I will ignore the huge amount of waste and non stimulative items in here, (as will most of congress) and focus on the supposed investments in either Clean Energy or ‘Green Jobs’.

Weatherization Assistance Program $2,900,000 – Mostly supported by Northern State Senators including Susan Collins, previous year spending was about $240M, so 10 times the funding for this program.

The Weatherization Assistance Program is the government’s largest residential energy conservation program, and provides important assistance to low-income families facing high energy bills.  Since the program’s inception, more than 5.8 million homes have been weatherized using federal, state, utility and other monies.  Each of these households now has more money to spend on other necessities that it would have spent on heating and cooling an inefficient house.  According to the National Association for State Community Services Programs, for every dollar spent, WAP returns $2.72 in energy and non-energy benefits over the life of the weatherized home.

Review – Looks like an effective program, which will save energy.  I think the amount is a little much, not sure the program will be able to ramp up that quickly.

Advanced Battery Manufacturing   $2,000,000 – A big push from Carl Levin and the automakers.  The automakers will receive the tax credit for the purchase of a new car, a replacement of government vehicles with more efficient, worth 1.5B, but also support for this spend.  A123 in Massachusetts had asked for a 1.8B grant to build manufacturing facilities in Michigan and other places, it supports that.

Review - Would actually create jobs

FutureGen – $2,000,000 – Dick Durbin who has been involved directly in the negotiations, slipped this one in there.  The project site is in Mattoon, Illinois.

Review – CAN IT – This is a carbon sequestration project.  An attempt to build a zero emission coal based plant.  Please don’t waste are time, there are better more efficient ways to spend our money.  This is an Illinois boondoggle.  Oh, by the way, the plant startup is scheduled for 2012.  How is that for ‘timely’ ?

Renewable Energy R&D through the EERE – $2,648,000 -

Review – CUT in HALF – No idea what is in here, other than support for the Federal bureaucracy of the Energy Department.  They have 11 stated programs ranging from a Biomass program to a ‘FreedomCar’.    I am sure there are specifics, but there is the potential for overlap of programs here, with the Weatherization project for example and other than it is another department I am not sure the goals differ.

BPA Borrowing Authority – $3,350,000 – Pushed by the Northwest senators, Patty Murray in Washington.

Review – CAN IT – This is the Bonneville Power Administration.  A group of utility companies that want loans to rebuild transmission lines, projects at the Grand Coulee dam and other projects.  They talk about hundreds of jobs and there ability to repay the previous loans. Hopefully this money on grids is done per the guidelines in the SmartGrid initiative.  I am sure it is not…If these Utilities are such a good risk and repay their loans why do they need the government?  Can’t they issue bonds?

WAPA Borrowing Authority – $3,230,000 – Pushed by the Western senators, seems like abuy off of many republican senators in the West.

Review – CAN IT – Again, another agency of the US Energy Department.  Transmission line and education focused, they rent equipment to Utilities.  It is business as usual.  Government in bed with the Utilities.  There has to be a better way to use this money.  How many jobs?

SmartGrid – $4,400,000 – Pushed by the lots of people, who think they are high-tech.

Review – INCREASE  IT – This spend needs focus first.  Is it for smart meters at households, new better transmission lines, or renewable generation ?  Focus this project into the grid management technologies only.  Install monitors at homes, power distribution center monitoring, transmission line monitoring and measure, and manage the current use of power.  Monitors in 40M homes would cost more like $10B.  This should be a national goal and an incentive for all Utilities.  The previous line items for borrowing by large utilities and consortium, should be granted on the bases of what percent of their transmission network is ‘smart’

These are the major items in the current stimulus bill.  There are some continuation of tax incentives or new ones for efficient vehicle purchase, but overall this is disappointing.

I don’t see the change.  The rhetoric is there, but when push comes to shove we support the industries that lobby, such as Coal, Automobile, and Utilities.  We support pet projects  for Senators, who think locally and not nationally.  Lastly, we support the bloated, inefficient federal government.  This is not change.

