Too Big To Fail? Too Big, Period.

Cross-posted from the Breakthrough Institute and WattHead - Energy News and Commentary

The executives of General Motors, Ford and Chrysler made yet another trek to Washington DC this week - this time ditching the corporate jets to drive hybrid cars - and once again pled for a federal bailout to prop up their struggling companies. Up to $34 billion taxpayer dollars are apparently all that stands between at least two of the "Big Three" automakers and bankruptcy.

GM's executives told Congress the company will fail very, very soon unless it receives at least $12 billion in loans in the coming months. Chrysler warned they could go belly up by year's end without $7 billion in government aid. Even Ford, which is doing a bit better than its two Detroit brethren, is asking for an open, taxpayer-funded line of credit of up to $9 billion dollars.

All this means its time for Congress and the American public to face two basic facts.

First, GM and Chrysler are essentially bankrupt already, and Ford may not be far behind. The insular management of the Big Three has already run their companies into the ground, and if a massive government loan is the only thing that will keep them afloat, we might as well consider them failed companies, for all intents and purposes. So let's start treating them that way. With the economy in recession already, we certainly need to ensure a soft landing - rather than a hard collapse - for the auto companies and the millions of Americans who depend on them for their paychecks. But the objective of the bailout should be to preserve American auto industry jobs, not to preserve the Big Three companies themselves. GM, Chrysler, and perhaps even Ford are done. We shouldn't be afraid to turn the page on this chapter of the American auto industry and usher in something entirely new - and better.

Second, if GM, Chrysler and Ford are too big to fail, then it's time to realize that they are simply too big, period. If taxpayers are going to put their money on the line to bailout Detroit, we should be taking advantage of this opportunity to make fundamental changes to the American auto industry. It is time to say, "Never again!" to auto companies that are so large that they can hold taxpayer's hostage because the consequence of their failure is too great - companies that are so large that competition and innovation are stifled by their vast and unwieldy bulk.

Here's what we propose: offer government loans to the Big Three to ensure the companies don't collapse now during the midst of recession. But the conditions of those loans should be similar to the conditions of the Chapter 11 bankruptcy the companies would enter in absence of the loans. No blank checks for the Big Three to continue business as usual.

Instead, Congress will appoint an independent blue ribbon commission. They'll staff that commission with the best bankruptcy judges, restructuring consultants, and industry experts in the world. This commission will be charged with breaking the company up into several smaller companies that will inherit the different divisions, car models and assets of the parent. The commission will then seek new management to run each new company, deploying head hunters to recruit top talent from mid-level management within the Big Three, or even in the ranks of foreign companies like Toyota, Volkswagen or Hyundai.

The new companies - Baby GMs, or Baby Chryslers - will then be turned back over to the private sector and they'll be encouraged to issue new common stock to raise more operating capital. The government will have to vigorously enforce anti-trust laws to ensure these companies remain small, at least for the time being, and to keep foreign automakers or governments from gobbling them up (the Chinese government has already been shopping for one of the Big Three, and would gladly snatch up the new companies if we let them).

In the end, we'll have a new kind of American auto company - leaner and nimbler, and under a new class of managers - and a new kind of America auto industry - one that's more competitive and fosters the continual innovation that's been absent in Detroit for too long.

In the short run, we'll protect as many automaker jobs as possible by injecting capital into these new companies to help them weather the transition period. In the long run, some of these new companies will fail, but when they do, they won't be large enough to send the entire economy into tailspin. And for every company that fails, others will succeed by adopting a corporate culture that embraces innovation and produces high-quality cars that match the American consumer's demands.

The net result will be a vibrant and innovative American auto industry that sustains good manufacturing jobs here in the United States. The new competitive environment will foster the adoption of more efficient vehicle designs, encourage the development of cutting-edge technologies like plug-in hybrid electric vehicles, and create space for up-and-comers like Silicon Valley-based electric car manufacturer Tesla Motors to enter the field.

That's the future of the American auto industry. Anything short of this kind of dramatic restructuring of the industry will merely prolong the inevitable day when GM, Chrysler and Ford fall under their own weight, taking American jobs, taxpayer dollars and our economy with them. Too big to fail? Too big, period.

