Environmental Awareness in the Past
Jonathan Adler’s “Fable of Federal Regulation” (December 2004) is a useful reminder that the most effective way of dealing with any problem is usually to deal with it at the most local level. I have to take issue, however, with his statement that in the .first half of the twentieth century the “prismatic pools of oil and chemicals on the water’s surface were a sign of prosperity, not of waste and abuse.” This statement plays into the hands of big-government environmentalists who would have us think that environmental awareness began only with their version of concern for nature. Practical environmental awareness and action began long before. In 1694 the Massachusetts colony created a closed deer hunting season to preserve the resource. In 1708 New York created a closed hunting season to protect quail and turkey. Responding to tourism interests that reflected public interest, Congress began creating national parks in the late nineteenth century. To control market hunting, Iowans put the first limits on game bird kills in 1878. People who were worried about the fate of forests formed the American Forestry Congress in 1882. This small criticism also reinforces Adler’s point, that long before the federal government got involved, local interests were addressing environmental problems.
Kaufman is author of Coming Out of the Woods (Perseus Publishing) and No Turning Back (iUniverse.com).
Poor Advice on Wind Power
Thomas Tanton has given PERC Reports readers some very poor advice (“A Whirlwind of Troubles,” December 2004).
To start, the Production Tax Credit (PTC) for wind is at 1.8 cents only to balance the existing subsidies for conventional sources. Since the credit is only applicable for 10 years, its 30-year present value equivalent is about 1 cent. Moreover, in Colorado, wind is more than competitive with new conventionals. Xcel’s new coal plant, for example, will yield costs of perhaps 5 cents when .finally available in 6 to 7 years—not 2 cents, a number valid only as today’s marginal cost of very old paid-for plants. Since wind may be priced at about 5 cents without the PTC (4 cents with it), the 1-cent PTC is not much over a 20 percent subsidy—not Tanton’s “almost 100 percent.”
Secondly, his claims on dependability are way off. Today wind can be viewed as a fuel saver, lowering rates by a factor of about two over rates from existing natural gas plants (which cost more than 6 cents at today’s never-to-decline gas prices). These existing backup gas plants can be turned on rapidly. As more wind is added, the wind variability will decrease, not increase, due to geographic diversity. Wind has a capacity credit (value to the utility in displacing a different type of generator) approximately equal to its capacity factor (ratio of average to peak power), not the zero value that Tanton implies.
Tanton fails to realize how rapidly total energy contribution percentages change with a worldwide wind-system growth rate that is doubling about every two years. U.S. wind deployment is small now only because we have not done what some other countries have.
His avian-kill comments need little rebuttal. The numbers killed are so small as to hardly appear in the national statistics and, per machine, they are getting better every year.
Lastly, I dismiss most of Tanton’s statements on transmission lines. Yes, they will not be used as fully as a base-load plant if we don’t make the right effort. However, in the future, we are sure to see a dispatchable source, and more fully loaded transmission lines, as wind is backed up by cost-effective pumped hydropower, compressed air, perhaps hydrogen or liquid fuels, and other forms of storage using wind-derived energy. But even with little change, extra transmission lines will mostly be in rural areas, where economic development easily trumps this small additional cost issue. This is why wind has overwhelming support among the small rural/farm business interests of this country.
Ronal W. Larson
Thomas Tanton Replies
PERC Reports readers should not take at face value all of the claims of wind industry enthusiasts. In response to Larson’s specific comments:
1. The Production Tax Credit (PTC) 30-year present value equivalent is about 1 cent. The PTC historically had an escalator clause and will likely increase in future years, so calculating a “30-year present value” is extremely uncertain. The 1.8 cent subsidy is close to 100 percent of the current price of fuel from coal-fired plants (2 cents); it is close to half the price of delivered energy (4 cents). Even if Mr. Larson is right, and the value of the subsidy over time is just a penny, and the value of the subsidy over time is just a penny, that is still a subsidy of 20 percent of the delivered wind energy cost. This is a higher subsidy than any traditional fuel source has. The legislative history of the PTC indicates that Congress is not trying to “balance” the subsidies of other energy sources but rather support an “infant industry.”
2. Today wind can be viewed as a fuel saver. I certainly agree. But if it is a fuel saver, wind costs must be compared against the cost of fuel, not the full value of electricity, which also includes the cost of the generating capacity. For coal and natural gas plants, the cost of fuel represents 35 to 45 percent of the total cost, or about 2 cents per kilowatt-hour. Further, many reputable sources (e.g., the Energy Information Administration) do not forecast ever-increasing prices for natural gas as Larson claims.
3. Wind has a capacity credit approximately equal to its capacity factor. This is simply not true for any existing or planned wind development. Capacity credit has to do with the ability of a generation source to be dispatched or relied on with certainty by system operators during the high load periods. Wind can only be relied on to the extent that statistically determined percentages provide assurance. The latter seldom exceeds 15 percent.
4. We are small now only because we have not done what some other countries have. The usual example cited is Denmark, which does have a substantial wind percentage but it also imports significant power from other Scandinavian countries that generate much less wind energy.
5. The numbers of birds killed are so small as to hardly appear in the national statistics—and they are getting better every year per machine. The number of kills may be small as a result of the small number of turbines. More turbines will lead to more kills. The Center for Biological Diversity has filed suit against wind farms in California for violating the Endangered Species Act.
6. We are sure to see cost-effective pumped hydropower, compressed air, perhaps hydrogen or liquid fuels, and other forms of storage. I agree that energy storage is an important development but at current efficiencies, storage increases the cost of wind power by 25 to 30 percent, not counting the direct cost of the storage installation.