Alternative Energy Watch: Redirecting Ethanol Subsidies; Heritage Foundation Proposes Cuts to Energy Department Funding; Wind Generation Subsidies Suspended in New Jersey

Today’s alt energy news leads off with some comments from Secretary of Agriculture Tom Vilsack, reports on some problems with wind generation in New Jersey, and comments on a new report from the Heritage Foundation.

Vilsack spoke against ending the $0.45/gallon ethanol blending credit, instead supporting a gradual scaling back of the credit and redirecting some of the savings to installing more blender pumps at US gas stations. Vilsack’s suggestions echo those proposed by an ethanol industry organization called Growth Energy, which supports ethanol as “America’s green growth energy solution to our foreign oil problem.”

Growth Energy’s plan is composed of two primary elements. First, building  an ethanol infrastructure, including federal support for installing 200,000 blender pumps and federal loan guarantees for ethanol pipeline construction. Second, the group wants all new cars sold in the US to be flex-fuel vehicles, capable of using any blend of ethanol up to 85% (E85).

A blender pump with tanks and installation costs about $100,000. That would cost $20 billion for 200,000 pumps. The ethanol subsidy currently costs US taxpayers $6 billion annually. Growth Energy estimates the cost of making vehicles flex-fuel-capable at about $120 per vehicle. The group proposes converting 120 million vehicles to flex-fuel. Total cost: $14.4 billion, all of which would be paid for by car buyers, not the federal government.

Whether or not Vilsack’s and Growth Energy’s plan is eventually adopted, it does contain a reasonably good idea. Encouraging more blender pumps is good, but the locations should be limited to those Midwestern states where corn is grown and ethanol is produced. Moving ethanol around the US by truck or rail reduces ethanol’s carbon emissions gains, and pipelines to carry ethanol would likely double the $20 billion price tag for adding blender pumps.

Adding more government spending is not something that the Heritage Foundation favors. The conservative think tank has published a report calling for a $6 billion reduction in the proposed 2012 federal budget for the Department of Energy. The reduction represents about 20% of the DoE’s proposed spending.

The largest proposed saving is $4.03 billion in the DoE’s applied research programs. The report notes that the Office of Energy Efficiency and Renewable Energy should be eliminated entirely saying that the office is promoting commercialization of energy efficiency technologies, not their development, and that private firms could do both the development and the commercialization better.

The Heritage report assumes throughout that private enterprise always and everywhere is better at everything than any government. The report also asserts that “[e]nergy production is a viable commercial enterprise, so the U.S. does not need a government agency dedicated to advancing this activity.” Both propositions are certainly arguable, and plenty of argument is sure to follow soon.

Finally, the Daily Record of Parsippany, New Jersey, reports that New Hersey is reezing new applications for its wind power incentive program following one incident where turbine blades fell off a 10-megawatt turbine and a second incident where cracks were found in turbine blades.

One of the installations, at a Christmas tree farm, was returning just 25% of the electricity production the owner was led to believe he’d get from the wind turbine. The owner expected to apply for more than $79,000 in clean energy rebates for the installation, but now wants the bladeless tower removed and a refund from the companies that made and installed the tower.

We noted earlier this month a report from the UK that calls into question many of the claims made for wind generation. Having the blades come off was not mentioned.

Paul Ausick