Tuesday, June 9, 2009

Bet on Google for Solar Power?

A Reuters story today says "Google Inc is closing in on its goal of producing renewable energy at a price cheaper than coal..."

That is GREAT news! I'd bet that Google and other profit-making enterprises, spending moderate amounts of their own money, are much more likely to hit "pay dirt" that all the government investment in the world.

"Google's Green Energy Czar Bill Weihl said the odds of success had gone up in the last year or so from a long shot to a real possibility of demonstrating working technology in a few years. 'It is even odds, more or less, I would say,' he said in an interview with Reuters. 'In, you know, three years, we could have multiple megawatts of plants out there.'"

Google plans to use "solar thermal" technology that generates steam to drive electrical generators, rather than photo cells that turn sunlight directly into electrical power.

Wikipedia has a fine item about solar thermal and they include a number of photos. The first photo above shows a parabolic trough of mirrors. They reflect sunlight to a fluid pipe that is most likely inside an evacuated tube to reduce convective heat loss. The second photo above shows an array of flat mirrors that reflect sunlight to a central collector. In both cases, the collected heat is turned into steam to drive electrical generators.


As readers of this blog know, I am a "realist" on global warming. I acknowledge that we have had significant actual warming of about 0.5ºC over the past 150 years and I am concerned about the rapid increase in atmospheric CO2. While I do not believe human activities are responsible for more than about 0.1ºC of this warming, and I do not think we can do much about that 0.1ºC on a practical level, I do believe we should take conservative actions to reduce the continuing rapid rise of CO2. Solar energy (along with nuclear, wind, and biomass) is one carbon-free avenue we should explore.

I commend Google for their work in this area!
Ira Glickstein


Howard Pattee said...

You say, “I'd bet that Google and other profit-making enterprises, spending moderate amounts of their own money [on solar energy], are much more likely to hit "pay dirt" that all the government investment in the world.”

This is typical conservative ideological nonsense.

Google will make a profit because at present government subsidies support solar energy at a rate 100 times higher than petroleum. Government also has invested billions in grants to individuals and private companies to develop profit-making renewable energy sources. These government investments are why private companies are developing new technologies.

I really get tired of your constant ideological bitching about government. Do you think government should not give grants for research?

Ira Glickstein said...

Thanks Howard for your comment and the link to our US Dept of Energy website.

Your link details the FY 2007 "$16.6 billion in energy-specific subsidies" which "have more than doubled since FY 1999."

So, we spent over $8B in 1999 and more and more each year, up to $16B in 2007. And, what have we received in return? According to your link, "Between 1999 and 2007, the average real price ... increased more than 80%. Meanwhile, total energy consumption or demand, including imports, grew by about 5%. Most subsidies and support to energy producers should stimulate supply; so too should higher prices and rising energy demand. Yet in 2007, the United States supplied roughly ... the same amount as in 1999."

Real prices INCREASED 80% while demand increased by only 5%. Meanwhile, domestic production stayed the same. Is this a successful use of over $100B in a decade?

Energy prices declined rapidly in 2008 as a result of the economic crisis, not due to government energy-specific subsidies. Domestic supply has not increased.

As for the environment, much of the $16B went for coal, gas, and petroleum, reflecting the political constituencies. "Renewables" got $4.9B in 2007, but most of that, $3B, went to ethanol, pleasing the farm lobby.

Wind power has increased greatly, but at subsidies 10 to 100 times greater than conventional fuels. Still, wind gives us less than 1/100th of our electricity.

I suppose the above is more "conservative idological nonsence" but, at least, it is from the link you provided.

Some of your mistrust of corporations and the competitive marketplace is justified. However, much of it (IMHO) is overly-ideological.

The Carbon Tax I favor would increase the price of gasoline by $1/gallon and other fossil-fuels proportionately, and give the proceeds back to everyone with a social security number. Higher prices for fossil fuels would make solar and other carbon-neutral energy relatively less expensive. It would encourage more profit-making companies like Google to explore and market domestic alternative energy. Rather than politically-motivated subsidies for conventional fuels, and overly-hyped carbon-neutral sources like ethanol, greedy captialists would speculate with their own money.

When you spend your own money, you tend to make better choices. Google's solar thermal may or may not be the best alternative energy source. If they succeed in matching or beating the price of coal-fired electricity, we will all benefit (along with Google investors). If they fail, it will be their money that is lost.

Ira Glickstein

Howard Pattee said...

