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Economy, Markets, Energy Supplies and Geopolitics Feels Like its 1979

Politics / US Politics Jul 08, 2011 - 04:45 AM GMT

By: Andrew_McKillop


Diamond Rated - Best Financial Markets Analysis ArticleIt feels like 1979 all over again: the US, European and Japanese economies are in the doldrums, gold and oil prices are high and rising, friendly Middle East and Arab dictators are falling. In the White House things are also in flashback: the charismatic new Democrat preaching clean energy and climate catastrophe mantras is as unsuccessful as Jimmy Carter at winning the public around.    Can Obama succeed where Carter did not?

The Green Economy: Where Next ?

Back around 1978, when Jimmy Carter's star began to seriously wane, he searched for new ways to engage the American voting public, save oil, please the business community and generate new jobs - and he hit on renewable energy. Hard to believe perhaps, but oil prices in 1978 at around $40 a barrel in today's dollars were thought of with the same horror that Al Gore told us to think about CO2. The result was bad for Carter: his failed attempt at creating a 1970s-style green economy was as unsuccessful at pleasing the crowd as Obama's attempt to ride along with Wall Street into a renewable energy asset chip playing, leveraged trading feast of speculation where haste rhymes with waste and boom-and-bust is the deal of the day.

At the time when Carter suddenly became ecology-conscient and started preaching renewable energy, all kinds of environmental doom was already on offer. Even runaway climate change had a spot in the limelight but too much CO2, at the time, was only associated with unrestricted coal burning. Another very big difference was that advocates of a causal link between coal energy and climate change, in the late 1970s, were offering a prospect of sudden climate cooling and acid rains to wilt crop output and diminish the USA's then undisputed role as the world's  # 1 food exporter.

Global warming was to come, and go, a lot later on - as Barack Obama found out to his cost.

When Obama took office, the green economy was already a plaything for a spiralling number of interest groups to discuss, debate, dispute - and leverage deal. It was supposedly the opposite of the brown, fossil fuelled, polluting, resource depleting and economic growth-chasing economy for a world whose population had doubled, adding 3.5 billion new consumers, more than 11 times the USA's population of today, in the 40 years since 1968. With the fast emergence of the Asian giant economies China and India, built on exactly the same brown economy model and outproducing all comers in the globalized economy, all kinds of limits to growth were getting a lot nearer and more menacing than in Carter's times.

The crisis talk of the post-2000 world was often apocalyptic, but doing anything about it was at least as difficult as a third of a century previous.

For reasons that analysts and historians will discuss and differ about later on, climate change became the winning fear theme for media handwringing by political and corporate leaders. Themes like species extinction, deforestation, overpopulation, food shortage - and oil shortage - were downplayed or even denied, probably on the basis of it being too late or too expensive to change them. To be sure, however, oil shortage was identified as needing the single solution of green energy. Nuclear power was firmly on the solution side - until the Fukushima disaster.

Green energy would grow, but it shattered. Its hoped-for productive growth was claimed to give independence from Middle Eastern, Russian and other unfriendly or unreliable political regimes racking up the price of their oil. The quest was urgent - exactly like it was in Carter's times 33 years before but this time there was a new high ground driver. This was: CO2. Like coal which supplies about a half of the USA's electricity and three-quarters of China's power, and natural gas which also supplies a large chunk of world electricity, the fossil fuels oil-coal-gas also produce a lot of CO2, even if it was likely more important to political and corporate deciders that oil and coal, as well as pipeline gas and LNG in Europe and Asia are getting more expensive, fast.

The equation that CO2, global warming and climate change are a tight-knit evil bundle was already, if fuzzily a background theme in Carter's times, but by 2008 had massively ballooned and perhaps unknown to Obama was peaking as a corporate-profitable and government-friendly fear theme to browbeat, that is motivate, the public. Already, the renewable energy industry and its financing were as far apart as the three sides of that equation. By 2007 or earlier, the industry had become just another plaything for the hedge fund fraternity and Wall Street fraudsters. For Obama, stepping into office amidst a massive economic crisis things were different: the immediate official imperative was to find a way of rescuing the renewable energy industry from Wall Street’s collapse.

