Obama Wants To Fund Clean Energy Research With Oil & Gas Funds

An anonymous reader writes "The Obama Administration has put forth a proposal to collect $2 billion over the next 10 years from revenues generated by oil and gas development to fund scientific research into clean energy technologies. The administration hopes the research would help 'protect American families from spikes in gas prices and allow us to run our cars and trucks on electricity or homegrown fuels.' In a speech at Argonne National Laboratory, Obama said the private sector couldn't afford such research, which puts the onus on government to keep it going. Of course, it'll still be difficult to get everyone on board: 'The notion of funding alternative energy research with fossil fuel revenues has been endorsed in different forms by Republican politicians, including Alaskan senator Lisa Murkowsi. But the president still faces an uphill battle passing any major energy law, given how politicized programs to promote clean energy have become in the wake of high-profile failures of government-backed companies.'"

Comments

How is this not a good idea?

[HangingChad]

The notion of funding alternative energy research with fossil fuel revenues has been endorsed in different forms by Republican politicians

Until the president proposes it, then it automatically becomes "socialism" and they'll oppose it.

Re:How is this not a good idea?

[CncRobot]

His fisrt term he put $80 Billion towards this. You will remember great hits like Solendra, A123, and Fisker. The list of companies getting the money from that original program read like a whos-who of campaign donors. Many of the companies went bankrupt quickly after getting the federal money and none of them produced anything usable.

So, to anser your question "How is this not a good idea?" The track record is this will be a slush fund to reward his friends and accomplish nothing useful. Corrupt politics and corporate cronyism at its finest. Nothing to do with "socialism", just plain theft.

Re:How is this not a good idea?

[benjfowler]

In the case of Fisker, the government is backstopping them, to prevent the Chinese from funding Fisker and then stealing all the technology for themselves.

Re:How is this not a good idea?

[WindBourne]

First off, companies like Solendra were very much Republican based. There initially were granted money from W, who held back at the last minute due to ppl bitching about W's funding of AE. Secondly, few of those companies put any more money into dems than they did into pubs.

Secondly, there are many others that are hits, such as Tesla. In fact, if private enterprise had the success record of Chu, they would be lauded as being one of the most successful investors of all times.

Re:How is this not a good idea?

[amiga3D]

No problem agreeing with you on the fact that theft is a two party activity. The point is that this is just more money being pissed away while we go into a hole at a rate of around 100 billion dollars a month. Enough already!

Re:How is this not a good idea?

[Ichijo]

Let's also fix the market failures of air pollution and carbon emissions by internalizing their costs into the price of fossil fuels. If you agree that correcting market failures makes the free market more efficient, then you must be in favor of a carbon tax.

Re:How is this not a good idea?

[Jah-Wren Ryel]

Many of the companies went bankrupt quickly after getting the federal money and none of them produced anything usable.

Err, no. The DOE loan program is actually performing better than congress expected when they created it in 2005. I'm willing to bet that you don't even know the name of one other company that received a DOE loan besides the three you've mentioned. As usual, reality is more complicated than sound-bites.

Re:How is this not a good idea?

[PixelScuba]

Actually the number of companies folding under this program was even lower than congress thought... about 11% Maybe we have different interpretations of "maths" but a little more than 1/10 companies receiving clean energy loans and tax breaks isn't "many" to me. Fact Check talked about this several times during the campaign last year.

Re:How is this not a good idea?

[TubeSteak]

You will remember great hits like Solendra, A123, and Fisker.

Last year, the US Department of Commerce slapped tariffs on Chinese solar panels after the WTO agreed that the Chinese were dumping (too late for Solyndra).
And Solyndra is suing 3 Chinese solar companies under the Sherman anti-trust act for driving the company out of business

The Chinese bought A123, with the US Government's approval.
Fisker is the last man standing, but they're at the whim of their now-chinese-owned battery supplier, who has been trying to invalidate their previous contract.

All your examples had negative narratives pushed by conservative media.
Unfortunately, those narratives never actually had much relation to reality.

Re:How is this not a good idea?

