Subsidizing Solar Power

  • John Wakeman of SUR Energy says government and utility incentives have lowered the costs of a solar installation for consumers.(Photo courtesy of Mark Brush)

Sources of renewable energy like wind, solar, and hydroelectric are still just tiny players in a world powered by fossil fuels. Most of the power for your light switch comes from burning coal and natural gas. Mark Brush reports the government is trying to change that. There are state and federal programs that will pay you to put solar panels on your house:

Transcript

Sources of renewable energy like wind, solar, and hydroelectric are still just tiny players in a world powered by fossil fuels. Most of the power for your light switch comes from burning coal and natural gas. Mark Brush reports the government is trying to change that. There are state and federal programs that will pay you to put solar panels on your house:

John Wakeman was laid off from his factory job eight years ago. So, for him it was, “well… Now what?” He’d always been interested in solar panels and wind turbines. So he decided to go into business helping homeowners put these things up. It’s been eight years, business was slow at first, but he says these days, business for solar panels is picking up.

“There are a lot of people that have always just dreamed of it. You know, they thought it was really cool, they looked into it in the ‘70s. In the 70’s it cost, you know, ten times as much for the same energy. The costs have really come down.”

But it’s still really expensive for a lot of people. Wakeman says a typical solar job costs around sixteen thousand dollars these days.

But now – you can get help from the government.

There’s a federal tax credit that will pay for 30% of the cost of new solar panels on your house. So you spend sixteen grand – you get $4,800 off your next tax bill. And on top of that, there are a bunch of state and utility operated programs that will help pay for the up-front costs.

In fact, more than half the states in the country are forcing utilities to make more renewable power.

So more utilities are paying people to install things like solar panels, wind turbines, and geothermal heat pumps.

In many places, it costs less to install these things than it ever has.

Wakeman says these incentives have been good for his business.

“I can actually build a business somewhat on that. I can hire some people and get them trained. You know we can go out and sell some systems.”

But some say these subsidies are not a good idea:

“The sunlight may be free, but solar energy is extremely expensive.”

Robert Bryce analyzes the energy business for the Manhattan Institute. It’s a conservative think tank. Bryce says solar power is enjoying big subsidies from the government right now, but it’s not translating into a lot of power going onto the grid:

“Solar energy received 97 times as much in subsidies per megawatt hour produced as natural gas fired electricity; even though the gas-fired electric sector produced 900 times as much electricity as solar. So how much subsidy are we going to have to give them to make them competitive. And I think the answer is going to be… It’s going to have to be a whole, whole lot.”

Bryce agrees – there are some big environmental costs to traditional fossil fuel sources. Costs that are not always paid for. But in the end – he says renewable energy sources like solar just can’t compete with traditional fossil fuels.

But others say the subsidies for renewable power are boosting an industry that is trying to get a start.

Rhone Resch is the president of the Solar Energy Industries Association. He says the subsidies renewables are getting today just make the game fair:

“We’re starting to get the same kinds of support from the federal government that the fossil industry has enjoyed for the last 75 to 100 years. And when you do that, the cost of wind comes down, the cost of solar comes down, the cost of geothermal becomes more cost competitive.”

If you look at the numbers, traditional power sources have always gotten more money from the government. In 2007, the federal government gave out 6.7 billion dollars in subsidies to support electricity production. Most of it went to coal, natural gas, and nuclear.

Today, renewable energy sources, like solar, are getting a little more help. And supporters hope that help doesn’t disappear – like it has in the past – when the political winds change.

For The Environment Report, I’m Mark Brush.

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Corn Ethanol: Higher Food Prices

Some people are warning there are hidden costs
to the drive for ethanol. The demand for corn-based
ethanol for fuel has pushed the price of corn close
to the highest price it’s been in 10 years. In the
first of our two-part series on ethanol, Rebecca Williams
reports that economists say the push for more ethanol will
mean higher prices at the supermarket:

Transcript

Some people are warning there are hidden costs
to the drive for ethanol. The demand for corn-based
ethanol for fuel has pushed the price of corn close
to the highest price it’s been in 10 years. In the
first of our two-part series on ethanol, Rebecca Williams
reports that economists say the push for more ethanol will
mean higher prices at the supermarket:


(Sound of burger sizzling)


Everything in your classic American meal has one thing in common.


