2 The Politics of Energy: Who wants destruction, why they want it, and how they make sure it continues

Written by David Simmons on . Posted in 5: Anatomy of Destruction, Books

Anatomy of Destruction
Chapter Two: The Politics of Energy:
Who wants destruction, why they want it, and how they make sure it continues

 

A lot of people make fantastic profits from destruction.

The 6.8 billion tons of coal burned each year costs about $680 billion a year, and this is real money that goes to real people. Coal and nuclear plants generate and sell a total of $2 trillion worth of electricity each year, and real people get this money. These people don’t want the destruction to stop and have money to make sure it doesn’t.

This chapter explains who these people are, how much they have invested, how and why they have invested, and how much will lose if we switch to any non-destructive system at all. These people have fantastic sums of money at stake; perhaps a fourth of everything invested worldwide, and can afford to spend fantastic sums to protect their investment. Their biggest threat is solar, because it is the most practical and cheapest non-destructive option. They take steps to make sure the solar never takes over which have proven very effective so far.

Their task is getting more difficult as the cost of solar continues to plummet and the cost of nuclear and coal skyrocket. But they have found ways to fight solar that work and will continue to invest in them, and find new ways to fight solar, as long as they can do so. The only real way to stop them is to understand why they do what they do, the way they got the power and control they have, and the methods they use. Control over public opinion only works if people are willing to allow themselves to be controlled.

 

A Little History

 

The idea of regulated energy systems goes back a long way before the first electric plants. There were already many regulated utilities in the world in the early 1800s, when utilities meant gas, water, and sewer. Like modern regulated utilities, these companies were granted monopoly rights by governments in order to attract capital, with rates for services set by regulators so that the utilities could recover their investment and provide returns to investors. Although these businesses existed prior to 1900, they were quite small and important until Thomas Edison’s electricity production manager, Samuel Insull, got his boss involved in the industry. Within a decade, the regulated industry was the largest industry in the world and Edison’s company (now called GE) the largest corporation in the world. There are sound mechanical reasons that the world was better off with regulated electricity providers in the early part of the 1900s, which have to do with the fundamental nature of electricity, particularly characteristics of AC and DC. New technology that became available in the 1960s and has only been perfected in the last 30 years has eliminated every reason that once existed for having regulated utilities. But they exist, they are still the largest industry group in the world, and if we switched to unregulated small-scale production, these industries would collapse with many trillions of dollars of investment capital lost. The story of regulated utilities starts with an argument between Thomas Edison and one of his employees, Nicholas Tesla.

 

AC and DC

 

In 1879, Thomas Edison invented the first workable light bulb.

Three years later he built power plant in New York City to power the light bulbs his new factory in Schenectady was making and started signing up customers. The plant ran on coal. He had not yet invented an electric meter, so customers would get electricity for free until he perfected one.

“Workable” hear means “high impedance.” Arc lights were already in wide use, but because they had very low impedance they had to be run in a series. If you are an old timer, you are familiar with the old Christmas tree lights that were wired in a series: If one bulb goes out, the entire string fails. It would be impossible to use low impedance lighting in a commercial application because, if you did and a single light bulb went out anywhere in the system, the entire system would shut off until the bad bulb was found and replaced. Arc lighting was generally only used for event where a single generator ran one to a dozen lights with a technician on hand to replace any that burned out and get the system back on line quickly. High impedance bulbs can be run in parallel, which means each light operates separately and if one fails none of the rest is affected. This was the invention that made electric lighting practical commercially.

Edison’s electricity was the same as the electricity produced by a solar panel, DC. DC stands for direct current and means only that the electrons flow only in a single direction.

Nicholas Tesla worked for Edison in his lab in New Jersey. Tesla was very smart but didn’t see eye to eye with his boss on a lot of things. He thought that there was a better kind of electricity. This other kind of electricity would have the electrons moving back and forth at a certain rate, say 6o times per second. The voltage would rise to a peak, fall to zero, reverse and go to a negative peak, then rise back to zero, and it would all start again and repeat 60 times per second. Edison did not like the idea. He thought it was unnatural. It is easy to understand DC electricity and Edison had worked with it his entire life. Batteries are DC and the telegraph systems Edison had worked with from his teenage years run on DC. A lot of people who studied the records say that Edison never really understood how AC electricity worked. He certainly wasn’t comfortable with it.