[Image source: FoxNews.com]

Waxman Challenges Dingell for Leadership of Influental House Committee

Cross-posted from the Breakthrough Institute

Representative Henry Waxman (D-CA) plans to challenge venerable Representative John Dingell (D-MI) for chairmanship of the influential House Energy and Commerce Committee, according to a report from Roll Call.

"The move marks a major showdown between two Democratic powerhouses, with implications for a host of major legislation next year from health care to global warming to renewable energy. Waxman currently chairs the Oversight and Government Reform panel."

The House Energy and Commerce Committee has jurisdiction over a wide range of critical issues, including energy policy, health care, interstate commerce issues and most likely global warming policy as well. The committee will no doubt be a critical player in the legislative implementation of President-elect Obama's policy agenda.

Waxman and Dingell have taken two dramatically different stances on global warming and energy during the 110th Congress and a change in chairmanship could reshape the Congressional political landscape on these issues.

Reflecting their differing constituencies, Dingell opposed California (and 15 other states') efforts to set tailpipe emissions standards for greenhouse gases while Waxman led hearings to press EPA Administrator Stephen Johnson on why the agency had blocked California's efforts.

The difference is just as clear when it comes to federal climate policy. In March 2007, Waxman introduced the Safe Climate Act, still the most aggressive proposal for global warming pollution caps in the Congress. In contrast, Dingell and his committee waited until the final hours of the 110th Congress to release a draft outline for economy-wide greenhouse gas regulations.

Roll Call reports that a number of other key House leadership races were also underway, less than 24 hours after the polls closed.

A hat tip to Brad Johnson at the Wonk Room on this one

What Do We Want? Cheap, Abundant Solar! When Do We Want It? Now!

By Jesse Jenkins, Associate Director, Breakthrough Generation. Cross-posted from the Breakthrough Blog

The solar industry is booming, ramping up production capacity and driving costs down steadily towards the mythical "Grid Parity" point - the price point when solar on your roof beats paying your utility bill. That's a game changer and the solar industry is steadily heading that direction.

But as Andrew Leonard (writing at Salon) recognizes, we could hit that magic grid parity point faster with leadership -- and major investment -- from the federal government. With energy prices rising, our economy faltering, and Americans crying out for something to be done, it's time for the clean energy investment that will unlock the potential of solar and other renewables and re-energize America for a new era of sustained prosperity.

Booming demand for solar power will drive worldwide investments in photovoltaic (PV) cells to the same level as the semiconducter industry by 2010, according to a new report from market intelligence firm iSuppli Corp.

PV cell production plants are expected to crank out as much as 12 Gigawatts (GW) of solar cells globally by 2010, up from 3.5GW in 2007, iSuppli predicts. The PV market is expected to grow by 40% annually until 2010 and sustain 20% annual growth rates after that, according to iSuppli chief PV analyst Dr. Henning Wicht.

As solar manufacturing ramps up, the price of solar falls as it speeds down a relatively predictable price curve. For crystalline silicon-based solar cells (the most mature type of PV cell), costs have historically fallen roughly 20% for every doubling in manufacturing capacity. Major PV cell manufacturers Q-Cells AG and REC Group predict price drops to continue as manufacturing ramps up. The two PV giants expect solar system costs to fall by 40 percent from 2006 to 2010.

So we're on the path to solar grid parity. But as prices at the pump and on our electricity bills continue to rise and Dr. James Hansen warns us again about the urgency of our climate situation, there's no time to lose. As Leonard writes, "What do we want? Grid parity. When do we want it? Now."

So what can we do to speed solar along it's merry way towards grid parity - and hasten the day when cheap and abundant solar can slash both our energy costs and our greenhouse gas emissions?

How about a healthy dose of federal government leadership?!

Let's start by cutting through the political demagoguery and posturing in Congress and pass the much-needed extensions of critical renewable energy incentives -- including an eight -year extension of the solar Investment Tax Credit.

As Thomas Friedman wrote this weekend, it's time to "broker passage of legislation that has been stuck in Congress for a year," the Renewable Energy and Job Creation Act (H.R. 6049), a bill that "could actually impact America's energy profile right now -- unlike offshore oil that would take years to flow -- and create good tech jobs to boot."