This is a lot of money and it does not support the objectives of job creation, alternative energy production, and timely investment.

I differ in how much to change the gas tax, where to spend the money, and how to distribute the money, other than that I agree with the study by the National Commission on Surface Transportation Infrastructure Financing (only in Washington can they come up with a name like this).

I propose a variable federal gas tax which would create a more fixed retail gas price, how is that for political speak.  I think it is simple, let me explain.  Set a target retail price for gasoline, and vary the federal tax collected as the price of oil increases or decreases.  If market based oil prices rise, and the subsequent gas at the pump goes up then the federal tax is lower to maintain a gas price within a range.  Since the current federal tax is 18 cents on $1.60 average price, the ability to control the retail price is somewhat limited but it make logical sense to me that in the time of $4.00 per gallon pricing the tax should be less if not zero, and at $1.60, the tax should be more.  There is math required here to make sense of this and I am sure economists can come up with a model to implement.

Second, I don’t think the money should go to ‘infrastructure’ projects, whatever that means.  I say that because it is one of the overused words in Washington D.C., now.  That and ‘Investment’, tag a spending idea with one of those terms and it should be smooth sailing.

Here is the point, the Federal Government spent $50B dollars last year from the gas tax to support ‘Infrastructure’ projects in the states.  This represents 25% of ‘infrastructure’ spending last year, so the States chipped in the rest (remember the state gas tax is in many cases more than the federal), so that would equate to $200B spent last year on highways, bridges etc. These numbers are from the NCSTIF mentioned above.  Similar amount over the last five years also.  Ok, and our roads and bridges are a mess?  Why are they still a mess?  Has anyone looked into how this money is spent?  I have a simple point of view, however it is distributed, it is NOT working.  So, why would we put more money into this system?  As a business person, this current approach is not worthy of new funding.

I propose creating a Green Financing Fund.  The annual federal gas tax would be loaned out to private industry, working on alternative, cleaner, more sustainable transportation systems.  It is targeted investment (see even I can’t avoid the word!), in replacing oil based fuel.  Loans from this fund would be made to qualified companies, at a low interest rate.  Interest paid would be returned to the federal government and used for federal highway projects (the old way).

This would create a wave of Venture capital flocking to new ideas.  Low cost capital is one of the many things inhibiting growth for these companies.

We need different, bold ideas to turn things around.  Spending more money in an ineffective system is not the way to go, no matter, if the projects are ‘shovel-ready’ or not.  I can assure you the job sectors most effected by the current recession is not road builders, or bridge repairers.  These recent proposals in Washington, wrapped in the ‘save our jobs’ flag is nothing but marketing and political speak.

There is inherent waste, bureaucracy, and cronyism in the system now and we should not support it.  Shake things up !

I would double the investment below and create 1M jobs and not limit it to high school or other students.

Obama is ready to spend all the money from the war on new programs, whether it is 30 billion to bail out mortgage holders, health care, federal education dollars and Hillary will freeze rates and stop foreclosures for 90 days and then spend it on healthcare.  I appreciate that this is a campaign and people will say just about anything to people in pain.  The bigger picture is, we mess with the middle east because of oil, we should invest our hard earned money into ways to eliminate this dependency.

One way would be a summer program to drive conservation.  For how many years have you receive promotional materials from your electrical company to use lower use lighting, low flow shower heads etc..  There are probably tax dollars behind this if I were to look into it, but there is an incentive for the electrical company, it is called peak demand.  They can’t meet peak demand.  Their infrastructure is crumbling, we will not let them build any new plants, coal, nuclear, whatever, they need ways to reduce usage.  Well maybe we can help them.