Tesla built an AC generator to show Edison what it could do. AC electricity turned out to be extremely dangerous. A 200 volt DC shock will make you a little surprised and make your hair stand on end, but it won’t hurt you. A 200 volt AC shock is easily enough to kill you. When Edison saw how dangerous it was, he told Tesla to stop his work on AC and prohibited anyone from working on it in his laboratory. Tesla didn’t care for the ruling. He kept on working on AC and built even more powerful AC generators at Edison’s lab. When Edison found out, he was furious.

Tesla was probably the best researcher in his lab. But he couldn’t keep him if he wouldn’t follow orders. Edison told him to hit the road. Tesla didn’t have far to go. Edison’s rival, George Westinghouse, was happy to have a researcher of his caliber. Westinghouse put Tesla in charge of his research facilities. This was a formative time for electricity. For several years, Edison pushed for DC to be the standard for electricity production. Westinghouse and Tesla pushed for AC to be the standard.

In order to further his cause, Edison did invent one AC device. He knew AC was dangerous. He wanted to make the public aware of the dangers so he built a device that would use AC to electrocute small animals. He called in the press to witness the executions, but they didn’t seem impressed. He decided to go farther. He wanted people to know that AC electricity could kill people, so he had his researchers build a new kind of device to kill people, which he called the “electric chair.” He made the rounds of prisons in the area to try to get it used. He didn’t really care about making a profit selling electric chairs. This was a publicity stunt, designed to make the public aware of the danger of AC electricity. Edison’s people were somehow able to convince the warden at Auburn penitentiary that an electric shock would simply stop the heart, leading to a rapid and painless death. William Kemmerer was scheduled to be executed on August 6, 1890. But Edison’s people were very wrong about how AC electricity kills. The first time, they calculated the voltage too low and the first shock merely knocked him out briefly.

They recalculated and this time got it too high. His body exploded with the residue catching on fire.

The great age of AC electricity had begun.

 

Why We Use AC

 

DC has some great advantages over AC. It is much safer, for one. It is also significantly more efficient. DC motors convert about 95% of the electricity into usable energy; AC motors have an efficiency of 46%, with more than half of the electricity wasted and going to heat. Because the AC motors get hot in operation, they don’t last as long as DC motors. Because they depend on the frequency of the power source, you can’t alter the speed and power of the motors. If you have a ½ horse power motor, you use all the electricity needed to turn what would be a 1 horsepower DC motor all the time, even if all you really need is 1/10th or less to run the device. DC is also far more versatile and can run many things that AC can not run. On the end of your power cords for almost all of your appliances is a plastic box that converts AC to DC. This box will be warm to the touch, because it turns DC into AC by filtering out all electricity that is going the wrong direction and letting that electricity go to warm a resistor, which makes the converter hot. About half of all electricity used for your television, computer, refrigerator, air conditioner, the new super-low energy use light bulbs (LED), and anything with a motor or electronics is simply wasted. This means that, if we use AC rather than DC, we have to use and generate about twice as much. To put this another way, if we used a DC power source like the solar systems I will be explaining in the next chapters, our energy needs would fall by half due to the greater efficiency and by another 20% due to AC power line losses which don’t exist for DC power systems.

The line losses exist because a large part of AC power goes to create electromagnetic waves which radiate outward from every AC electricity wire on earth. Many researchers claim that these electromagnetic waves cause cancer, but the hard research that has been done on this—funded by utilities of course—was never published. It may be that they didn’t want to publish because they didn’t want to spend money on paper, but most likely they didn’t publish because the research showed that the waves do indeed cause cancer. In any case, millions of miles of wire are radiating electromagnetic waves everywhere on earth at this time. Chances are that you are within ten feet of a radiator. The energy in the electromagnetic waves causes a special type of resistance in AC lines called “inductive resistance” that AC lines do not have. About 10% of all AC electricity is lost to this resistance. If you add up all the losses unique to AC, perhaps 60% of all electricity generated is wasted. In other words, if we had DC, we could do everything we do now with perhaps 40% the amount of electricity we now use.