Passing a long-term extension of the solar incentives will create a stable investment environment for solar in the United States, encourage the expansion of US solar manufacturing, and drive solar towards grid parity -- all while strengthening our economy.

If instead, Congress fails to act, preferring to politicize votes over clean energy and offshore oil drilling instead, these incentives -- as well as the critical Production Tax Credit driving record growth in the wind power industry -- will expire at the end of the year. If they do, more than 100,000 good American jobs and tens of billions of dollars in investment will wind up on the chopping block, not exactly smart policy at a time of economic downturn and soaring energy costs.

"Already clean energy projects in the U.S. are being put on hold," Rhone Resch, president of the Solar Energy Industries Association told Friedman, as solar and other renewable energy companies try to limit risk in the face of a very uncertain and highly politicized investment environment.

So just as solar is ramping up and prices are coming down, Congress is playing political games, putting the breaks on a booming economic sector and delaying the day when solar energy is cheap and abundant.

If we want the new American energy sources that will cleanly power a new era of economic prosperity, we need to put our money on the table. We need to government leadership and federal investments that can ignite a clean energy future and unlock the potential of 21st Century energy sources like solar.

So let's start with with a long-term extension of the solar Investment Tax Credit and other critical renewable energy incentives. But let's not stop there! America's economy can't wait for the day when clean renewable energy sources can provide abundant, affordable and secure energy, and we can hasten it's arrival by:

• Ramping up investment in research, development and demonstration of cutting-edge clean energy technologies -- including next-generation solar technologies like thin-film photovoltaics and concentrating solar-electric plants.Economist Jeffrey Sachs recently called on the United States to "increase our annual energy-research budget to $30 billion." In December 2007, a group of over 30 energy scientists called on Congress (pdf) to invest a minimum of $30 billion/year on new clean energy sources and ways to use energy more efficiently. Let's put at least that much money on the table for clean energy innovation and deployment and secure a clean energy future.


• Major new public works projects could lay the enabling infrastructure necessary to truly unlock the potential of America's abundant renewable energy reserves.A new American supergrid - the interstate highway system of the electrical system -- would unlock the vast solar energy potential of the Desert Southwest and the wind energy reserves of the Great Plains, the "Saudi Arabia of Wind" (see this report for an example - pdf). Just as federal public works projects -- like the federal dams and the interstate highways system -- laid the foundations for the economic booms of the 20th Century, it's time to invest in the infrastructure that will underly a new century of sustained American prosperity.


• The federal government has enormous purchasing power. The government can accelerate the road to clean, cheap renewable energy by committing to purchase solar panels for government facilities. Just as government purchasing helped buy-down the cost of microchips and laid the foundation for the communications revolution, a solar procurement program can help secure the clean, cheap energy that will power the 21st Century.

Coal fueled the Industrial Revolution of the 19th Century. Oil powered the economic growth of the 20th Century. But these fuels are the fuels of the past -- their supplies are dwindling, their costs are rising and our dependence on them is imperiling our economy and our climate. It is time to unlock the energy sources -- including affordable solar -- that will power the 21st Century.

If we want our energy to be cheap, we want it to be clean, and we want it fast, we need to invest in the energy sources of the future, not the past. It's time for new American energy!

These Guys Are No Fossil Fools! Markey and Waxman Call for Ban on New Coal Plants

Ed Markey and Henry Waxman are no Fossil Fools! The two Chairmen and Congressional Climate Champs released a new bill yesterday calling for a moratorium on any new coal plants that do not capture and sequester their greenhouse gas emissions.

The ban would stay in place until Congress adopts and implements comprehensive global warming regulation and is designed to addresses the largest new source of global warming pollution — new coal-fired power plants that are being built without any controls on their global warming emissions.

"Comprehensive economy-wide regulation to address global warming is coming soon. But new uncontrolled coal-fired power plants are being built today," said Rep. Waxman (D-Cal.), chair of the House Oversight and Government Reform Committee, and author of the most-aggressive Congressional proposal to regulate greenhouse gases. “My legislation says: “No new plants without emissions controls.” The alternative is senseless - locking in decades of additional global warming emissions and requiring greater emissions reductions across the U.S. economy to compensate."

