American Elephants

Always Chasing Rainbows by The Elephant's Child

The carbon market in Europe — cap-and-trade — is in freefall. The prices of emissions allowances, which award the holder the right to emit carbon dioxide into the atmosphere, have fallen to a record low this week, down 11% from the beginning of the year,  They now trade at less than one-fourth of their July 2008 value. Hopes that other nations would fall in line with the EU program have been dashed, and there is no global consensus.

Recession on the continent has cut back on emissions, and the prolonged economic slump casts doubt on whether the EU can continue to bolster prices on the carbon exchange.  Carbon dioxide is not a pollutant. Life on earth flourished for hundreds of millions of years at much higher levels than we have at present. We are currently near the bottom end of the scale, not the top.  Greenhouses regularly keep their CO2 levels around 1000 ppm. Plants grow better at higher levels, and are more resistant to drought.

IPCC supporters have been frustrated at the lack of computer-predicted warming, though there has been some warming , perhaps about 0.8 degrees Celsius, since the end of the Little Ice Age in the early 1800s, but the timing of the warming suggests that a tangible amount of the warming comes from natural causes and has nothing to do with factories or SUVs.

Germany decided last year to slash the market prices it forces utilities to pay for renewable energy sources, and to cut the subsidies that have locked German taxpayers into €100 billion in handouts to the solar industry. The Germans, being a northern race, have had a long love affair with the sun, but there are limits. They have found that their heavily insulated houses are featuring more mold and mildew. Germany produces nearly half of the world supply of solar energy.

The green manufacturing that was supposed to be the planet’s salvation is just as susceptible to low-cost competition as other industries. Instead of creating a sustainable comparative advantage, German subsidies invited competition, and the rivalry that is now putting their solar industry out of business.

Italy is taking notice and are cutting back on ‘excessive” subsidies for solar and wind power. The Obama administration has shown no signs of such good sense, but we may have lucked out. Solar Trust last year received a conditional commitment for a $2.1 billion loan from the Department of Energy, but declared itself insolvent after its German parent Solar Millennium filed for bankruptcy in March, and Q-Cells, another German solar company filed for bankruptcy this week. Solarhybrid, and Solon went out of business earlier, and according to one analyst, more bankruptcies are on the horizon.  Consumers can expect a $260 hike in their energy bills.

The administration’s website lists five pages of other solar projects, with current and future loans worth hundreds of millions of dollars. Even after the Solyndra debacle and all the other bankruptcies, Washington boosters still insist that these projects are the key to America’s economic and energy future. They just believe.

The belief in “renewable energy” is religious in nature, and not susceptible to contrary information. Solar and wind remain beautiful dreams with no more substance than a rainbow. And the dream of cheap, unlimited power from “natural” sources is like chasing the end of the rainbow looking for the pot of gold.

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