But this inductive property also brings advantages for AC that DC does not have. This property makes it possible to change voltages extremely easily and with almost no loss. The device that does this is called a transformer. A higher voltage means that electricity can be moved much farther over much smaller lines. Edison’s DC power system in New York City could only serve a few blocks and needed copper wires as big around as rail road lines to do it. With extremely high voltage AC (up to a million volts) power can be moved thousands of miles through wires only as big around as a thumb.

Tesla’s system worked by generating electricity at about 50,000 volts. The electricity was sent through wires and could easily go dozens of miles. Then transformers attached to electric poles could step it down to 240 volts. It would go into homes as 240 volt electricity, and could be used either at that voltage or split into two separate 120 volt circuits.

In recent years, people have found cheap ways to transform DC electricity. My solar system is hooked up to an electronic transformer that takes whatever voltage the panels produce and converts it to the voltage needed to run my house. It then converts it into AC, because all household appliances run on AC. It does have a DC tap at this same voltage that I could use, but I don’t have any DC appliances so I don’t use it. In Edison’s time, inverters had not been invented yet. DC simply couldn’t work for a large, commercial power operation, at least not with the technology they had at the time.

Edison’s general manager in charge of electricity production, Samuel Insull, spent several years tying to convince Edison to accept the AC system. Finally in 1910, he managed to overcome the resistance and Edison authorized him to go to AC power.

 

Monopoly Power Systems

 

At this time, governments didn’t have any regulations about electricity. Anyone could make it and sell it. A lot of people built power plants to use for specific purposes. Most of these plants were only in use part of the day. Cities had electric streetcars that only operated at full capacity during the rush hours; the rest of the time the capacity was wasted. Most city people only needed electricity for lighting, so they only needed it in the late evening and early morning. Factories only needed electricity during the daytime when they were running. With many power systems running only a few hours a day, most of the capacity of the power systems was wasted.

Insull thought he could take advantage of the characteristics of AC to create a new type of power system. He would build one giant plant in the center of a city. Wires would feed the entire city. The plant would provide all of the city’s needs. It would replace the mostly-unused small power systems. His power plant would operate at close to full capacity almost all the time, so it could spread the costs of the plant itself and facilities over more units of sales, giving lower unit costs. He could sell electricity for lower prices than people could produce electricity for themselves, and still make a very nice profit.

But there was a problem. This system would require massive investments, larger than any that had ever been contemplated in the history of the earth. The plants themselves would be the largest industrial plants in existence. They would feed a network of lines and poles that would extend to every home, store, business, and factory in the city, perhaps millions of customers. They would require thousands of tons of copper wire, millions of transformers, a network of meters and meter readers, billing and customer service offices, and a small army of engineers, installers, and repair people working around the clock. No one had ever proposed investments on this scale before. It was new in the human experience.

Investors would not provide the capital if they thought others might compete with them and potentially drive them out of business. If someone found a new method of producing electricity that was cheaper, they must not be allowed to use it. They would need a legal framework of laws that protected them. They would need sole monopoly power and rights to produce electricity in each service area. No one else would legally be able to compete with them, no matter how efficient or non-destructive the competition was. They must have the authority to take advantage of their pricing power to set whatever rates are needed to cover their production costs, recover their investment costs, and provide investment returns at market rates. The people who run these companies must be guaranteed profits. The investors must be guaranteed returns. This was the only way this kind of system could work.

Insull looked for a city to start with. He chose Chicago and made his pitch to the city council. His pitch was simple: He would get all the money from investors to build the largest and most sophisticated power system in the world. The city would not have to pay a dime. He would build the plant and run wires to every business and home in Chicago that wanted service, without any cost to the businesses and residences. He would provide the worlds’ most reliable power supply, operating 24 hours a day with no interruptions. His system would spread the costs of the facilities over thousands of customers, so its costs would be quite low and he would pass the savings on to customers. Chicago would have the cheapest and most reliable electricity on earth.