This was easy for Obama to defend. Not only he had to mitigate the recession with printed dollars for Wall Street and unemployment for Americans, but also had to get clean tech "up to scale", because this was the only way to meet the higher goal of reducing carbon emissions. In 2008 and 2009 at least, these were officially identified climate killers wreaking cataclysmic climate change and possibly destroying the entire planet by around 2050 or 2075. Obama's push for extreme fast global cuts of CO2 emissions along with his major European war allies in Afghanistan, at the December 2009 Copenhagen climate summit,  was surely a defining moment. The summit was a total failure. By December 2010 the USA's one and only trading center for CO2 emissions credits - issued on a voluntary basis - had closed down. The right to emit a ton of this dangerous gas, which as of July 2011 still fetches 15 euro (over $20) in Europe thanks to mandatory trading, had  plummeted to 10 cents on the Chicago emissions market when its owners pulled the plug.

Sad to say, all kinds of other things were also killing the golden goose. The junk-science behind the global emergency equation that CO2 equals climate change was put to heavy stress from a range of inconvenient scientific truths, and further troubled by global warming decreasing in a spectacular way in the early 2000's, from a decennial peak well before Obama stepped into office. Global warming was becoming a rearview issue, as other more dangerous and immediately real crises went on growing, like the unending sovereign debt crisis that spilled out and engulfed the USA, Europe and Japan after Wall Street's collapse in 2008. More pertinent for Obama, his supposedly Keynesian-type recession-curing miracle of doubling the USA's sovereign debt in an orgy of throwing public money at private Wall Street players was as non-performing as the Copenhagen climate summit had been. The strange wars he inherited and decided to keep going in Afghanistan and Iraq, and added to with his own lackluster new oil war, in Libya, were also abject failures.


Obama however stayed hopeful, at least officially, on his administration's special version of the green economy equation: renewable energy of the corporate type, played out on Wall Street's gambling tables. His stimulus package was the first of three major initiatives intended to steer the economy toward something like the soft energy paths bandied around from Carter's times by alternate energy advocates. To fill the tax-equity gap, his stimulus provided $32.7 billion in direct grants and another $134 billion in loan guarantees to attract new investors to large alternate energy projects.  Most striking of all, the soft energy package instructed the Department of Energy to invest directly in promising cleantech companies, opening the way for a torrent of insider deals. By a stroke of his pen, President Obama made a federal agency the world’s largest venture capitalist in small scale energy. When the official in charge of the program appeared at a Santa Barbara energy conference in March 2011, he was mobbed by eager CEOs seeking the manna of Federal dollars.

The alternatives of “benign” sources of renewable power like wind, solar energy and the ill-fated maize ethanol biofuel program inexorably pushing up food prices and inherited like Obama's wars from the Bush era, along with a heightened commitment to meeting energy targets through conservation and efficiency, were used by Obama to channel a flood of dollar to well-placed and rightly named players in the alternate energy "investment space". The results was however in many ways a remake of Carter's unsure initiatives. As in the late 1970s, a heterodox cocktail of clean technologies, or supposedly clean technologies featuring real alternatives and cutting edge gimmicks like electric cars at $ 45 000 each was imagined able to bring a swarm of salutary effects. Obama made sure we all heard what they were: a healthier environment, an end to dependence on Middle East oil, a diminished need to carry out and probably lose expensive future wars for energy, and the foundation of a vibrant new economy with sustainable, cheap-to-create new jobs for all.

 In 1978, the USA appeared poised on the brink of a new age, events of the time having organized themselves in a way that made a clean-energy future seem tantalizingly close at hand. That was 33 years ago. As in 2008, a charismatic Democrat had come from nowhere to win the White House. Times seemed to be a-changing, and for Obama it was Happy Change, but history had a way of repeating itself: exactly like Carter, Obama had reacted to oil shock and wanted out of Middle East entanglements. Like Carter he was obliged to tout the merits of renewable energy.