[PopeRatzo]

Many of the companies went bankrupt quickly after getting the federal money

How many? You named three. And how many "green energy" companies got federal funding?

There were 27,226 federal awards listed in the stimulus bill for energy/environment. You've named three that failed. The three companies you mentioned were part of a specific group of those awards under the control of the Department of Energy that were meant just for new technologies. There were 28 such funding deals. Of those, four went under. Others in the successful group include a very successful battery company that's not far from where I live, which now supplies batteries automakers, including Japanese and Korean companies that build cars in the US. Batteries that are also exported. Other successes include companies that are building the smart grid and even a company whose technology is being used in the natural gas industry (you know, the fracking folks you love so much).

Though the stimulus bill authorized $90 billion for green projects, about $80 billion was spent, and most of that on infrastructure. The group of 28 Dept of Energy awards totaled $34billion. It might be worth noting here that a study published this week estimates the cost of the Iraq War at $6trillion.

You gotta look beyond just the right-wing talking points.

[Source for the stimulus energy figures: http://www.cnn.com/2012/10/04/politics/fact-check-green-energy

Source for the cost of the Iraq War: "Costs of War" project at Brown University's Watson Institute for International Studies. http://www.scienceworldreport.com/articles/5584/20130315/cost-iraq-war-6-trillion-dollar-costofwar.htm ]

Re:How is this not a good idea?

[joocemann]

Almost all of those green energy investments actually are working out. More than 95% of them are.

That success rate of investment is higher than almost anything. Most new businesses fail. Most new business ipo are a crapshoot.

When you stop focusing on the very low minority of failure (which we also know was induced by China) it was a huge success.

We should pull all oil subsidies and invest in green tech. Those awesome new batteries from UCLA would be perfect.

Re:How is this not a good idea?

[sgt scrub]

We have been giving welfare checks to oil companies since Rockefeller owned the government. Having that money shifted to clean energy might actually decrease the deficit. U.S. Oil companies still spend more money over seas than they do in North and South America combined. Ironically BP spends more in the Americas then U.S. based ones do; but, we take their money instead of the other way round.

Re:How is this not a good idea?

[anubi]

These are electric cars run by a computer. Knowing how to make the battery explode by software just might come in handy for someone who would like to leave a car thief with a very unpleasant experience.

Kidding around aside, please don't diss the batteries too much. I've blown up a few lithium batteries myself. Tow were intentional. I wanted to get an idea of just what it would take to make them lose their temper. Two were unintentional. But I did learn a lot from that. I was just happy I had the foresight to have used an old toaster oven for my battery pack test chamber. Lithium battery fires are nasty. Nothing I could do more than take the toaster oven out to the parking lot and let it exhaust itself.

One learns from their mistakes. There are several things I am not going to do again. Ever.

My neighbor's car caught fire a couple of years ago. He was lucky enough to catch it in the act and pushed it out to the middle of the street. The problem turned out to be the fuel injection system, which somehow did not shut down with the rest of the car. But being fuel injection is old technology, it did not make the news.

Fisker's exploding battery did.

I hate to diss technologies because of a misunderstanding of how to use them. There was a helluva lot of airplane accidents before we got that one pretty well nailed down.

Lithium batteries are dangerous. Very dangerous. So is gasoline.

Re:How is this not a good idea?

[kenh]

The "billions" the oil companies "receive" are really the simple deductions every other business is entitled to make - just like Apple gets to "write-off" research & development cost, so to do the oil companies. Just as GE gets to "write-off" capital investments, so to do the oil companies. And, they don't "receive" money from the government, they get to keep more of the money they earned.

Re:How is this not a good idea?

[ATMAvatar]

He provided evidence. You refuted his post, but provided no such evidence yourself. If it is as true as you say, surely you are capable of providing said evidence. As you are making the counter-assertion, it is completely on you to provide it, not on the rest of us to dig around for it.

And, I hope you realize that you are equally guilty of 1. But Obama and 2. Attacking the poster.

Re:How is this not a good idea?