All he needed was monopoly rights. But monopolies have bad reputations for a very good reason: they can charge anything they want and can take advantage of their customers. Insull had an answer for this, however. The city would form a new government agency, a utility commission, to regulate the utility. The utility would tell the commission its costs and the commission would calculate the price of electricity that gives the Edison Power and Light enough to cover its costs, pay market returns for investors, and provide reasonable profits for shareholders. Since the utility did not set its own rates, it couldn’t take advantage of its monopoly. It would be a fair system. Customers would get cheap reliable power. Investors would get returns at market rates. Stockholders would get nice dividend checks from profits.

The city council was told that a great deal of industry would move to Chicago to take advantage of the cheap, reliable power. The industry would create jobs and more people would have an income they could use to buy things they wanted, including electricity and electric appliances. The workers and businesses would pay more taxes so the city would have more revenues and could provide better services.

A good proposal. Of course, I have slanted all the arguments the way I expect Insull did, emphasizing the good and glossing over the problems. But if it was presented this way, I think most reasonable people in the city council would vote for it. This happened. Insull was able to convince Chicago. Edison got the charter and took over the entire electricity market for the city. Insull turned out to be right about just about everything. Industry wanted a reliable power supply at reasonable prices and Chicago grew from a cow-town into the largest industrial city in the world in a matter of a few decades.

To investors and shareholders, Insull’s model was actually better than a regular monopoly in important ways. Regular monopolies are not guaranteed customers. They have to keep people out of their turf. The Western Edison Light Company was a government sanctioned and protected monopoly. If people were foolish enough to try to produce electricity in competition, the managers of Edison’s company could call the police and have them arrested. Regular monopolies don’t have a guarantee of profits. If the costs for a regulated monopoly go up, it may actually lose money. Edison’s company could simply submit the right documents to the utility commission which would jack up the rates and pass 100% of the costs on to customers. Regular monopolies have a hard time attracting investors, because investors know that any change in technology that makes competition possible, or anyone who can find a way to compete, will eliminate their returns and wipe out their investment. Edison’s company didn’t have to worry about this. His investors would make profits as long as the city of Chicago used AC electricity.

Governments want their districts to have electricity so they stand behind the utilities. If utilities can’t make enough money to cover their costs and provide investment returns, governments step in and pay the difference. I live in Tucson and remember when my city went into debt to keep TEP afloat; after it built coal fired plants it didn’t need and couldn’t afford to buy coal for its regular operations. Much of the debt of the state of California comes from government borrowing to support its utilities. Over the decades, utility investments have gotten the reputation as the safest investments people can make.

It is nice to run a business protected by the government. Shareholders can never complain because the profits that pay their dividends depend on government decisions, not actions of the business. Investors get their returns no matter what so they won’t be whining either. The company doesn’t really have to worry about costs, because it can pass all costs on to customers. It doesn’t have to squabble with suppliers over prices; whatever they ask for their goods is fine. It doesn’t have union problems because it can pay its workers whatever they want and pass costs on to customers.

I have run businesses before and lost a lot of sleep over these matters. No one has to lose sleep to run a utility. Having a charter for a monopoly utility is almost like having a license to print money.

 

The Industry

 

Other cities saw how well the Chicago system worked and wanted it for themselves. Insull was happy to help them out. Edison General Electric, the holding company that owned and ran the local utilities, grew rapidly. Within a few years it was the largest corporation in the world. Westinghouse had Tesla and the technology, but he didn’t have anyone with Insull’s business sense. He had to spend the rest of his life trying to catch up.