As in the late 1970s, progress on soft energy was desperately slow, but the economy and not just the Middle East but the entire Arab world slid out of control at fantastic speed. As for Carter, Obama found that bad things had peaked a lot sooner than anybody anticipated. When Jimmy Carter installed solar panels on the roof of the White House he said: “A generation from now these solar heaters can either be a curiosity, a museum piece, an example of a road not taken—or a small part of one of the greatest and most exciting adventures ever undertaken by the American people". He was massively defeated in the following election. The next incumbent at the White House, Ronald Reagan, lost no time in having the solar collectors ripped out as he laid the bases for his two-term Vice President, George Bush to organize the ultimate liberation war in an oil-exporter country, the Kuwait liberation war, AKA Gulf War 1, in 1991.


In one of the great acts of humiliating political symbolism, Ronald Reagan tore down the solar panels which then spent years in purgatory before finding their way to the Jimmy Carter Library and Museum in Atlanta, where they sit on display in silent reproach to all who drive Hummers, own high-wattage plasma TV sets and twiddle their Tweeter account with a full-system electrical support need of around 1 kilowatt per person. Having followed the hard energy path since 1977, joined by coal burning China and India the world has started to register not the dire climatic effects of this choice - but the simple and straight economic effects. Even coal costs a lot, today. Oil is expensive again, over twice the Jimmy Carter-era price in real terms. Uranium for capital intensive and very dangerous nuclear power is hard to find and expensive - and only shale and fracture gas offers hope for cheap fossil energy supply.

To be sure, atmospheric carbon has shot from around 200 parts per million in pre-industrial times, with a world population around 500 million, to 386 ppm in 2011 with a population of 7000 million but to some at least this might not be surprising. More important for real energy transition, world average oil consumption in 2011 stands at around 4.65 barrels a year but in the USA, even in recession, it is around 23 barrels. The message from China and India at the Copenhagen summit likely still rings in Obama's ears: if CO2 is a problem cut your emissions, first, because you use 5 times more energy than the world average. As in Carter's times, the homely truth is that practicing what you preach is a real need if the message is destined to go anywhere but the trashcan.

 Most scientists agree that beyond some critical CO2 threshold, which may be far away and might be heavily backtracked by sudden global cooling, global warming is possibly irreversible and could be catastrophic - in other words a lot less than sure. Conversely, the catastrophic impacts of printing money and running up staggeringly unpayable debts can happen very fast, with a much shorter best-before date for this dangerous scam. While climate limits are fuzzy and no honest person knows just where the threshold lies, the sovereign national debt crisis of the US, European Union countries and Japan has much clearer limits and thresholds for running out of all control - a new and real crisis that was only hinted at in Carter's times, and responded to by Ronald Reagan, Mrs Thatcher and then by all other OECD richworld leaders with unparalleled brutality.

Obama in 2011 still has a fading aura of a new and different Democrat president rolling clean and secure energy with economic revival into a shrinkingly credible single package, but like Carter is challenged by reality to perform. Speeches from Obama have many times and explicitly linked these themes, for example a 2010 offering to Congress where he said: “To truly transform our economy, protect our security, and save our planet from the ravages of climate change we need to ultimately make clean, renewable energy the profitable kind of energy.” Unlike Carter however, Obama's pure faith in Wall Street making green energy profitable was used to pump huge amounts of borrowed and printed cash into still-groggy Wall Street gambling dens - with unsurprising results to any sane person. Since coming to power, Obama has dumped around $175 billion as grants and loans for fuzzily defined clean-energy and related projects simply on the Department of Energy, dwarfing its previous $27 billion annual budget to the extent its inspector general has frantically warned that his department could collapse under the strain. Yet one key sign of vague stirrings of recovery in the US economy since 2009 has been sure and certain growth of oil, coal, gas and electricity consumption !


Talk of refitting the White House with Jimmy Carter's solar panels has in many ways symbolized the green energy crusade of Obama, along with several billion dollars of spending on producing hi-tech gadgets like the US Air Force's F-18 Green Hornet, flying rarely and briefly on a 50/50 mix of fossil kerosene and biofuels. The green economy might exist on paper, but it is slow to emerge and far away from everyday living - and very expensive. The linkage and relation with the supposedly critical, but now troubled and disputed global warming crisis has become vague, as fossil fuelled prosperity staggers along under fantastic new debts in very large part due to Obama's outright support for the Wall Street version of profitably transforming the economy into an ocean of debt.