Here is a good example of conservative thinking. Ira says, “When you spend your own money, you tend to make better choices.” The whole point of government is that a “better choice for you” is not in general better for everyone else. Personal or corporate wealth is not the highest virtue. What is good for General Motors is not always good for the country.

The conservatives’ black or white ideological mindset makes it difficult to have a rational discussion with them about government-business relations. Historically, this has never been a black or white relation. Like most social problems it is an optimization problem ― and the optimum changes with conditions.

For example, in WWII the government controlled virtually everything ― wages, prices, what you produced, what you ate, which resulted in a productivity that has never been matched. It was our controlled productivity and military management that won the war. Without that edge it is doubtful we could have won. After the war our military and government control and support stabilized Japan and Europe. In the US, the government research funds built up our universities, which are now the best in the world, and paid for the education of millions of veterans. Our present economic strength is based on the technologies discovered with government support.

Reagan popularized the opposite ideology “Government is not the solution to our problem; government is the problem.” This simplistic adversarial view of government is easy to promote because nobody likes taxes. Reagan began the deregulation of financial institutions which lead first to the saving and loan crisis and then to our present deeper crisis.

The optimization problem is not simple, and as we should have learned, any ideological approach, liberal or conservative, only makes it worse. Nobel laureate Robert Lucas, one of the world's most famous conservative economists, has spent over a decade looking for the secret to economic growth, and has not found it. Nobel laureate Paul Krugman, one of the world's most famous liberal economists, admits that the mystery of growth is "deep and poorly understood." Simplistic models like Lauffer’s that claim to predict how tax rates affect growth are not considered serious economists; they are like talk show hosts and politicians with simple solutions to complex problems that are wrong.

Ira Glickstein said...

Thanks for your continued comments. Our dialog nicely illustrates L- vs C-mind ideology and reasoning.

I agree that "What is good for General Motors is not always good for the country." The billions in taxpayer bailout money has been good for GM in that it is still alive, but I do not think it is good for the country. And, I am not being partisan. I opposed President Ford when he and Congress bailed out Chrysler in 1979, in the form of government-guaranted loans. Lee Iacocca paid back every cent, with interest, but it set a bad precedent.

When the "full faith and credit" of the US Government is pledged, corporate execs feel free to take any risks. If their competitors take advantage of government guarantees, they almost have to take similar risks. Iacocca's risks at Chrysler happened to succeed. However, had Chrysler gone bankrupt in 1979, execs at other companies and banks would have thought twice about taking unjustified risks. Had Chrysler gone bankrupt, their profit-maiking divisions would have been snapped up by GM and Ford and others companies, and their losers would have suffered a deserved death. GM and Ford would have been better able to resist the Japanese car invasion. GM and Ford would have had to compete with the Japanese on both quality and price.

The current economic crisis was enabled by the government when they set up Freddie Mac and Fannie Mae. With the aid of Congress, to help the constituents of both parties in the short-term, Fannie and Freddie encouraged banks to give risky loans to people who could not pay them back. That helped the unions in the building and materials industries as well as the owners of those companies and housing developers. Bankers got rich giving loans and then selling them to Fannie and Freddie. Keep in mind, the current economic crisis blew up when Fannie and Freddie, supposedly separate from the government but perceived as quasi-government agencies, went bust.

You end with a jab at the Laffer Curve. It is indeed simplistic, as are all identities in mathematics.

If the tax rate is 0% the government will get ZERO tax revenue. Right? If the tax rate is 100% and the government proivides services equally to all whether they work or not, the tax revenues will also be ZERO because no one will work. Right?

Therefore, there is a tax rate, somewhere between 0% and 100% that wil yield the most revenues for the government. Can anybody doubt that?

The only point of contention is what the optimum rate is. Some of us think it is around 30%, and some evidence points in that direction. It may be 40 or even 50% depending on the level of government services and the level of progressivenes in tax rates, but it is in that range.

Ira Glickstein

Howard Pattee said...

I am not just jabbing at Laffer, I’m saying his curve has been intentionally misused as ideological propaganda by conservatives who want to reduce tax rates. The evidence says reducing taxes doesn’t produce more revenue.

Ira Glickstein said...

Howard, the idea that a tax cut could produce more revenue depends upon which side of the Laffer curve you are on, and how long a period you are considering.

For example, if the tax rate was 10% and you went to 30%, you would get higher revenues that year, and probably somewhat higher revenues in the following years (but not triple).

On the other hand, if the tax rate was at 60% and you went to 80% you would get higher revenues that year, but almost certainly somewhat decreased revenues over a period of time.

Conversely, if you went from 60% to 40%, you would see decreased revenues that year, but probably higher revenues over a longer period.

