Climate Mandates Floundering
– By Howard Sierer –
Why am I not surprised that a massive, government-mandated overhaul of the economy shows every sign of going off the rails? With trillions – yes, trillions – of federal taxpayer dollars committed to electric vehicles and green energy, we’ll all be stuck with paying for the unfolding mess.
Unsold electric vehicles are piling up on dealers’ lots and automobile manufacturers are cutting production and future investments. Offshore wind power projects are being abandoned while their manufacturers are pleading for government bailouts. Solar power generation is growing but primarily because government mandates require utility companies to charge their rate-payers billions of dollars to fund their conversion to renewable energy and taxpayers to fund expanded long-distance transmission lines.
Start with electric vehicles. Nearly 4,000 auto dealers signed a letter to Pres. Biden complaining that EVs are piling up unsold on their lots. The letter explains that “early adopters formed an initial line and were ready to buy these vehicles as soon as we had them to sell.” But now most consumers “aren’t ready to make the change,” in part because EVs are still too expensive, have limited range and most apartment renters don’t have garages for home charging.
Those “early adopters” were mostly wealthy, idealistic Democrats. A new study from the University of California – Berkeley found a “strong and enduring correlation between political ideology and U.S. EV adoption.” About half of EVs registered as of last year were to “the 10% most Democratic counties, and about one-third to the top 5%,” the study notes. The study suggests “it may be harder than previously believed to reach high levels of U.S. EV adoption.”
Auto dealers agree, saying that they are carrying 90-93 days of EV inventory while gas-powered car inventory turns over in 31-32 days, this, despite the fact that manufacturers have slashed EV prices and increased discounts. Pres. Biden is discovering that his mandates can’t dictate automobile buyers’ preferences, and dealers want relief.
It follows that automobile manufacturers are hurting. Ford expects to lose $4.5 billion on its electric vehicles this year. General Motors’ EV sales have stalled; it cancelled a planned expansion and instead has committed $10 billion to share buybacks. Both companies remain profitable overall today but only because profits from their gasoline-powered vehicles cover EV losses.
Those profits will come to an end as new tailpipe emission standards from Biden’s Environmental Protection Agency take effect and will force EVs to make up two-thirds of all new vehicles manufactured by 2032. The government is placing a multi-trillion dollar bet – using taxpayer money – that the public’s willingness to accept EV shortcomings will change over the next eight years.
Next, take a look at what’s happening to Biden’s wind power fantasies. His administration championed offshore wind power farms along the Eastern seaboard because higher population densities and local opposition limit windmill installation onshore.
Deploying his planned 30 gigawatts of offshore power by 2030 is turning into a nightmare. Wind power developers have taken billions of dollars in losses on U.S. offshore projects this year with offshore wind farm developer Orsted writing off $4 billion and General Electric reporting a $1 billion loss. As a result, many projects either have been cancelled or their developers are requesting revisions to their contracts with utility companies who in turn are under administration pressure to increase their use of green energy dramatically.
In September, several large offshore wind developers asked New York’s Public Service Commission to increase contractual payments by an average of 48% to cover their costs. Wind power company Engie has raised many of its wind- and solar-power contract prices in the U.S. around 50% compared with prices before the pandemic.
Orsted’s CEO Mads Nipper warned U.S. officials that “taxpayers and electricity customers will inevitably have to pay more to support wind energy. And if they don’t, neither we nor any of our colleagues are going to build more offshore. It’s very simple.”
As a result, Northeastern states’ governors are lobbying the White House for taxpayers to “pay more.” They want funding provided in the Inflation Reduction Act to cover 50% of wind project costs. (The misnamed act has hundreds of billions of inflation-producing dollars in what amount to green-energy slush funds.)
The administration’s obvious political problem is to find a way of increasing payments to wind power companies while not being accused of corporate welfare. It also has a second, not-so-obvious political problem: all the country’s taxpayers – that’s you and me – will be subsidizing northeastern utility customers to the tune of billions of dollars.
We shouldn’t be surprised that government central economic planning is resulting in massive market disruptions by forcing ill-advised capital investments to make products that consumers don’t want. It’s all reminiscent of the Soviet Union’s many five year plan disasters. Socialism doesn’t work; free markets produce what people want at the lowest cost.
The hard truth about socialist climate economics is that if we’re going to switch to green energy from fossil fuels, someone has to pay for it. But as the costs become better understood by consumers and taxpayers, resistance is building.
Progressives are doing more than force-feeding the green-energy transition. They are pushing their supposedly-superior cultural values on a public that doesn’t share them. If government mandates backfire on wind power and auto makers, unwilling taxpayers will be made to pay for repairing the industry’s wreckage.
Well written. What you write is so clearly played out here in California. Thank you for your clarity.
Change is always resisted and difficult. Unfortunately, climate change is real in spite of denial and failure to acknowledge it. If we continue burning fossil fuels, the world our kids and grandkids inherit won’t be livable. I would hope we older folks would plan for a future with more promise than the way things are headed.
Thanks for your perspective. I reply with two facts.
First, most people don’t realize that the dominant greenhouse gas by orders of magnitude is…water vapor, i.e. clouds. Clouds have a far greater effect on heat retention than carbon dioxide or any other gas. Many of us, including me, find that today’s climate change lies well within the range of temperatures experienced over the last several thousand years prior to any increases in anthropomorphic carbon dioxide. It’s far from clear that reducing CO2 emissions will have much effect on warming: it is not possible to know either way.
Second, the progressive left’s climate change dreams notwithstanding, carbon dioxide will continue to increase for the next decade or more, no matter what this country does, as both China and India are building dozens of coal-fired power plants and will continue to do so, making our mandated reductions in fossil fuel use moot. Spending trillions to no avail is not my idea of good public policy.
Sadly, what you say is reasonable, but the determining factor is that the atmosphere has been in a relative state of stasis for several thousand years. It has always included the elements and compounds it now contains, but it has done so in relative balance. Water vapor certainly is critical but consistent in the larger context balanced by temperature and elevation which bring about relative humidity – rain/snow, evaporation, etc, as a natural process. Carbon dioxide has also played a part in the balance, but since the Industrial Revolution began, it has multiplied and created imbalance. The “hockey stick” graphic is otherwise unexplainable. Historic periods of temperature change, such as the ice ages, have resulted from other imbalances. If we can in any way slow the threat of climate change, we should at least try. And if you don’t believe it’s happening, how do you explain the melting of the polar ice caps, the melting of glaciers and the increasing rise of the ocean level? It’s terrifying, and it’s real. If it continues as it is, in a century large parts of the world will be uninhabitable. Let’s do what we can to preserve it.
Suggest giving Tony Heller a listen. He has numerous videos on You Tube. It’s a shame some of our more well-known climate alarmists don’t have your facts, J C. Their Hawaiian, Delaware, & Massachusetts multi-million dollar estates will be lost. Imagine that. Huh. And the private jet thing. Rules for we peons only, I suppose. Seems logical.