The UN's Intergovernmental Panel on Climate Change sets a CO2 concentration of 450 ppm as the ultimate red line benchmark, a level we could reach by around 2045 if the untransformed brown economy keeps bulldozing forward, but while preaching growth of a new sort and profits of the old type, climate change advocates feel obliged to tell us the prognosis is grimmer than that. Obama himself has cited studies and reports where UN IPCC experts claim that halting CO2 concentration at 450 ppm means we must immediately and ferociously cut back. The so-called Global Climate Initiative of 2009, headed by the same Mikhail Gorbatchev who lied so unconvincingly about the Chernobyl nuclear disaster of 1986, advocated an 80 percent cut in world CO2 emissions by 2020.

This imperative, completely rejected by almost all world leaders outside the G8 group, coupled with the unlikelihood of current and recent action being able to create the green economy, now makes energy policy a confused battle zone of wild theory.  One example is reaction to the Fukushima nuclear disaster of 2011, ranked equal in severity to the Chernobyl disaster and likely to cost as much - probably more than $ 150 billion in the next 10 years, and another $ 100 billion in the following 15 years. Despite nuclear power supposedly not producing CO2 but supplying a real 25 percent of Germany's electricity, and about 39 percent of Switzerland's power, both countries have officially set a 10-year deadline for completely abandoning the nuclear option. Renewable energy and conservation, by simple necessity, will have to massively grow in both countries, and this will also differ from Obama's failing methods for growing the green economy by featuring government planning and coordination - not just the shifty genius of financial markets and brokerage houses.

What is important about this policy shift is that it was completely unplanned and spontaneous: at least until March 11th 2011, when the Fukushima disaster started and was tracked by the world's media from the first hours, nuclear power was fiercely defended, by some, as a major plank for moving the economy away from fossil fuels - handily forgetting that uranium is a rare and depleting fossil fuel. At least on a rhetorical level, the public disaster at Fukushima, unlike the carefully and quickly forgotten Chernobyl disaster - initially helped by Gorbatchev's lying - has shifted public opinion in many countries to wanting a non-nuclear future. High oil prices, however, are still treated as thing we dont talk about too much in public, through fear this might encourage producers to raise the price even higher and above all because we are totally dependent on oil and dont know what to do about it.


Shortly after Obama's inauguration, graduated swarmed towards the US Energy department, and not just on the hope of Federal dollars trickling down to them. They would say in interview that they yearned to wind up at the Department of Energy because “It’s like NASA in the ’60s”. In Carter's day, scientists at NASA were touting ultra-expensive, orbiting satellite solar power stations, beaming energy back to Earth by probably lethal high-power microwave links, but in 1969 had achieved real success: the Moon landing. Obama’s choice of Steven Chu, the Nobel laureate physicist, as energy secretary heightened the allure but Chu was obliged to accept the real world: the USA, more than almost any other country, is totally dependent on oil, coal and natural gas - and its 103 nuclear reactors depend on imported fossil uranium for most of their fuel.

In the early Obama era, romantic notions of marking history by transforming America’s economy, and then by extension the world economy, were a common theme of his speeches but this became dramatic by 2011, in a way that treads the knife-edge of global financial, monetary and economic catastrophe. Not curiously for Obama, because it is so menacing, this is a real flashback to Carter's era: back at the old crossroads, to be sure, but now with even less time and much more urgency.

Talk of climate crisis has now retreated to where it started to have a real hold on the Old World's political and corporate elites, at the abstract level of Bilderberg, Davos Forum or WorldShift Network panel discussions churning out global diagnoses and moral imperatives with a heavy price tag for new tax burdens the political elite must sell to their voters. The gritty practicalities of real world energy, often apologetically admitted by Steven Chu, make high-flown rhetoric on a grand scale touting new and unprecedented feats of business-plus-government even harder to play the crowd with when the results are so spotty, disparate, unconvincing and usually unsustainable. Collective amnesia on what happened in the 33 years since the time when Jimmy Carter failed to rouse the crowd and failed to get re-elected, still draws surprisingly little analysis.