[Anonymous Coward]

Oddly enough, the source for those figures (if you follow back all the blogs), is Fox News:

  http://nation.foxnews.com/obama/2012/10/20/list-36-obama-s-taxpayer-funded-green-energy-failures

CnCRobot, please avoid ad hominem attacks. They make it appear that you are disingenuous.

Re:How is this not a good idea?

[WindBourne]

So, let me see if I understand this.
China subsidizes Steel companies in China back in the late 80's, and then dumps on western markets esp America destroying others. Once they took over the markets, then the prices are double what they would have been prior to China's dumping.
From there, they do the same with electronics. We used to get cheap electronics here produced by Americans. Now, they are produced in China. Of course, a CHEAP smart phone here is around $150. Over in China, a cheap smart phone is $30.
They did the same with clothing and then fabric. Moved on to our furniture.

NOW, they flat out steal our R&D, subsidize the development in China and then dump it on our markets.
In fact, to get our AE industry off the ground we provide subsidies that is open to any and all companies. OTOH, China subsidizes ONLY Chinese companies, but all is dumped on the global market.

And you do not see an issue with this. Really?

Re:How is this not a good idea?

[RicktheBrick]

Is it bad if more solar panels are made at a lower cost? Yes it is if it takes away American jobs and the government ends up paying more for unemployment insurance and health and welfare cost. Yes if it prevents American companies from investing in automated equipment that would allow them to sell their products at even a lower price. Shipping money to China so they can invest in American corporations and end up owning almost all of America is not a good idea.

Re:How is this not a good idea?

[joocemann]

500 million is a drop in the bucket of things you should be worried about, and, again, was a very minor loss in a pool of successful choices.

This is just like the 32 million dollar muffins that the DOJ was buying each year and the news made a big deal about.

80BN in yearly oil subsidies for an archaic and dangerous system that is already highly profitable? And you're moaning about 1/160th of that, and its not even a yearly cost. PFfft.

Tornadoes in Teacups. You will forever be upset until you gain a grasp of the words SIGNIFICANCE, MAGNITUDE, etc.

Hopelessly off-target

[LenE]

It is unfortunate that government is apt to pursue political solutions rather than viable practical solutions. That's the world we live in.

The premise here is that gas and oil companies should be punished, and their gains should be confiscated and given to other companies with better intentions. The real world truth is that there are no oil or gas companies anymore, and there hasn't been for the last fifteen years, at least.

No, what used to be oil companies have all become energy companies. They all invest heavily in alternative energy technologies, because they have the most to lose if anything does become viable and threatens their current revenue generators. I've spoken with several former CEO's of these former oil companies, and they were, to a person, fixated on the end of oil and the emergence of alternative energy sources. I left these conversations wondering why these CEO's were more pro-alternative than any environmentalist I had ever met.

The government confiscation of funds from these companies, and the eventual redistribution to campaign donors fronting "new" energy companies will only slow down the discovery of practical and sustainable alternative energy sources.

-- Len

Re:Hopelessly off-target

[LenE]

The plan to collect $2 billion from oil and gas revenues is a tax. These companies don't get subsidies for being oil companies. They get tax credits for R&D investment, like any other company in the US. Politicians call these subsidies, like some call tax cuts spending, when a lowering of a tax rate is not an expenditure.

When a politician states that they want to eliminate the subsidies to oil companies, they are talking about not giving them tax credits for R&D, like any other company. As I mentioned in my first post, this R&D is largely in alternative and clean energy research. Removing the tax credits for these energy companies is counter to the professed intention of supporting alternative energy.

-- Len

Re:Hopelessly off-target

[LenE]

The money is not given away. It is a tax credit for R&D. What you seem to be suggesting is that some types of R&D are more worthy for receiving a tax break. In the larger picture of a national economy, R&D spending prepares for economic growth through either finding ways to lower cost, or produce a better product. It is incentivized in the tax code, to promote economic growth.