Hire 500,000 high school and college students during the summer.  Provide them with all the materials, such as low usage lighting, window sealants, shower heads, a long list of materials.  Go from house to house and replace these units.  How much would this cost ?  500,000 x $10/hr x 40 hrs x 12 weeks = $2,400M, plus materials, guess of another 2,500M, plus management, coordination and Marketing of 500M. Program costs of just over $5.4B per year.  What do we gain?

Talk about a stimulus package, what are these young adults going to do with the income???  Yes, wouldn’t you like to believe save for college, not likely. They will spend it, several billion into the economy.

How many houses can they get to?  500,000 = teams of two = 250,000 teams, five places a day, two not home, they do three houses per day = 750,000 homes a day x 60 days = 45M homes.  Pretty aggressive, so say it is half that to be conservative, 22.5M homes.

111 million households in US – we get to 20% in one summer.  How much electrical savings? 1,139 (billion kWh) per year from all households.  We reduce by 10%-12%, which are numbers I have seen for conservation and what Germany has achieve with similar programs.  Per year electrical reduction = 20% of 1,139 billion x 12% = 27.3 (million kWh) or the equivalent elimination of 2,600 housholds from the grid.

Some background and assumptions which I used in recommending this;

BACKGROUND

The federal gas tax has been in place since 1932.  Contrary to popular belief, all monies do not go to highways or infrastructure, in fact that didn’t even start until the 50′s, prior to that it was used to fund wars.  Since 1980 the tax has increased dramatically from 4cents to 18cents per gallon.  Yet, we still have a call from Obama and congress for Infrastructure spending for roads, bridges and the like.  What have you been doing with the money Congress? Another post on that topic.

Starting in 1919 with Oregon, states started to get on the bandwagon with this new tax approach.  All states have some type of tax, whether it is a gas tax, sales tax, or excise tax (call it what you want) on gasoline.  Here is a map with all states combined taxes on gasoline from http://www.taxfoundation.org/publications/show/1054.html

On average around 40cents per gallon and $281 per person per year.

ASSUMPTIONS

1. The US economy and consumers can handle a gasoline price of $3.50 per gallon without substantial economic slowdown
2. The price of Gasoline will fall below $3 per gallon by the end of the year.
3. Funding of green initiatives from both candidates will be delayed due to funding for the economic crisis and the continued war
4. The government, federal and state, has limited spending discipline with gas tax revenue
5. Higher retail gas prices encourage a ‘green consumer’

PROPOSAL

Impose a scaling green fee on gasoline prices. The fee would scale with the underlying per barrel of oil price.  As oil prices fall the fee increases, as it increases the fee would decrease.  The intent is to maintain a retail price around $3.50 per gallon.  The federal government would collect the fee.

Pay the Federal government a processing fee of 10% for collecting and enforcing the collections.

On a quarterly basis, the federal government will distribute the funds to an agreed upon ‘Green Investment Council’, which is managed by US Venture Capitalist firms.  Investments are made by this council in ‘green’ technologies and companies that meet the specific goals of alternative energy production, job creation, and investment return.  The overriding goal is investment return as it is with most Venture capitalists.

At no time will these fee funds take a majority position in any company, all use of these funds need to be along side private investment and will be non-voting shares.  Funds will be managed similar to the way investment funds are managed now. Contributors buy into an investment fund, expecting a return.  The revenues from this fee will be treated the same.  Congress will sit at the table as the investor.

In this way the Government is directly investing the fee from consumers in ‘Green Technology’, not funding wars or social security or corporate greed, or whatever they have been spending money on lately.  It is similar to a charity that can prove that the monies go directly to the recipient and not to the bureaucracy.  I would rather give money to those charities.