On one level, this is understandable. Conservation and energy efficiency talk, along with semi-confidential and often amateurish renewable energy inventions and ideas in the 1970s context summons up images of monkish self-denial symbolized by Carter's warm wooly sweaters and downsized small cars from Europe or Japan. Today's attempts to sell austerity as using a bicycle to get to work, protecting the environment by terbium-based low-Watt lightbulbs, and creating low-cost jobs scavenging wastes in the streets suffers the same dont-want-to-know rejection from the public inundated by relentless advertising inciting them to consume, day and night. Carter’s efforts to encourage clean energy were a failure, not only because his administration tried to sell a new thing before it worked. Using the NASA -in-the-’60s analogy, this programme not only succeeded because of mega-cash, but also because it was planned and organized, from start to finish.

Unfortunately for Obama, the likelihood of governing politicians doing it - governing the quest to transform the economy, and ramp up renewable energy to replace fossil fuels - is lower even than in Carter's era. Foreign wars, to be sure, are still a government prerogative and since 2001 the USA's military adventures in the Middle East have cost an estimated $ 2100 to $ 2800 billion, but completely replacing the energy production and supply system is imagined to be possible by throwing mega-bucks at Wall Street and hoping the trickle down does things.  The dominant and preferred corporate image of the green future already exists - in Silicon Valley. Supposedly recession-roof, but not in fact, Silicon Valley buzzes with giddy, or at least greedy anticipation of a NASA-type flood of  “cleantech dollars” coming its way, perhaps enabling it to cover the loss of nearly all its industrial and technological edge on Asian and European rivals.


The organizing principle behind clean technology is that growing scarcity and rising costs of fossil fuels, coupled with climate change or environmental concerns, will drive society toward alternative sources of energy. Couched in Wall Street parlance, the lure is of enormous wealth accruing to whoever is there at the right time with the right invention, idea, process - or snakeoil.

For renewable energy the needed financial largesse runs right against US energy policy for the past century, which aimed to promote cheap and abundant energy, starting with coal, which still supplies around 50 percent of US electricity, is basic to producing steel, and also supplies large quantities of industrial heat. In the past, more demand led to more power plants built with little heed to pollution or energy efficiency, but this had changed even by the Carter era, as energy started getting expensive. Confusing waste with thermodynamic unavailability of energy, coal power is often derided as burning three lumps of coal to produce one lump’s worth of electricity, with two of the lumps going up the chimney. In the exact same way, any regular late model family sedan car pours 4 gallons into its fuel tank but only gets 1 to 1.5 gallons of road travel from it, and any jetliner leaves a huge swath of unburnt kerosene behind it, floating in the sky. Alternatives supposedly exist, and for Silicon Valley this supposed solution is symbolized by the ultra-expensive two-door Tesla Roadster electric sports car, loaded with a battery pack of 6800 portable computer type lithium-based cells weighing around 450 kilograms.  The technology is at best primitive, compared to alternatives like compressed natural gas-driven engines in hybrid cars.

More deadly for achieving real solution, the Silicon Valley model has only two facets. While one half of Silicon Valley is busy developing high-priced gimmicks, the other half is working out how to generate more new gimmicks based on the first. Like any IT gimmick we can call them "applications", such as highway recharging centers decorated with solar collectors on their roof, but using good old coal power to recharge the high priced batteries of the overpriced electric cars a few fortunate players run around in, and stop by, often, to recharge them needing at least two full-size battery packs for each car which operates.

The advertising industry has run amok with the popular imagination on what green economy should mean to the average consumer and voter: it now means towering wind turbines, sleek electric cars, and acres of mirror-like solar panels shimmering in the desert. Carefully tucked away from the urgent message to go out and buy, these new industrial products need a huge and constant fossil energy subsidy and support system, starting with their production and extending right down to their utilisation, repair, maintenance and disposal. Known to some as the "Smart Grid quandary", actually building this hypothetical and hoped-for thing will cost vast amounts of cash, which presently isnt available, and will take so many decades of time to build it may be obsolete before it is completed, an event horizon that makes alternative strategies not just interesting, but vital.