At first, virtually all their facilities were coal-fired. They needed fantastic amounts of coal. Coal mines opened to supply them. Hundreds of thousands of people got jobs at these mines. The rail companies were overwhelmed and had to expand dramatically to haul the coal. They hired tens of thousands of people to build the rails and run the trains. People have to build the mining equipment and trains. They have to make steel for the equipment, rails, locomotives, and coal fired plants themselves, and the steel plants that will make the steel that wouldn’t be needed if not for the coal-fired utility industry. The system spurred fantastic growth. The stock market boomed. Unemployment plummeted. This didn’t just happen in the United States. Edison and Westinghouse’s power companies were worldwide. Their industrial plants were worldwide. In each case, the model was the same: the company would get a monopoly on power production in a certain service area. The company would use the strength of their monopoly rights to attract investment capital. It would be allowed rates that covered its costs, provided a reasonable profit so it could pay reasonable dividends, and enough to pay market returns on all investment capital.

As I write this, there are roughly 50,000 coal plants on earth, burning a total of about 6.8 billion tons of coal a year, one ton each year for every man, woman, and child on earth. These plants run 24 hours a day, 365 days a year, and small armies of people to unload the trains, move the coal, store it, move it again to the furnaces, crush it, inject it into the fireboxes, remove the ash, adjust the belts, and all the other tasks needed to keep them functioning. Roughly a half million people work in the plants. Tens of millions work mining the coal, transporting it, building the rails and locomotives, repairing the rails and locomotives, and all the other tasks needed to provide an endless supply of coal to burn in these plants. Hundreds of millions of people worldwide provide services to this industry. They run restaurants, hotels, cocktail lounges, gas stations, car dealerships, beauty shops, bordellos, and all manner of businesses to the people who wouldn’t have work if we didn’t have these giant fuel-using utilities.

 

 

Nuclear

 

Karl Grossman, the author of the very informative and well documented book “Cover Up, What they don’t want you to know about nuclear power” (you can download this for free from Karl’s blog, available at this link) explains the origin of nuclear power.

During World War Two, the United States government undertook the Manhattan Project, the largest government project in the history of the planet, to build nuclear bombs. The details of the project are top secret, of course, but it employed millions in various stages of the nuclear industry, from moving the incredible amounts of rock to move uranium, enrichment that at times required half of the entire electricity output of the United States, engineering and building nuclear reactors, and thousands of other related tasks. Westinghouse and GE had small armies of employees who worked in the nuclear industry and wanted to keep them employed. The government wanted to keep the nuclear industry alive for several reasons. For one, it needed skilled people to build the massive quantities of nuclear weapons it would need to keep up with the Russians and Chinese, and would never be able to justify the enormous expenses—particularly after it already had enough to destroy the world several times over—unless there was a civilian component to the nuclear industry to share the costs. For another, it needed nuclear for the same reason it continues to support coal: It needed the jobs. But the most important reason was related to the enormous legislative power of the giant corporations, mainly GE and Westinghouse that had enough sway in Washington to dictate public policy. The lobbyists for these businesses came up with the public relations campaign called “Atoms for Peace” and lobbied and advertised heavily for these projects.

In 1954, the United States government commissioned a study by the Brookhaven institute to address public concerns about whether the power system might be too dangerous to pursue. The result came back: Nuclear had risks of unparallel magnitude. A single accident could permanently destroy an area the size of the state of Pennsylvania. The battle was short, however, because the lobbyists had already gained enough support on Capitol Hill to get the program through. Obviously, no plant would exist if they had to buy insurance, because no one would be able to afford to buy insurance to cover real losses. The industry had a simple answer: merely pass a law transferring all risks of nuclear to the public. In 1957, Congress passed the Price Anderson act, indemnifying nuclear plants for virtually all risks. The government agreed to supply the fuel for the reactors at a heavily subsidized price. This was necessary because the fuel enrichment facilities could be used to make nuclear bombs and the government didn’t even want people to know how much this cost, for fear they may reverse engineer this process and use the knowledge to make bombs. I could find no information about actual costs of enrichment. The uranium is mined; it goes into a government (taxpayer) facility and is processed at an undisclosed cost, and then goes to the nuclear power plant with no markup whatsoever. There was no known way to deal with nuclear waste, but the government agreed to deal with this issue and pay all costs at taxpayer expense, and, as Chapter One showed, it provide cash subsidies covering roughly a third of construction costs for the first few dozen plants built.

