President Obama’s speech last week that re-emphasized his commitment to reduce US carbon dioxide emissions brought dismay to those who appreciate affordable energy, but it sparked a celebration among corporate types who have long sought caps and taxes on CO2.
While it was still more words from the president, which don’t always match his actions, on CO2 limitation he has largely kept his promise to environmentalists. Critics slammed his plan to bypass Congress and to task the Environmental Protection Agency to curb emissions via executive order, but EPA has operated out of bounds since he was inaugurated in 2009 – especially with the “war against coal” that is now universally accepted as true.
“What has us most encouraged by the president’s speech is he is lacing up his gloves and getting ready for that fight,” said Michael Brune, executive director for the Sierra Club, in an interview with the Washington Post last week.
Obama has already bloodied coal companies, so the fight is in the advanced rounds. Meanwhile some corporations and industries – ones that benefit from gaming the environmental/energy regulatory system in their favor – slipped on their dancing shoes on Tuesday. Among them were the Obama crony capitalists that have received much coverage by NLPC: Walmart, Duke Energy and Exelon Corporation.
“We applaud the President and his administration for their commitment to renewable energy and conservation,” said Mike Duke, president and CEO of Walmart. “Walmart now has over 300 renewable energy projects in operation or under development around the world, and the Environmental Protection Agency has named us the number one user of onsite renewable energy. As we continue on our journey we will continue to leverage our scale in purchasing energy so we can drive down technology costs and make renewable power more affordable for everyone.”
In truth Walmart benefits from the subsidies, tax breaks and renewable energy mandates (in the states) that government has rigged for solar companies. What the Bentonville, Ark. retailer has done is find another way to create revenue.
“The rooftop spaces on Wal-Mart’s stores and distribution centers are unproductive assets without solar power,” wrote Travis Hoium, financial analyst for The Motley Fool. “Solar is a way use this space productively and generate power on-site.”
Except, of course, Walmart could never be dependent on such a sporadic power generator for its direct electricity needs. Nor would it be economically sensible without government meddling in the marketplace. Hence you have states that require by law that utilities buy power from renewable sources, and tax breaks and subsidies that make the cost of placing solar panels on roofs worthwhile. It all is justified, of course, by federal- and state-level politicos who cite looming catastrophic global warming as the reason for carbon limits.
There is government manipulation of the system elsewhere in the chain. Walmart recently reached an agreement with SolarCity, a service provider and leaser (not a manufacturer of panels) of equipment, to add projects to 60 California stores.
“SolarCity offers zero-down installations and there’s a positive return on investment for projects that Wal-Mart pays for itself,” Hoium wrote. “As the costs of solar modules and installations fall it will become more and more economical and make use of otherwise unused real estate.”
SolarCity has its own reasons to praise Obama for his continued pursuit of carbon dioxide restrictions. The company benefited greatly from the 2009 stimulus under its “Payments-in-Lieu-of-Tax Credits” provisions, where solar installers received cash payments rather than claiming breaks on their tax returns after the fact.
“Whether SolarCity survives depends on how long the subsidies last,” said Daniel Simmons, director of state policy at the Institute for Energy Research, “because solar power is one of the most expensive sources of electricity.”
Walmart and the family that controls it – the descendants of founder Sam Walton – had other reasons to praise Obama last week as well. A manufacturer of panels that they hold a majority interest in, First Solar, saw its stock price soar after the president’s climate change speech. The company has already enjoyed billions of dollars in taxpayer-backed loans to build huge utility-scale solar projects in the West. Other reports say the president on Tuesday directed the Department of Interior to issue permits for 10 gigawatts of renewable energy on public lands. More subsidies, more mandates, and more tax breaks mean more happiness for the Waltons.
The retail leviathan wasn’t the only one that praised President Obama’s speech. Duke Energy, the nation’s largest public utility that has been solidly in the Democratic Party’s court (including sponsoring last year’s political convention in Charlotte), “applauded” the call for cleaner energy as well, according to the Greenville (S.C.) News.
CEO James Rogers, who will soon depart the company (but leave a firm imprint), has been leading Duke’s ambitious effort to buy up lots of renewable energy projects. A longtime cap-and-trade advocate who has kept Duke in the U.S. Climate Action Partnership, he has worked the subsidies and tax breaks system to his company’s advantage so they receive a solid return on their investments.
And another major utility, Exelon Corporation, may finally see the bet that it made on government carbon dioxide regulations pay off. The Chicago-based company is invested heavily in CO2-free nuclear power. Former CEO John Rowe told American Enterprise Institute in a March 2011 speech that he supported cap-and-tax because “the science of climate change is real” and because “it offered my company a way to improve its earnings and profit from its cleaner power.” Exelon is also a member of the Climate Action Partnership.
Exelon threw considerable money into its lobbying efforts, and Rowe flew to Washington regularly to push for climate regulations. Rowe’s anti-greenhouse gas ambitions so impressed President Obama that the administration enlisted him to lobby Congress on the issue. The Natural Resources Defense Council called him “the single most important figure in the utility industry” on climate change, and he removed Exelon’s membership from the U.S. Chamber of Commerce because of its “stridency against carbon (dioxide) legislation.”
According to Bloomberg News Exelon lost $30.5 billion of market value since 2008 as its stock declined 64 percent, when Congress failed to pass legislation to regulate carbon dioxide. But with Obama’s new unilateral commitment, the utility appears poised for a comeback.
“The worse things are for coal, the better they are for nuclear,” said Kit Konolige, a New York-based analyst for BGC Partners LP, to Bloomberg. “These guys are the nuclear play.”
“Play” is the operative word: You play ball with Obama in the crony capitalist regulatory game, and you will be rewarded.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.