(Sound of soda can opening and fizzing)


The burger, chips, soda, even the ketchup. They all depend on corn.


Cows eat corn. Chips have corn oil in them. And your soda and ketchup
have high fructose corn syrup as a main ingredient. Supermarkets are
loaded with food that has something to do with corn.


And lately, corn’s been near its highest price in ten years. The price
has nearly doubled. Everyone from livestock producers to beverage
companies has been feeling the squeeze of more expensive corn. And
that’s been starting to show up at the grocery store.


The US Department of Agriculture predicts our food is going to get more
expensive this year, and maybe for many years to come.


Ephraim Leibtag is a USDA economist. He says we’ll probably be paying
between two and a half and three and a half percent more this year at
the store:


“That’s on average for your food bill. So if you’re buying an average
basket of products and you spend $100 when you go to the store, now
you’ll be spending $103. But you’ll see it first in products most
related to corn. In addition you’ll see some after-effects because if
more corn is produced that may drive up the price of other commodities
if the tradeoff in land is between, let’s say, corn and other potential farm
products.”


So if farmers plant more corn for ethanol instead of soybeans, that
will drive up the price of soybeans, and in turn, the food that’s made
from them.


It turns out that’s exactly what farmers are planning to do this year.
A recent USDA report says farmers will be planting 12 million more
acres of corn than last year… and less soybeans, and rice.


Leibtag says high corn prices have been great for corn farmers, but he
says it’s been rough on a lot of other people:


“If you use corn as a main ingredient you’ve already noticed your costs
go up quite a bit. Some companies have explored the possibility of
substituting or using other products. But certainly producers of livestock and
poultry have higher feed costs. They have to think about exactly how they’re
going to produce their product when one of their inputs goes up 20, 30,
50, 80 percent in price.”


Ethanol backers say it’s just a matter of time before the market will
adjust to more expensive corn. Bob Dinneen is the president of the
Renewable Fuels Association:


“Corn prices are indeed going up… Our own industry is paying more for feedstock for ethanol today. But
at the end of the day, as the marketplace adjusts, we’ll be able to grow
more than sufficient grain to satisfy the country’s demand for food,
fuel and fiber and rural America will be better for it.”


But others argue it won’t be possible to have it all forever. Lester
Brown is the president of the Earth Policy Institute:


“Usually in the past, rises in food prices come when we have a poor
harvest somewhere in the world as a result of weather and therefore is temporary. It usually
lasts a year or so and weather comes back to normal and we get a good
harvest again. What we’re looking at now is continuous pressure on
prices as far as we can comfortably see in the future, simply because in
agricultural terms, the demand for automotive fuel is insatiable.”


Brown says we’re at risk of trading food for ethanol fuel. And he says
it’s not just going to impact food prices in the US. It’s also going
to affect food supplies worldwide, especially in developing countries.


“The biggest effects are hitting people in other countries who consume
corn more directly, like Mexico for example, which has a corn-based diet and there
the price of tortillas has gone up about 60 percent.”


Brown says many US politicians have what he calls “ethanol euphoria.”
He’s called for a moratorium on licensing new ethanol plants. He wants
the government to think about whether it makes sense to keep
subsidizing ethanol made from corn.


Many people, even some in the ethanol industry, say ethanol from corn
is a limited solution. So researchers are looking for ways to make
ethanol from other sources, such as woody plants like switchgrass.


In the meantime, ethanol from corn is still the most viable option.
Economists say if corn gets diverted into ethanol on a large scale,
that might mean we’ll all be paying higher food prices for the next
several years.