If ideas such as the Cash for clunkers http://mygreensuit.com/2008/08/03/cash-for-clunkers/

or Conservation Corps http://mygreensuit.com/2008/04/07/conservation-corps/

or Incent to Invent http://mygreensuit.com/2008/04/07/incent-to-invent/

have any standing they will need to prove themselves to the ‘Green Investment Council’

SCOPE

At current prices of $3.29 we are talking about a 20cent fee, which would equate to around $25 billion annually in the investment fund.  If the gas price actually reflects the falling oil price then we would double the investment amount per year to $50 billion.  This money, in the right hands, and please understand, Congress is not the right hands, would go a long way in funding businesses that can meet the environmental objectives, provide jobs and get the job done quicker than any government run program.

Oil prices have fallen to below $80 a barrel as of Friday October 10.  The sell off has been in place for several weeks but was accelerated on Friday due to a widening economic crisis. I expect oil prices to continue to retreat, between $40 and $50 dollars by the end of the year would not surprise me.  Why ?

1.) The slowdown is real, this time.

Inventories are building at businesses, which means the consumer is not buying and businesses will then not need to buy new inventory.  Historically this statistic has been highly correlated to short term economic growth.  It has become somewhat less accurate as businesses have moved to ‘Just in Time’ inventories, but the fact that efficient businesses are left holding product does not bode well for the short term.  Expect big Christmas discounting.

2.) OPEC is hurting.  Not just OPEC countries but all propped up dictators and economies built on oil prices are feeling the global pinch.  The Russian stock market, which is built mostly on oil and natural gas prices, has fallen more than the US stock market over the last several weeks.  Hard to believe but, true.  The faster the rise, the faster the fall.  Venezuela is substantially slowing major social initiatives, due to slowing oil revenues.  The next OPEC meeting is November 18.  Expect OPEC Leaders to message that they are cutting production, lots of news conferences and statements and then return to their countries and exceed their production quotas.  They have nothing else.  They are a one trick pony and have been for almost 40 years, economies built of natural resources.  Boo Hoo, poor Vlady.  Go practice your Judo.

3.) Speculation works both ways.  The outcry from financial market geniuses that speculation drove the oil price so high in the first place, that the market does not work, should be eating their words now.  It is not a workable policy to have ‘one-sided capitalism’.  You can’t stop speculation or regulate oil prices from rising quickly and then remove those regulations to let it fall quickly.  You can’t let everyone win by letting housing prices rise quickly and then regulate and protect consumers by not letting them fall as quickly.  Either have consistent regulation on both sides, which will lead to a muted market, or allow the swings up and down.  People can benefit from swings either way.

4.) The ‘Green Economy’ will continue.  This is my hope that the progress we are starting to make will not get slowed down by a dropping oil price.  Read more about this in my next article.

Now if my retail gas price will reflect this price decrease I would be happy.  The per barrel price has fallen 46% since the peak.  I think my peak price per gallon was around $4.29 for regular grade.  I just paid $3.29 a gallon this week.  A decrease of 23%.  It would help the economy if this moved to the consumer quickly.

We are at a key moment in our economic, political and environmental futures.  There is an increasing awareness of the need for energy independence and environmentally friendly energy.  We have an opportunity to solve these legitimate issues in a far reaching, planet saving, approach or fall back on the easy way.  I, for one, do not want to be part of a generation that takes the easy way.  We owe it to ourselves and our children to fight the right fight, however difficult that may be.  The right fight is one that makes these two issues into one issue.  We can find solutions that free us from foreign dictators AND are environmentally friendly.

Our energy plan for the future needs to be one that relies on efficiencies in our distribution and use of electricity, comes from renewable clean energy sources, and is local to the electrical users.  It will require innovation, new technology and a consumer commitment to make this happen.  The government needs to provide guidance, lofty goals, limited support where needed, and for the most part get out of the way.  Tom Friedman in his new book, “Hot, Flat and Crowded”, is calling it the ‘ET’ revolution or Energy Technology.  He compares it to the IT revolution which led to amazing productivity enhancements across our economy.

Whatever we call it, how we move forward on these issues will define us as a generation.