Like Steven Chu ruefully admits, he quickly got to learn the true and awesome size and nature of current dependence on fossil fuels. Scientific method means you take account of facts, whatever nice theories, or notions you might play with. To be sure this is not the case in the political arena, and even less so on Wall Street where hype is second nature.

Thus it may be nice to know that on the energy supply side, wind and solar-thermal electricity production are sufficiently advanced that in the right climate both can be deployed at “utility scale,” meaning that if it’s breezy or the sun is strong enough and its daytime, for solar equipment, a windfarm or solar farm can produce as much power as a coal-fired plant, but rarely more cheaply. Wind and night are therefore new and totally different "hostile new parameters" for energy management. Overcoming these constraints makes Smart Grids and large scale necessarily very expensive power storage an obligatory need - sometime.

Where windfarms are the most advanced, in Europe, overcapacity is already a major problem: the solution in Europe could or might be importing electricity, from any energy source and any country, through interconnected power transport networks - which will have to be massively reinforced and extended, again at high cost and over time and necessarily losing energy through transmission losses. While some states of the USA, especially California, Texas, and some northeastern states aim to rapidly scale up their windfarm capacity, and grow their solar thermal and photovoltaic power supply, they also face the looming need for Smart Grids and possible, but mightily expensive large scale power storage.


All this of course only concerns electricity, which in both the US and Europe is almost unrelated to and apart from national oil consumption, the oil link with electricity being broken already in Carter's era. To be sure, fond hopes are often advanced by green energy defenders, saying they believe an all-electric car fleet could or might be possible, perhaps by mid-century, but the electric power capacity that would be needed is in the science-fiction domain. Taking only the USA's present total of about 200 million private cars, with a similar fleet in Europe, recharging these cars at around 5 kW each would need mind-boggling growths of electricity generating capacity. Doing it solely with green electricity, also needing power storage, would add a further dimension of unreality.

The usual cop-out response to legitimate and fact-based questioning of the green energy component of the Wall Street-friendly, Silicon Valley type new green economy, assuming that green energy and the green economy are different and that green energy is only a part of a larger green economy, is that technological ingenuity and Wall Street financial wizardry can solve all problems. Very little proof attaches to this notion, and coming from a politician, even Barack Obama it could be the warning that "If my mouth is moving, I might be lying", or more politely, I let the enthusiasm of my speechwriter run riot.

Cop-out tech unfortunately swirls high in the green-and-clean tech tank, like tsunami waters invading Japan's Fukushima nuclear plants. It has sometimes unexplained, sometimes rational blind spots. A great all-day and all-night source of renewable energy is geothermal heat - but it needs expensive drilling and fracking, needs time to develop and like Ocean Thermal Energy Conversion (OTECs) is a forgotten hopeful - except when things get really tough. Thus we sometimes hear that geothermal heat allied to algae growing could or might crack the liquid transport fuel problem with renewable sources, but these and other advanced biofuels "may take a few decades to come".

Supply-side snakeoil is of course natural to an economy that has suffered decades of supply side doctrinal brainwashing, from right after Jimmy Carter was thrown out of power. So we find that energy efficiency measures that would not make the cover of Popular Mechanics, but could make Time because of their dangerous ideology in fact hold the greatest potential for immediate large downward impact on national energy demand. For instance, municipal-owned car fleets in cities, operating on compressed natural gas and compatible with biogas, can be supplied to all adult ratepayers and taxpayers able to drive, using credit card-type access and billing of these hire car fleets limited to city-only driving. Sharpening the ideological content and really hitting current energy demand, and transport pollution, all private owned cars would be excluded from cities operating these mass car fleets.

Making sure ridership was higher than present would also be operated through billing: two ride cheaper than one-only person driving the city-owned, fuelled and repaired vehicles. In most advanced industrial countries with 80 percent or more of their populations living in cities, we find that cities take about 70 percent of national oil demand, and as much as 55 percent of all energy is consumed by buildings: around 12 percent for building and maintaining them, and over 40 percent for heating, cooling, lighting and supplying them water. The easiest, fastest, most effective way to reduce national energy demand is therefore to hit the private transport and building sectors: yet any city centre has serried ranks of building with their lights on all night and all weekends, while its highways are jammed with huge tailbacks of private cars, twice a day. The solution is simple: governance by our elected governors: take the right decision and do it.