GE and Westinghouse had built all government reactors and would build the commercial reactors. They expected a massive public outcry against nuclear, particularly after the Brookhaven findings were leaked, and created an advertising campaign with the slogan “too cheap to meter,” flooding the media with money. The “too cheap to meter” slogan was nonsense and the corporate sponsors knew this. The fuel cost per KWH was lower than that for coal, at least initially (this is no longer true due to shortages of uranium which have driven the cost up to where it is comparable with coal) but nuclear has far higher construction and facility costs than coal and, even with the massive government subsides on nuclear, the total KWH cost of nuclear no cheaper than coal. But the goal of the advertising was not to enlighten the public about the truth, but to deflect public opposition.

It helped, but didn’t placate everyone and protests continued. Protestors were able to prevent the planned opening of the Fermi 1 reactor in 1957 and able to prevent the first two plants proposed, in Bodega Bay and Malibu California, from even beginning construction. But on May 26, 1958, President Dwight D. Eisenhower inaugurated the first commercial nuclear plant at Shippingport Pa.

Nuclear plants cost a lot to build. But the utilities don’t worry about this because they don’t pay the costs themselves. They raise the money from investors, pay whatever it costs to build, and report the costs to the utility commissions, which calculate the rate needed to pass these costs on to customers. They have a money machine. Their investment returns are built on complicated formulas worked out by Samuel Insull designed to attract investment. He wanted people to provide whatever sum was necessary for whatever project he planned, and the formulas were very generous. The more the utilities invest, the more money they make. Who cares if it costs $7 billion to build a nuclear plant? That $7 billion comes back to your investors plus interest over the life of the plant. Only one thing can prevent this: the total collapse of the central-station regulated utility industrial structure. Only one thing could cause this to happen, competition from more efficient producers like solar, and at least until 1978, this was illegal.

 

Solar and Regulated Monopoly Utilities

 

Insull’s entire idea depended on the idea of economies of scale. Large power plants can spread their costs over more units of production, leading to lower unit production costs. The savings could go partly to customers and partly to the producers. To get these economies of scale, the industry has to build enormous facilities, requiring enormous investments. The whole idea only makes sense if there the large facilities and gigantic distribution systems are necessary. They are for coal and nuclear that produce AC power through large distribution systems. They are not for solar.

A solar photovoltaic system has no economies of scale whatsoever. It costs just as much per watt/hour of capacity to have a 1 watt facility as a 1 billion watt (gigawatt) facility. Your roof produces roughly four times the energy you use; if we adjust this for the higher efficiency of DC, and people started building DC appliances and wiring homes for DC, a figure of eight times would be more accurate. As Chapter Two showed, actual costs are very low and would add only a tiny amount to the cost of a house.

By 1978, the industry realized how serous a risk solar was. Solar has no input costs so it could be sold for extremely low prices by (literally) mom and pop operations that would compete on an individual level with the utilities if they had to. Competition would drive electricity prices down and the utilities would not be able to afford their fuel costs and would go out of business. The utilities could not compete with large centralized solar facilities for several reasons. First, they were bloated monsters with no idea how to compete on price. Second, there are no economies of scale in solar so buying power brings no advantages, even if the business employees people who know how to negotiate profitable business deals. But their big disadvantage came from their tie to AC power systems and their high transportation and distribution costs. You can provide your own power at your own home for far less than utilities can provide solar-generated electricity. If we factor in the relative disadvantage of AC, personally generated solar electricity would cost less than a third of the amount that utilities would have to charge to make a profit.

Prior to 1978, it was illegal to use solar, even to produce your own electricity. The utilities had guaranteed service areas. All consumers in their area belonged to them. But they realized that solar costs were falling so fast that they wouldn’t be able to keep this illegal forever. Rates were set by utility commissions in each state. They wouldn’t be able to stop a cascade of death if one state decided to make solar legal. They needed an overriding federal law to take off the pressure.