Drill, Baby, Drill, is a sad commentary of how things work now.  Oil companies and lobbyists, that both campaigns swear off as having no place in Washington, have made oil drilling a top topic and wrapped it in the, ‘Energy Plan for the Future’ blanket.  Although it may help with reducing oil dependency on the Axis of Oil, it does not do it in a way that is respectful of our planet. The more time we discuss this in public debates, the less time we spend on real solutions.  Solutions that can meet both goals of energy independence and renewable, clean energy.  Drill, baby, drill does not meet the basic principles outlined above, it is not clean, it is not local, and it is not renewable.

Let’s change the debate to a discussion of how we as Amercians can show humility, by admitting we have a problem, show fortitude, by applying our best resources to solving the problem, and show respect, for our planet and all of it’s residents.

American Clean Power ?

Please stop talking about Clean Coal as some kind of solution for energy independence and/or global warming issues.  It can not do either of these.  Let’s use some common sense.  Coal to replace gasoline ?  Coal to replace home heating oil?  We could build more coal fired electricity generating plants, but that does not reduce our dependency on foreign oil for the other two needs.

The picture used on the left comes from the ACCCE, a new group funded by Coal and Energy companies.  They are in the process of spending millions of dollars on ad campaigns to tell you

1.) Coal generates %50 of our electricity 2.) Coal is cleaner and can be even cleaner with investment in technology.  They run ads on TV, they have a web site http://www.americaspower.org/ Thanks for Sharing!

Clean coal !  Please.  Is there such a thing as clean coal ? It does seem peculiar to me that both Presidential candidates highlight Clean Coal, some oil drilling and nuclear plants (McCain, not Obama), for our short term energy solutions.  Other technologies are always mentioned as an afterthought, oh, yeah, “some of that Solar and Wind stuff too”. One characteristic of the commonly mentioned technologies is they exist (not clean coal), and they are backed by large existing corporate and union interests. I am sure that is just a coincidence.

Clean Coal is NOT ready for prime time.  The more we try to make old solutions work, the more money, time and energy we take away from building RENEWABLE solutions.  What is renewable about Coal, even if it was Clean.  Nothing.  It is currently plentiful so let’s use it, is the logic.  Talk about clinging to beliefs.

The same reasons many conservatives knock newer renewable energy sources, such as ‘it is not ready’, ‘it will not scale’, ‘it is to expensive’, ‘it is unproven technology’…. All apply to clean coal.

The three technologies currently being researched and mostly in a pilot phase are;

Clean it, Filter it, and Capture it.

‘IT’ is nitrous oxide, sulfur dioxide, carbon dioxide and of course your everyday mercury and other metals.

Clean it, consists of a bath for the coal prior to using.  It removes much of the sulfur, and some of nitrous oxide, BUT, it leaves a nice slurry of waste water that goes somewhere…oh yeah, in the ground, in a river, in the environment.  It does nothing to reduce carbon dioxide.

Filter it, means catalytic converter type filtering on the smokestake, or new oxygen purification systems where they cook the pollutants in a bath of oxygen.  This second approach is more effective but expensive.

Capture it, means Carbon Sequestration.  Even Al Gore talked about this during his powerpoint theater.  Is it just me, or does capturing the carbon dioxide and pumping it into the ground or better yet into active oil reserves make any sense ?  What a stupid idea.

I want to believe technology can solve most problems, and maybe it can reduce emissions so that Burning Coal produces NO pollutents.  But until that comes closer to reality, just shut up, and focus on alternative energies that actually work NOW and are clean.

http://news.yahoo.com/s/ap/20080804/ap_on_el_pr/obama_energy
Obama’s new proposal, though, includes two significant reversals of positions he has taken in the past: He had steadfastly fought the idea of limited new offshore drilling and was against tapping the nation’s emergency oil stockpile to relieve pump prices that have stubbornly hovered around $4 a gallon.