For the Environment Report, I’m Rebecca Williams.

Related Links

Insurance Rates Driving Sprawl?

  • Insurance rates are often lower if you live in the suburbs. (Photo courtesy of the USDA)

People who live in the city pay higher insurance rates for cars and homes than people in the suburbs. Often it’s a lot more. The insurance industry says it’s using the fairest method. The GLRC’s Lester Graham reports that method might contribute to urban sprawl:

Transcript

People who live in the city pay higher insurance rates for cars and homes
than people in the suburbs. Often it’s a lot more. The insurance industry
says it’s using the fairest method. The GLRC’s Lester Graham reports
that method might contribute to urban sprawl:


(Sound of car starting)


We’re taking a little drive and Brandi Stoneman is showing me where she used to live.
It’s just two-and-a-half miles from where she works. But… she met a guy… they
dated… they fell in love… and after a while decided to move in together.
His house was bigger. So, Brandi moved from her home near downtown
and out to his house 15 miles out into the suburbs.


When she told her insurance agent… she got a surprise. Her auto
insurance rates dropped… a lot.


“It almost was in half when they—when I told them I’d moved and
changed and it almost dropped in half. Of course I was excited, but it
was amazing. It was a huge difference.”


“Did you ask them why?”


“I did ask them why and they said, of course, that it was the area that I
lived in. It went by the zip code and it didn’t have really have much to do
with the fact that I was farther away from work.”


So, instead of five miles to work and back… she drives 30 miles… to the
same downtown location, but that wasn’t the only surprise. She kept her
old home in town… so, like her boyfriend, she still needed to buy
homeowners insurance.


“And when we both were looking and shopping for insurance rates, I
spent about three-to-four hundred dollars on my premium on a house that
was almost half the price of his, and that was, again, because of where I
lived and the zip code and the area that I live in.”


If you live in the city… this might sound familiar. You probably know a
colleague or friend in the suburbs who’s paying a lot lower insurance
rates. Stoneman lives in Michigan. That state’s Office of Financial and
Insurance Services spokesman, Ken Ross, says it’s typical of insurance
rates across the country.


“Our urban population centers have experienced higher rates for both
home and auto insurance. That is a function of insurance companies
pairing the higher costs associated with living in an urban environment, higher
concentration of people with higher losses and those losses are paired
with rates being filed and ultimately premiums being charged to
consumers who live in those areas.”


And the regulators say that’s a pretty fair way of doing things. The
insurance industry also thinks it’s fair.


Peter Kuhnmuench is with the Insurance Institute of Michigan.


“Largely because of the density of the population, the incidents of
collision, the incidents of theft are much higher in an urban area than
they are out in the outlying suburban areas.”


Kuhnmuench says if people choose to live in the city, they should expect
to pay higher insurance rates. He agrees that the lower rates in the
suburbs might be an incentive to move there.


“Well, I would certainly believe that cost factors for insurance would be
a contributing factor to your decision to move from the city to the
suburbs. Obviously, higher insurance rates reflected in the city could be
one of those contributing factors, I guess, Lester, but overall those rates
pretty much reflect the underlying costs to provide the coverage in those
areas.”


Different state legislatures have considered laws that would make
insurance rates less dependent on where you live, but those kinds of bills
usually don’t even make it to a vote because legislators don’t want to
anger suburban voters by making them subsidize urban insurance costs.


So instead, more people move to the suburbs and ironically, everybody else
subsidizes the cost of new suburban streets, more lanes of highways, and
other infrastructure costs associated with the sprawling suburbs and
accommodating the people who commute to the city.


And while the lower insurance rates encourage a move to the suburbs,
big city mayors say the higher rates in urban areas discourage
redevelopment in the city. Those mayors, urban legislators, and
advocacy groups lobby state legislatures to find an insurance rate
structure that doesn’t penalize those people who choose to live in the city
and reward those who spread out to the suburbs.


For the GLRC, I’m Lester Graham.