They came up with a really nice idea. Their lobbyists would go to the federal government and use their influence to get an overriding Federal law passed that would make solar impractical. The law would be framed to create the appearance of encouraging solar, by legalizing its production. But it actually works to discourage solar, by several mechanisms. The first is to make it illegal sell the electricity in any kind if market. People who used solar (technically, any “small renewable energy system”) could only sell to the utility. And they couldn’t sell at anything close to the market price. As I write this, market prices for electricity on the wholesale market are about 8.4¢ per KWH (you can check today’s prices on this link http://futures.tradingcharts.com/marketquotes/DX.html. Prices are in MWH so divide by 1000 to get KWH prices). My local utility has a buy rate for solar of 8/10th of 1¢, less than 1/10th of the market price.

This law was passed in 1978. It is called the Public Utility Regulatory Policy Act and is commonly known as PURPA and it is administered through title 16 of the US Code, section 796. The law was written by lobbyists who obviously wanted to hide its true intent, so it is very deep in legalese, but the bottom line is that utilities have a formula they use to calculate the price they pay for solar. This price is equal to something called the “avoided cost” and it can never be more than a tiny faction of the cost of coal and nuclear due to the way it is calculated. It works out to between 1/10th and 1/5th of the amount the same utilities pay for destructively generated electricity. Coal generated electricity cells for full price. Nuclear energy sells for full price. Solar sells for 1/10th to 1/5th of full price.

If you manage a Wal-Mart, you have a lot of roof space just sitting there, wasted. It could be producing electricity and contributing to the bottom line of the store. Most managers’ incomes come mostly from bonuses that depend on how much money they can make for their company. Every store needs a roof anyway. Why not have a solar roof? If you could sell the electricity for market prices, this makes sense. But if your income depends on some arbitrary formula that bureaucrats make up, which currently leads to numbers too low to justify any investment and can be made lower with a stroke of the pen, it simply makes no sense to invest. The same is true for each of the homes and businesses in the United States. After PURPA worked in the United States, the same concept was taken to the rest of the world and most countries have some version of it.

Of course, the utilities aren’t the only ones that would start to have problems if solar began to really take off. Utilities do not have to worry about how much coal costs, because they just pass the cost on to customers. They don’t have to worry about negotiating coal costs to make them lower. In fact, they prefer higher prices because they get a fixed margin above costs. The higher their costs, the more profit they make. Coal companies obviously love this. Wouldn’t you love to have a customer that insisted on paying more for your product than you needed to make a profit? Train companies love it. About half of all train traffic and profits comes from coal. Equipment makers love it. The utility unions love it. They can ask for anything they want and the utilities will never fight it. The investors in all of these companies love this. The lobbyists love it, because they get enormous sums to use to persuade lawmakers to keep everything as it is. The giant companies like GE and Westinghouse really love it, because they build and supply the endless needs of the largest single industry in the world on a cost-plus no-negotiation basis.

 

Why Governments Also Support Destruction and Don’t Want Solar

 

We all know that the coal, nuclear, gas, oil, and utility spend vast sums on lobbyists each year, and much greater amounts on campaign contributions and still greater amounts on the political action committees that work behind the scenes to provide the real muscle that makes the political process works. The corporations naturally want their people in office. They control incredible power and wealth they can use to make sure this happens.

But the general goals of government coincide with the desires of lobbyists anyway. Governments’ job is to keep the machines of our societies functioning. They know that our societies desperately need something called “economic activity.” This term means “keeping busy in the economy” and “economic busyness” is not something good in and of itself. But activity means jobs that our systems need, it means spending that spreads out and trickles down to the people, and it means millions of transactions that wouldn’t otherwise take place that the government can tax. The people who mine the coal, run the coal trains, man the coal-moving equipment, make the coal-moving equipment, make the steel for the coal-moving equipment, pump oil for fuel to power coal-moving equipment, the people who shovel the coal into the furnaces, remove and bury the ash, and even the rescue workers who dig out the miners when the mines collapse and the doctors who treat the black lung are all involved in economic activities that wouldn’t be taking place if we used solar. Solar generates electricity without any inputs. It isn’t an active system, requiring a great deal of people to do a lot of things. The government wants people to use active systems, like coal and oil, not solar.