Carving out specific areas for different rates, is just meddling. The law of unintended consequences will guarantee that the recipients of these proposed grants will have very little to do with the professed goal. A few years ago, I saw many academic papers tack on the words "with nanotechnology" in an attempt to gain funding. Most of the projects had nothing to do with nano anything. In a similar way, these grants will go to alternative energy shams that have nothing viable in the way of technology, but loads of good intentions.

Why give money to the government to have a small portion given back? This is a policy that is anti-growth, except for governmental growth.

Not sure what free money you are talking about.

-- Len

Re:Hopelessly off-target

[Sloppy]

These companies don't get subsidies for being oil companies.

Suppose Iraq were to invade Kuwait, and as a result, market experts predicted that oil prices would go up, long-term. One example of a subsidy for being an oil company, would be to use public funds (collected as income taxes or through currency inflation) to send military forces out to kick Iraq's ass our of Kuwait.

Suppose people typically used oil in a manner that tore its molecules apart to release energy, and then they dumped the resulting lower-energy molecules into the public atmosphere where they don't just magically go away, and where most physics-based (as opposed to faith-based) models predict the waste products cause various undesired side-effects at public expense. An example of a subsidy, would be to knowingly allow this pollution to happen, without making the oil users do something to clean up the CO2, or if they can't do that, charging them a fee for inefficient government programs to clean up the CO2.

The two examples of subsidies that I gave, both turn out to be real, rather than merely hypothetical. You might even call these subsidies good ideas if you insist, but let's not pretend they're not subsidies. These are examples of government using its power to artificially distort the energy market toward oil being more relatively affordable than competing energy sources, and these political decisions have the effect of reducing the natural free market incentives for developing clean[er] energy. ("Picking winners and losers" in Republicanese, if that helps anyone understand it.)

Like I said, some people may be able to make a good case for this manipulation of the market. I just want everyone to admit we're doing it, that's it's not something a tech-neutral, or a free-market-uber-alles, government would do. And somehow, I have a hunch that once we start acknowledging that, the case for how it's a good idea, may be challenged. It'll be a good debate.

Re:Hopelessly off-target

[Pretzalzz]

There is a difference between a tax credit and a tax deduction. A legitimate business expense is a tax deduction and will save you whatever you spend times your margnial tax rate. A tax credit on the other hand will save you 100% of your cost on your taxes.

Re:So....

[AK Marc]

I still can't believe you morons elected him. Twice.

We elected Bush twice as well. You are just now noticing the voters are morons?

There is no subsidy

[Anonymous Coward]

Unless you count the oil depletion allowance as a "subsidy".

But by that definition, then every industry gets a "subsidy" in terms of depreciation and other tax breaks.

But how big is it? About $2.4B annually total for all oil companies between 2011 and 2012.

Obama spent more than that on failed alternative energy speculation in the same time period.

How about a plan where everyone wins?

[Immerman]

Can't argue that government subsidies of industry have a long history of being more about cronyism than anything else, so how about we "subsidize" green energy development in a completely even-handed manner governed by the free market? By phasing out the massive subsidies and environmental protection exemptions we're handing out to fossil fuel suppliers on an ongoing basis.

As fuel prices begin to rise *every* green energy project will start to look more attractive to investors, and we can stimulate dramatic investment in the field while simultaneously reducing government expenditure. If we're worried about the chilling effect that would have on the poor and the broader economy we can repurpose those funds in terms of, say, a refundable tax credit so that most people and businesses will see no net change, but will have greater incentive to pursue energy efficiency which would provide a net increase in available funds versus the status quo.

If we're worried about undermining domestic oil production versus foreign then fuel tariffs are the obvious answer. There may be some political fallout from that, but so long as they're tied to offset the reduction in subsidies I suspect most other governments actually wouldn't have a real problem with them, though they'd no doubt make some noise to gain political capital. Heck, earmark the tariff revenue for the tax refund coffers and everyone will see an immediate benefit except the oil companies. If we're willing to spend a bit of political capital and risk setting off a trade war we could even set the tariffs high enough to offset the loss in subsidies so that the domestic oil companies benefit as well.

Seems like it could be a big win all around. Am I missing something?