Whatever it is, the green economy is not business as usual; trying to make green energy comply with Wall Street's version of BAU explains a lot of its little success to date and the big red warning signs flashing for its partial successes to date, like windfarms and solarfarms. Being told that so-called mundane improvements in automobile fuel efficiency in all OECD oil importing countries could save as much oil as Russia and Saudi Arabia presently export (about 19 million barrels a day) in fact assumes drastic rises in car fleet fuel efficiency - with a car fleet that at any one time has a life expectation of as long as 14 years.

Hoping for more realistic, and really mundane savings that are imperceptible to consumers is the usual cop-out in the efficiency-raising patch: the very small savings per car or per unit produced is swamped by the growth in the number of cars or units produced. An excellent example is the explosive growth of private car fleets in China and India. Expanding at double-digit growth rates close to 20 percent a year, the type of cars produced are getting larger and heavier, swamping any efficiency gains from technologically better engines, transmissions and tyres. Fitting individual homes and apartments with so-called smart meters has already been equated, by the public and by experience, with price gouging at peak periods of demand but explaining this away as a national imperative for averting global climate catastrophe, around 2050.

The sci-fi vision of a future all-electric “ecosystem” built on a smart grid fed by bountiful supplies of clean and economic power, equipped with massive power storage to handle all of the large variations in supply from variable renewable sources is in disturbing ways the same as early Atoms For Peace snakeoil selling of the all-nuclear future. It didnt happen and nuclear disasters can only make us thankful for that.

To be sure, most renewable energy sources and systems are non-lethal, even if many are almost as expensive as nuclear power, but the major problem faced by the green energy future decorating the nicely-crafted speeches of Barasck Obama and his lookalike colleagues in other countries is the same problems of cost, credibility and time that nuclear power faced - and failed. Playing with fire, the snakeoil selling of an all-green energy future dangles the lure of almost scandalously low, as well as guilt-free energy bills for happy and carefree consumers who will never face blackouts and price spikes, like US power consumers did in the Dick Cheney-Enron era of outright Wall Street trader bets ruling electricity supplies across mos of the country. The rosy timewarp asks us to jump further back, to the days of Jimmy Carter, but this time he will win re-election and will be called a man far ahead of his time.

The problem 33 years ago was that doing environmentally sound things got equated with asceticism and sacrifice, inviting the one-liner that greenies are asking you to huddle in the dark, shivering in winter, boiling in summer and eat beans by candlelight to save the planet. Better using what we have, organizing, and taking democratic majority decisions is one real highway for constructive change. One example is national referendum calling on energy decisions affecting us all: Italy's recent nuclear referendum is an example many elites view with horror - in their certitude that human beings, except them, are crassly stupid.


Wall Street betting is that as green energy tech advances, a vast new command-and-control network for energy will somehow emerge - obviously paid for by the state, and therefore totally hypothetical to Wall Street players and their corporate friends. This cop-out is intensified by rabid defense of the one-only No Alternative of private capital running the game of lowering the cost of renewables and spreading energy saving lifestyles and operating methods inside society and economy. Since this kind of change only ever happened previously in wartime, we evidently have to wait for a war.

Boundless optimism of the Silicon Valley type recalls the early days of the OS and Internet booms.  Official Valley legend has it that one of the richest guys you never met was suddenly imitated by 50 000 others just like him, innovating all at once, almost instantly shifting from the hard tech that the smart guy was playing with, to soft tech applications for the upstream hard tech that one guy also did not invent. The profits flowing from applications then got partly reinvested in servers able to compensate the tiny memory and computing power of enabled cellphones. The difference with green energy is total, and with the green economy is absolute because the upstream hard tech for green energy, and upstream hard political decisions for enabling the green economy do not exist.

