Comments on: Busting the "Clean Energy Bank" (another problem with Waxman-Markey) http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/ A free-market energy blog Fri, 30 Jul 2010 00:52:54 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: T. Caine http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/comment-page-1/#comment-1778 T. Caine Fri, 14 Aug 2009 04:32:37 +0000 http://masterresource.org/?p=3154#comment-1778 Nice post, Jerry. I found it a bit late but I too share some confusion about the purported green bank. For as much of a supporter as I am for further financing of renewable energy and green projects, it seems like the green bank scheme is still a bit unclear. So the bank is funded with $10 billion from Congress. Sounds simple enough, we've become good at writing checks. I've read recently that this money can then be leveraged 10-to-1 to produce $100 billion that can then be matched with an addition $100 billion from private investment. $200 billion for green energy... sounds fantastic! So where is the debt coming from that provides the other 90% of $100 billion? Is it coming from the Fed or the Treasury? If so, we're basically just printing more money or adding more debt for the sake of building green projects. Why would Congress "fund" the bank with $10 billion if the Treasury is simply going to have to back the debt of the rest? If it's coming from the government, it's money we don't have either way so it's being covered by taxpayer dollars in the end. If its coming from private investors (along with the other purported $100 billion) then why isn't this money being invested in this arena already? As you pointed out, the total is a bit of a high target. How can the creation of an organization really cause the private sector to suddenly dramatically increase its investment in the green sector? Are their investments/debt guarantees in turn guaranteed by the Fed/Treasury (back to government debt again.) If the market was that attractive, it would not need funding help. And as you point out again, maybe it doesn't? Let us remember that we are talking more about dipping the government into the venture capital arena rather than banking. These are leading edge technologies or startups that may not even be turning a profit. The reason why venture capital is based on equity rather than debt is because new innovation-based companies often have no way of servicing the debt (which investors helping to finance the bank would want in lieu of an equity stake.) Do we really want to encourage the government to become an equity investor--a task probably more suited to the private sector. If not, it can only lend to companies that make enough money to provide cash flow for the bank/financiers. The government already is an instrument for promoting green innovation. This is why we have grants and government sponsored research. This idea really needs some legs before it can become more than just increasing national debt to fund more energy projects. Nice post, Jerry. I found it a bit late but I too share some confusion about the purported green bank.

For as much of a supporter as I am for further financing of renewable energy and green projects, it seems like the green bank scheme is still a bit unclear. So the bank is funded with $10 billion from Congress. Sounds simple enough, we’ve become good at writing checks. I’ve read recently that this money can then be leveraged 10-to-1 to produce $100 billion that can then be matched with an addition $100 billion from private investment. $200 billion for green energy… sounds fantastic!

So where is the debt coming from that provides the other 90% of $100 billion?

Is it coming from the Fed or the Treasury? If so, we’re basically just printing more money or adding more debt for the sake of building green projects. Why would Congress “fund” the bank with $10 billion if the Treasury is simply going to have to back the debt of the rest? If it’s coming from the government, it’s money we don’t have either way so it’s being covered by taxpayer dollars in the end.

If its coming from private investors (along with the other purported $100 billion) then why isn’t this money being invested in this arena already? As you pointed out, the total is a bit of a high target. How can the creation of an organization really cause the private sector to suddenly dramatically increase its investment in the green sector? Are their investments/debt guarantees in turn guaranteed by the Fed/Treasury (back to government debt again.) If the market was that attractive, it would not need funding help. And as you point out again, maybe it doesn’t?

Let us remember that we are talking more about dipping the government into the venture capital arena rather than banking. These are leading edge technologies or startups that may not even be turning a profit. The reason why venture capital is based on equity rather than debt is because new innovation-based companies often have no way of servicing the debt (which investors helping to finance the bank would want in lieu of an equity stake.) Do we really want to encourage the government to become an equity investor–a task probably more suited to the private sector. If not, it can only lend to companies that make enough money to provide cash flow for the bank/financiers.

The government already is an instrument for promoting green innovation. This is why we have grants and government sponsored research. This idea really needs some legs before it can become more than just increasing national debt to fund more energy projects.

]]> By: Perversities of Whackman-Malarkey — MasterResource http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/comment-page-1/#comment-1777 Perversities of Whackman-Malarkey — MasterResource Fri, 26 Jun 2009 11:01:00 +0000 http://masterresource.org/?p=3154#comment-1777 [...] most attention, but there is so much more that deserves criticism. Jerry Taylor, for example, has exposed the “Clean Energy Bank” provision (buried in Subtitle J) as an open-ended piggybank [...] [...] most attention, but there is so much more that deserves criticism. Jerry Taylor, for example, has exposed the “Clean Energy Bank” provision (buried in Subtitle J) as an open-ended piggybank [...]

]]> By: Richard W. Fulmer http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/comment-page-1/#comment-1776 Richard W. Fulmer Fri, 12 Jun 2009 19:54:37 +0000 http://masterresource.org/?p=3154#comment-1776 Many of the people who worry about the “politicization of science” also support federal subsidies for scientific research. Yet such subsidizes inherently politicize science given that it is the job of politicians to decide how the money is spent. Many of the people who worry about the “politicization of science” also support federal subsidies for scientific research. Yet such subsidizes inherently politicize science given that it is the job of politicians to decide how the money is spent.

]]> By: Andrew http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/comment-page-1/#comment-1775 Andrew Mon, 08 Jun 2009 17:02:58 +0000 http://masterresource.org/?p=3154#comment-1775 Don't forget the "We made it to the moon! What can't we do?" Fallacy. Don’t forget the “We made it to the moon! What can’t we do?” Fallacy.

]]> By: Tom Tanton http://www.masterresource.org/2009/06/busting-the-clean-energy-bank-another-problem-with-waxman-markey/comment-page-1/#comment-1774 Tom Tanton Mon, 08 Jun 2009 14:17:37 +0000 http://masterresource.org/?p=3154#comment-1774 Nice piece Jerry. One other factor is the track record of government picking "winners" only to find out later that the winner is in fact a "loser." Somewhat similar to your second factor, but technology based rather than investment-attractiveness based. One prime example is ethanol as you note (but for complementary reasons; more recent albeit partial life cycle analysis showing ethanol increases ((as many of us were pointing out very early on)) emissions.) Now, as reported by UC Berkeley (my goodness...) mass transit maybe isn't all IT'S cracked up to be and actually has a larger carbon footprint than an SUV. Someone once said "the more I learn the less I know"...ought to be a lesson for the central government technocrats. Nice piece Jerry. One other factor is the track record of government picking “winners” only to find out later that the winner is in fact a “loser.” Somewhat similar to your second factor, but technology based rather than investment-attractiveness based.
One prime example is ethanol as you note (but for complementary reasons; more recent albeit partial life cycle analysis showing ethanol increases ((as many of us were pointing out very early on)) emissions.) Now, as reported by UC Berkeley (my goodness…) mass transit maybe isn’t all IT’S cracked up to be and actually has a larger carbon footprint than an SUV. Someone once said “the more I learn the less I know”…ought to be a lesson for the central government technocrats.

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