Not only did Obama push for drawing from the Strategic Petroleum Reserve, he also reiterated his changing position on offshore drilling — first revealed last Friday — suggesting that he could live with it if done in an environmentally sound way and as part of a bipartisan energy compromise.

See posts below;  We could impact the price of gas quickly by releasing from the SPR, or sell reserves to the oil companies for energy funds

This idea has some advantages and some pitfalls, but in an age of energy and environmental crisis, it is worth considering.  The annual cost of $8b to $20b, depends on how fast we want to ramp this program up.  The lower amount is for providing incentives for 2M cars a year and the higher amount for 5M cars a year.  It is estimated that of the 230M cars in the US about 60M cars are 15 years or older.  That is 15M cars that spew carbon at a higher rate (10 to 30 times!) than current emission controlled cars.  Newer cars also use less fuel.

The basic idea of this plan, is to provide an incentive check to people who sell their older cars and ,in return, buy a newer more efficient one.  This is an active program in several states, like Texas.  Real world experience always provides great feedback, and there is some positive and negative. Some blog feedback from these states is that the process is overly complex and bureaucratic.  An emphasis on streamlining the process for consumers would need to be made prior to launching this nationally.

Texas gives consumers, who are mostly lower income class, up to $3,500 dollars toward the purchase of a newer car.  This stimulates the right environmental behavior and also provides an economic stimulus.  Many people do not spend the full refund on the new car but spend it elsewhere in the economy or even save it !  Amazing ! We also get less efficient vehicles off the road.

These are the kind of ideas we need to be debating, not windfall profit taxes, not gas summer tax refunds, not DRILL or NOT DRILL.  Politicians should shut up and get on board with game changing ideas, show some leadership and creativity on these issues !

The old tax’em when they are doing ‘too well’ government philosophy, is back in Washington D.C.  The recent calls for a windfall profit tax against the oil companies certainly doesn’t support capitalism, fair play, foreign competitiveness, or sound economic policy.  It is just plain silly.

Some facts about big bad ExxonMobil, as reported with their recent quarterly results.  Revenues of $138b, Profits of $11.9b, $7b investing in finding new oil, $10b back to shareholders in dividends or share buybacks, $10.5b in income taxes, $9.5b in sales taxes, and $12b in other taxes.

First, as a percent of revenue oil companies are not profit machines.  Under 10% profit margin? Not a huge wall street story there.  If we need to focus on overly priced, close to monopoly, under regulated, excessive profit companies, someone should be looking at Google. Second, they pay a lot in taxes now, over 30% and if you add in the fact that dividends are taxed again as income, this is even higher. Third, they are investing in research (fair to point out R&D Tax credits for this) for new oil.  I am not sure it is enough but they do owe their shareholders a return.

My proposal is to hopefully create a win-win situation.  DO NOT tax corporations and DO provide incentives toward more alternative research.  It is difficult for me to think that oil companies will become the ‘green’ companies of the future, contrary to current marketing efforts by BP and others, so Government incentives to promote research and development may be necessary.

From the article below;  http://mygreensuit.com/2008/05/13/reduce-oil-prices/

We the people, should use the Strategic Petroleum reserve as leverage.  It is a fairly simple plan, we sell 200M barrels of oil to the top 5 oil companies on a pro rated market share basis.  We sell it to them at the 90 day moving average of a barrel of oil, or potentially at a slight discount, since refining costs and distribution need to be accounted for, and we take the proceeds and invest in some of the creative alternative energy, conservation and research ideas currently swirling around.

A simple plan review, the average cost of a barrel oil in the reserve = $24.  Let’s estimate a $100 government profit on each barrel x 200M barrels = $20b for energy programs.  The oil companies get a new supplier, with reduced shipping costs (it is already here!), and they still make some profit, WIN.  The Government gets $20b to invest in alternative energy, and gets some satisfaction in making the oil companies do something they probably don’t want to – WIN.

Next post on what we should invest the $20b in.