For the moment, rightly-named players in global green energy can brag about its US version being favoured by venture funding, along with IT and biotechnology and subject to the whims - and crashes - of Wall Street's fortunes. Prestige energy tech therefore flourishes in the well-guarded multi-million-dollar residences of anybody who made it in Silicon Valley. The New Green Valley has swapped old style status symbols like giant yachts and Gulfstream jets for anybody below CEO status, to sprawling mansions so ruthlessly energy-efficient they generate their own power and produce a small saleable surplus to smugly feed back into the grid. Meanwhile 24 million Americans are unemployed and its 200-million-strong car fleet consumes 9.2 million barrels a day of gasoline, about the same total volume of oil as China consumes. The USA's sovereign debt has grown by $ 3600 bilion from December 2008.

The mantra that thanks to Obama, innovation and entrepreneurship can really change things only underlines the doctrinal cul-de-sac in which US green energy has got itself lost, as China and India make state decision making and coordination a basic plank of their own green energy futures, already leaving the US trailing in hardware development and the scale of applications. In Europe, due to the Fukushima disaster and outright citizen opposition to nuclear power, countries like Germany, Italy and Switzerland are obliged to use state planning and coordination of their energy transition because the timescale has been telescoped down. Private capitalist players will have their scoop from state coffers, but in no way will take all.

To be sure, lucky players always share the excitement of scooping easy cash, and state planning is a byword for inefficiency and corruption, but at least one thought tempers the enthusiasm of supply-sider gung-ho private capitalists. The Internet and social-networking booms of the late ’90s and early ’00s were sector-specific, self-contained affairs where duplication and redundancy covered any problems of getting to the right solution by wasteful trial and error, in time honored capitalist style. For the massive-sized energy system of all major countries reaching across the nation and into every home, and a zero sum game of sure and certain total loss when it fails, edging forward on the whims and spin of Wall Street's roulette wheels is a high risk strategy. Maybe we will get there - but probably we wont. Even in Silicon Valley therefore, the words "energy policy" are not instantly equated with Stalin, or Pol Pot despite his back-to-gardening interest in decentralizing the cities.

The real alternative to the fake war against global warming is the long-term bipartisan goal of energy transition. This has to be a democratic mission with impartial and well-advised deciders picking winners and losers, mobilizing the finance needed, and ensuring the industrial development of all new and promising energy and economic equipment and infrastructures for lasting change.

Given the 33-year history of the USA's fitful and incompetent attempts at musing about a green economy, which in Carter's day opened a royal path for Ronald Reagan to grab power for 8 long years and start the process of debt enslavement of the USA, the danger signals for the present path are on red alert. Like the skepticism on global warming that goes on growing, cleantech and greentech are losing their appeal at a critical moment as people point to sad symbols of a failed past, like Carter's White house solar collectors or the swaths of rusting, derelict wind turbines that stretch to the horizon in orderly columns near California's San Gorgonio Pass - another Carter gambit.

Change will come whatever the path that is taken, but today we are at the crossroads, with the casino table on one side, and democratic ordered change on the other. Is Obama listening ?

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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Ernie Messerschmidt
13 Jul 11, 10:13
the public sector as Atlas

"The private sector is Atlas. He holds up the public sector."

This statement makes me wonder where North has been for the last 4 years. Apparently somewhere with his head in the sand. The big story of the "financial crisis" was and continues to be the public sector holding up a failed private (criminal) banking system. The public sector is being the Atlas. The private sector is not providing jobs -- 20% real unemployment -- mainly because the financial sector has captured the government and doesn't give a hoot about the real economy, ordinary people, or the country. We live in a mixed economy. 20-50% of all economies is public sector. The public sector represents the people providing the infrastructure and social support that is necessary for a viable society. Besides that, the analysis into the dichotomy of private/public overlooks the fact that value comes from work. A better analysis looks at workers, capitalists, and government. Who really produces everything and pays for everything? Workers. They are (or should be) represented by government against the interests of the ownership class, the hyper-wealthy, who now have the nation by the throat and are running it into the ground. Yes, Atlas needs to shrug. The people need to shrug, through democracy and their government, retake control from parasitic big finance, and rebuild a decent, viable society.

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