As the Energy Department hustled to get another $4.7 billion in loan guarantees for green tech companies out the door before time ran out and the program ended last week, yet another solar panel manufacturer was wilting in the sun, and the green jobs scam was looking more threadbare than ever. Says the WSJ:
Solar-power equipment manufacturer Stirling Energy Systems Inc. has filed for bankruptcy, adding to a wave of troubles in the solar industry amid soft demand, falling prices and difficulty raising money. [… ] Both [of the company’s plants] were sited on public land in California and obtained fast-track construction permits from the Obama administration.
The filing is the latest in a string of U.S. solar company bankruptcies, as soft global demand for solar power, falling prices and a glut of solar panels from Asia have hammered manufacturers.
Surprise, surprise: the American “green energy” industry faces much the same problems as everyone else in this economy. Solar firms still have to compete with Chinese labor (and massive Chinese government subsidies further enhanced by cheap Chinese currency).But there’s another factor behind the failure of so many Obama administration initiatives in this field. Because alternative energy generation is expensive and inefficient, it requires some combination of subsidies, high energy prices and forced purchases to make these investments pay off.The Solyndra guarantee and related programs were all developed back in the heady early days of the Obama administrations when delusional greens thought their global agenda was on the verge of being realized. Cap and trade and other aggressive energy policies would artificially jack up energy prices in the US to the point where demand for solar and other alternative energy would grow. The global carbon treaty would provide a permanent source of demand for green energy.The political assumptions underlying the green investment boomlet turned out to be false. There will be no global carbon regime for the foreseeable future; there will be no cap and trade and no aggressive federal programs to raise energy prices during the deepest recession since World War Two.Perhaps even worse from the green point of view, a cascade of discoveries and technological advances has dramatically increased the supplies of oil and gas in the western hemisphere — including huge new domestic energy supplies in places like Pennsylvania, Ohio and upstate New York. These discoveries are devastating to the politics of the environmental movement.There will be the usual NIMBY-motivated opposition (some of it justified) to frakking and to oil and gas pipelines, but overall millions more Americans are going to be economically tied to domestic energy production and they will not want their congressional representatives voting against the industry on which their paychecks depend. Nor will they support presidential candidates who promise to eliminate their jobs. It will not just be the people who work in the extraction business who feel this way. Those who supply the industry, those who operate pipelines, those who sell goods and services to gas and oil workers: they will form a powerful phalanx of pro-oil and gas interests that will reach far beyond Texas.At the same time, key environmental arguments will be seriously weakened. The western hemisphere looks set to become energy independent for the foreseeable future; the US is moving steadily away from the dependence on Middle Eastern oil that makes many national security experts think green. Importing from Canada just isn’t the same kind of problem as importing from Iraq.The question of supply and peak oil will also recede; with new technologies and new discoveries coming so quickly, fewer people will feel the need to make large financial sacrifices now in order to prevent huge oil shortage and massive price hikes in the near term.Increasingly, the climate change argument will be the only argument left to support subsidies for alternative energy generation. That argument has not been enough to make far reaching legal changes in the past when national security and peak oil worries supported it; there is not much to suggest that the climate change forces can win the political battle standing alone.The collapse of the green political structure (cap and trade plus global carbon treaty) and the transformation of the American fossil fuel supply have dramatically weakened the case for alternative energy. Investors take heed.