and what can be done.
Thank you for your time, attention, and consideration.
May God grant us the wisdom and fortitude to sustain us though these difficult days.
Barry Stevens, PhD