I read through most of your link and was surprised those quoted did not mention what base tax rates (in percentages) they were talking about. Nor did they indicate how long it would take for a tax increase or decrease to play out in revenues over the longer-term.

None of the material in your link made these simple points. It seems to be out-of-context quotes compiled by an opponent of tax cuts.

Do any responsible "supply-side" economists say that a tax cut will always produce increased revenues? Or that the effects will be immediate?

I think you are being ideological when you state flatly "reducing taxes doesn’t produce more revenue" Never? Really?

Ira Glickstein

Howard Pattee said...


I have given you opinions from the most knowledgeable conservative economists collected by a conservative organization (Townhall).

These include economists from the Congressional Budget Office, the Treasury Department, the Chairman of George W. Bush’s Council of Economic Advisors, Chief Economist on Staff of Bush's Council of Economic Advisers, Treasury Secretary for Pres. George W. Bush, and many influential experts like Paulson, Bernanke and Greenspan, and dozens of expert economists, none of them liberal. They all agree that in general and in the current situation reducing taxes should not increase revenues.

This uniform consensus of the experts (and my restatement) that“reducing taxes doesn’t produce more revenue" does not imply that tax reduction will never increases revenue. “Never” is not in the economists’ vocabulary!

Your objection that the quotes did not include their analysis is irrelevant. The context of the quotes is usually given, and it is reasonable to expect that in giving their testimonies these experts have done their homework.

I do not claim to be an expert in economics. That is why I use the testimony of experts. I do not consider you an expert in economics, and since your response shows no respect for these experts, I see no point in wasting more time on this topic.

joel said...

Howard said:

I do not claim to be an expert in economics. That is why I use the testimony of experts. I do not consider you an expert in economics, and since your response shows no respect for these experts, I see no point in wasting more time on this topic.

Joel comments:

How sad. This is an example of why C-minds and L-minds can't seem to communicate for long. It seems to me that L-minds tend to be authoritarian, in the sense that they rely on the authority of well known people rather than their own logic. While Ira argues mathematics and logic, Howard argues that this or that person of superior credentials has a corner on the truth market. And, demonstrating another L-mind characteristic, gets angry and walks off in a huff.

Whatever small success I've had in life has been due to proving mathematically that certain authorities were wrong. The reason I was the person to do this is that I followed my skepticism rather than all the crowd that accepted the word of authority. How much more this can be true in a very shaky field like economics where Nobel Prizes are given to people with opposite views. It's too bad that we tend to forget that in the real world predictions by the economic experts are often wrong. With respect -Joel

Ira Glickstein said...

Howard is correct when he says the Town Hall website tends to be conservative, however, there are now 3234 blogs on the topic of "Tax Relief" and a total of over 13,000 blogs hosted by Town Hall on that website. Howard's link was just to one of them.

Although they tend to the right, they are fair and balanced and almost anyone can start his or her own blog and post whatever they want, within reason.

Also, I do agree that experts should be given more consideration than duffers like me (and Howard) who admit to no specific credentials on the topic of the economy. On the other hand, Joel is correct that sometimes the experts on any given topic are wrong or misinterpreted, etc.

The key point about the Laffer Curve for me is that it is a mathematical identity. There is an optimum set of tax rates to achieve maximum revenues. Different income earners will react differently to the rates, so the optimum will be different for salaried wage earners who have no flexibility to get around taxes and high-income investors and entrepreneurs who have great flexibility in getting around tax laws, including helpful politicians who pass special loopholes for their situations in return for campaign contributions.

It is clear that the Reagan tax cuts (which reduced marginal rates of over 70% down to the Laffer range of 30-50%) really worked. The link Howard provided had to do with the Bush tax cuts paid for themselves, and it is not as clear whether they worked or not - they probably did not.

Ira Glickstein

Ira Glickstein said...

Previous discussion in this Topic focussed on government vs private investment. I think "hard-headed" and less "political" risk taking is more likely to succeed. There is good news today!

According to Reuters today Google is

"... working to develop its own new mirror technology that could reduce the cost of building solar thermal plants by a quarter or more.

"'We've been looking at very unusual materials for the mirrors both for the reflective surface as well as the substrate that the mirror is mounted on,' the company's green energy czar Bill Weihl told Reuters Global Climate and Alternative Energy Summit in San Francisco on Wednesday. ...

"The company's engineers have been focused on solar thermal technology, in which the sun's energy is used to heat up a substance that produces steam to turn a turbine. Mirrors focus the sun's rays on the heated substance."

Ira Glickstein