The people who run the government are not stupid. They know what the system needs to keep functioning. They know they need to support the types of businesses that generate activity. Of course, they know they can’t come out openly against solar, and they never do this. But they can work against it behind the scenes. They can make the widely-publicized speeches nationwide saying how much they favor solar and how they will work tirelessly for it. (Pause for applause.) But when they go to the luncheons for fund raisers in coal areas, they negotiate the depletion allowances, which are cash payments made per unit of coal. Subsidies on destruction drive down costs for destruction so they encourage destruction. The coal subsidies are enormous, but they rarely make the news because the negotiated laws that provide them are so complex it would take years just to figure them out, and once you did you would never be able to explain them to the general public in a way that makes sense. I found out about them by accident, through a tiny notation in a line of my Schedule E form. I had been speculating on the stock market and bought and held an oil trust for a few months. I got a form from the brokerage which explained how to fill out the Schedule E and referred me to the note to calculate my allowance. For a while, I had owned a part of a company that was raping the earth, and would get paid for it. When I got the allowance, I went back to the statements from the company and realized the depletion allowance completely covered the extraction costs of the oil. The government, or actually the taxpayers, covers the cost of raping the world. The companies and investors get the benefits, plus their subsidy payments.

 

Propaganda

 

The politicians all tell you how much they want to end the destruction. Solar, they pour out their hearts for. They want it. Who doesn’t want something this good? But wishing and hoping doesn’t make it practical, they tell us. We have to be realistic. Solar is just not yet practical. They say this over and over. It isn’t true, as you will see in the next chapter. But if politicians weren’t able to say anything that wasn’t true, they wouldn’t be able to speak at all.

The corporations are even more brazen in their hypocrisy. Right up to the largest oil disaster in the world, British Petroleum was spending a fortune on an endless barrage of ads telling the people it had changed its name to reflect its new priorities, and BP now stood for “Beyond Petroleum.” The ads said the company was now an “integrated energy solutions” company, not an oil company, and its main focus would be on making solar energy a practical system to replace the oil it used to concentrate on. It would take a lot of work, of course. But with work and effort and the support of the far-thinking executives at this integrated energy company, and the efforts of their research crew, they would eventually be able to make it practical, they hoped. The ads featured beautiful and concerned looking scientist-actresses telling us why they were working so hard for BP to make solar practical: for the children. They cared about the world and wanted to leave it safe and clean.

Of course, since solar is now impractical, we have to use oil temporarily. We need to face this fact and not try to fight them. They are trying to help us; they just have to provide oil until they can get the solar system practical. The overt message is that they really care. They want solar. But the subliminal one, repeated over and over and over, is that it is not practical and anyone who thinks otherwise is a foolish idealist. It seemed strange to me that this kind of propaganda could work. But it obviously does. I couldn’t find anyone who actually looked at the numbers to see if it really does make sense. What is the point? The experts all agree that it can never work. Who are we to question the wisdom of the kind, concerned, noble and hard working solar scientists at BP? After the 2010 spill, it was revealed that they made $46,000 every second of every day off their oil operations, and had no significant solar operations at all. They were slow to pull the ads and they began to look more and more ridiculous each day that passed. When the ads finally came down, the airspace was filled by others with the same message, including GE, Westinghouse, and the giant German industrial company, Siemens. They continue, day after day after day.

From a practical perspective, you may wonder why a company would spend hundreds of millions of dollars to saturate the airwaves with messages they are working on solar, when they really aren’t. None of these companies actually ask anyone to buy solar; in fact, the ads all seem designed to prevent people from even thinking about buying. Why would a company advertise to keep people from buying products they produced? The answer is that they don’t really produce solar products; they are only “investing” in research. They can buy a share of a Chinese company that is doing research in solar for $5, and they are investing in research. Now they are not lying when they spend hundreds of millions on advertising to tell the world about their concern. But realistic and objective people would never believe them.

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