Related Links

Report: Forest Service Should Change Mission

A new report by a forest protection group says the increase
in logging in National Forests shows no signs of slowing. The uptick in logging is also happening in the Great Lakes region. The National Forest Protection Alliance says the U.S. Forest Service needs to re-evaluate its mission. The Great Lakes Radio Consortium’s Tracy Samilton has this
report:

Transcript

A new report by a forest protection group says the increase in logging
in National Forests shows no signs of slowing. The uptick in logging
is also happening in the Upper Midwest/Great Lakes region. The
National Forest Protection Alliance says the U.S. Forest Service needs
to re-evaluate its mission. The Great Lakes Radio Consortium’s Tracy
Samilton has this report:


Logging companies are going after more acres in National Forests
because trees have regenerated after the large-scale clear-cutting of a
hundred years ago. But Jake Kreilick of the National Forest Protection
Alliance says the logging is a net loss for taxpayers, because the U.S.
Forest Service is heavily subsidizing it by building roads to get the
trees out. And Kreilick says it’s unnecessary – because lumber
companies have more domestic and global sources for wood than ever
before.


“The federal government does not need to be in the logging business any
more.”


But logging companies say with half the nation’s softwood in National
Forests, they do need the wood. They say the Forest Service is doing a
good job in managing the multiple users who rely on National Forests
for recreation, hunting and logging.


For the GLRC, I’m Tracy Samilton.

Related Links

Hidden Costs of Sprawl

  • Economists and urban planners are beginning to look at the hidden costs of sprawl. They're finding many people pay, but only a few benefit from the costs. Photo by Lester Graham.

Even if you don’t live in an upscale suburb in a sprawling metropolitan area, you’re likely paying to support that suburb. Economists and urban planners find there are hidden costs that are not paid by the people who live in those suburbs. Instead, much of the costs are paid by the majority of us who don’t live there. The Great Lakes Radio Consortium’s Lester Graham reports:

Transcript

Even if you don’t live in an upscale suburb in a sprawling metropolitan area, you’re likely paying to support that suburb. Economists and urban planners find there are hidden costs that are not paid by the people who live in those suburbs. Instead, much of the costs are paid by the majority of us who don’t live there. The Great Lakes Radio Consortium’s Lester Graham reports:


If you just bought a home that cost hundreds of thousands of dollars in a neighborhood of similar big expensive houses… you probably think you’ve already paid your fair share to attain the good life. The mortgage is a monthly reminder. And the real estate taxes are another. But the price you’re paying is just the beginning of the costs that make it possible for you to live there. Much of the rest of it is paid by people outside of your suburb; people who never realize the benefits.


Myron Orfield is the author of the book “American Metropolitics: The New Suburban Reality.” He says the people who live in the upscale suburbs get the advantages of the good schools and the nice roads… but they don’t pay all of the underlying costs. Much of that is passed on to others…


“Most of us don’t-aren’t able to live in the communities with 400-thousand dollar houses and massive office parks and commercial industrial. Only about seven or eight percent of us can afford to live there and the rest of the region really pays the freight for that.”


That’s because the rest of the region pays the county and state taxes that make the roads and nice schools possible. Orfield says a residential area alone doesn’t generate enough tax revenue to pay the full costs.


“So we all subsidize that development and so when all the resources of the region concentrate in six or seven percent of the region’s population, it really hurts the vast majority of the people.”


And while the cost of supporting the upscale neighborhoods is substantial, that’s just the beginning of the hidden costs of sprawl.


In most cases, those nice suburbs are nice because they’re situated away from the hub-bub of the daily grind of work and traffic and hassle. The people who live there might have to drive a little farther to get to work, but, hey, when they DO get home, it’s a complete escape, worth the extra drive time. Right?


William Testa is an economist with the Federal Reserve Bank in Chicago. As an economist, he measures things by how efficient they might be. He says driving a little farther from the nice suburbs to work and back wouldn’t necessarily be a bad thing.
“If people want to travel further because they can live better, then it’s their choice and they feel they live better with a longer commute, then we wouldn’t necessarily call that an inefficiency. When it can be inefficient is when people don’t pay
for the costs of their own travel.”


And that’s the rub. If you decide to drive 30 miles to work instead of ten miles, the taxes on the extra gasoline you burn don’t begin to pay the extra costs of that decision… Again, William Testa…


“The spill-over costs that they don’t internalize when you decide to get in your car and drive someplace, such as to your job, is environmental degradation, the cost of road maintenance isn’t directly paid for when you decide how many miles to drive, maintain the road, the police, ambulance services and the like. So, economists would say that driving is not priced correctly to have people efficiently choose how many miles they choose to drive.”


While urban sprawl’s economic costs to society are substantial, there might be larger costs.


When an upper-middle income family chooses to live in an enclave of others in their tax bracket, it’s a given that the people who teach their children, who police the neighborhoods, and fight the fires are not going to be able to afford to live there.


In fact, those who would work in the restaurants and at the service stations in many cases can’t take those jobs because they can’t afford the housing and they can’t afford the commute.


Emily Talen is an urban planner at the University of Illinois. She says
that’s a cost that can’t always be measured in dollars and cents. It’s a separation of the haves and the have-nots.


“Social cost is that fragmentation, that separation, that segregation really on an income level more than anything else.”


Talen says when people decide they can afford the good life in the nice suburb, the new American dream, they often only think of their own success, but not about the costs to others.


“This is what our nation is founded on. I mean, it is founded on the pursuit of happiness and I think that that has been kind of problematic for people thinking in terms of their own individual happiness rather than issues about the common good.”


And so, Talen says when a town decides it will only allow expensive houses to be built, it’s decided that all labor for its services will be imported from out of town. The expense of that decision is borne by everyone else… especially the lower-income people forced to commute.


William Testa at the Federal Reserve Bank in Chicago says in the end, that cost might be the greatest one to society at large.


“This, it seems to me, is un-American and very un-democratic and something that we ought to think about very seriously. Could we really live with ourselves in a society where there aren’t housing options available for people to make a livelihood, to follow the opportunity for their livelihood.”


The experts say there’s nothing wrong with pursuing the good life, as long as everyone is paying their fair share of the cost. They say right now, that’s not happening… and those who never benefit from a pleasant life in the suburbs are paying much of the cost for others to do so.


For the Great Lakes Radio Consortium, this is Lester Graham.

HIDDEN COSTS OF SPRAWL (Short Version)

  • Economists and urban planners are beginning to look at the hidden costs of sprawl. They're finding many people pay, but only a few benefit from the costs. Photo by Lester Graham.

Economists and urban planners are beginning to calculate some of the hidden costs of urban sprawl to society. The experts say those costs are often borne by people who don’t enjoy the benefits of living in the expensive new suburbs. The Great Lakes Radio Consortium’s Lester Graham reports:

Transcript

Economists and urban planners are beginning to calculate some of the hidden costs of urban sprawl to society. The experts say those costs are often borne by people who don’t enjoy the benefits of living in the expensive new suburbs. The Great Lakes Radio Consortium’s Lester Graham reports:


When a town in a sprawling metropolitan area limits development to big expensive houses, that means the people who work in the service stations and the restaurants have to live somewhere else. They are forced to commute. That means a greater demand for roads. And that costs all of us. William Testa is with the Federal Reserve Bank in Chicago. He says an even greater cost is lost opportunity for those who can’t even afford to make the commute to the jobs…


“The higher costs may be on people in the inner-city – or wherever – in low-income areas who can’t afford to live close to the places where the job demand is, where the jobs are being created.”


Testa says developing suburbs should consider building affordable housing for workers. If that doesn’t happen, he says society should find a way for those suburbs to pay the cost of their decisions.


For the Great Lakes Radio Consortium, this is Lester Graham.