"If we lose control of coal, we will have lost control of the climate," said Markey (D-Mass.), Chairman of the House Select Committee on Energy Independence and Global Warming. "This bill will make companies prepare for the future and prevent them from building low-tech coal-fired power plants before a global warming bill is passed that will necessitate the use of the newest, most climate-friendly technology. "

Without emissions controls, a new coal-fired power plant will emit hundreds of millions of tons of global warming pollution over its fifty-year lifetime. Over 100 new plants have been proposed, and if just a portion of these are built, they will make hitting greenhouse gas reduction targets necessary to halt dangerous climate change next to impossible. A single new uncontrolled coal plant could erase all the emissions reductions that will be achieved through the Northeastern states' Regional Greenhouse Gas Initiative, for example.

The bill, titled the "Moratorium on Uncontrolled Power Plants Act" would ban either EPA or states from issuing permits to new coal-fired power plants that are not built with state-of-the-art emissions control technology to capture and permanently sequester the plant's carbon dioxide emissions. The moratorium extends until a comprehensive federal regulatory program for global warming pollution is in place.

Looking ahead to future global warming regulations, the bill also bars any new coal-fired power plant built without state-of-the-art control technology from receiving any free or reduced cost emissions allowances under a future cap-and-trade program for greenhouse gases.

"Many communities are still paying for failed nuclear power plant investments in the 1980's," said a press release issued by Chairman Markey. "This bill puts investors and power companies on notice that if they invest in new sources of global warming pollution now, taxpayers won't pay for the costs of cleaning up those sources later."

“It’s important for ratepayers and regulators to understand the financial risks if their power company wants to build a new uncontrolled coal-fired power plant," said Rep. Waxman. "Those plants will be a lot more expensive to operate when global warming pollution is regulated. Ratepayers need to make sure they won't be stuck with the bill."

It's time to simply say "No!" to new coal plants! Like Markey and Waxman, American's are no Fossil Fools. Americans want Green Jobs Not Coal, and it's time Congress heard that message.

Oil Hits Record Price. Gas Nearing $4.00. President Bush, Clueless…

Happy Friday! Oil hit record-prices today: $103.05 per barrel. Bully for us...

That tops the inflation adjusted high of $102.53 set in 1980. Oil first inched over $100 to welcome in the new year on January 2nd and has hovered around $100 since then, routinely spiking into new record territory. Now we've blown past the final record: the inflation adjusted highs reached in the '80s.

This news comes as analysts predict $4.00 per gallon gasoline when refiners switch over to reformulated blends in Spring.

Of course, you and I already know that. We see it every time we drive past a gas station, or god forbid, actually pull in to fill up our tanks!

You'd assume President Bush would be clearly aware of the state of gas prices as well, given how much they impact average Americans every day. Well, you might assume that about another president anyway... I wasn't too shocked to learn that President Bush is actually completely clueless that gas prices are soaring towards $4.00!

In a press conference today, he revealed his complete ignorance of what life is like for real Americans on the street in an interview that began with a simple question from Peter Maer of CBS News. Here's the transcript of the exchange, courtesy of NTYimes blog, "the Lede":

Q: What’s your advice to the average American who is hurting now, facing the prospect of $4 a gallon gasoline, a lot of people facing –

MR. BUSH: Wait, what did you just say? You’re predicting $4 a gallon gasoline?

Q: A number of analysts are predicting –

MR. BUSH: Oh, yeah?

Q: — $4 a gallon gasoline this spring when they reformulate.

MR. BUSH: That’s interesting. I hadn’t heard that.

"I hadn't heard of that?!" Seriously?! Well that explains a lot...

Like why President Bush has routinely blocked the US Congress's fiscally responsible attempts to re-invest wasteful oil subsidies to kick-start new sources of clean, homegrown renewable energy.

Three times now, the House of Representatives of the 110th Congress has passed bills that would end wasteful subsidies to oil companies designed to spur domestic oil exploration at a time when oil priced in at about $20.00/barrel. With oil prices at record levels over five times higher than when Bush took office, it's simply fiscally irresponsible to shower an industry recording record profits with taxpayer subsidies while denying the most promising and fastest growing clean, homegrown renewable energy technologies critical incentives that spur their growth.

The House passed their third attempt to correct this irresponsible tax spending and shift funds to extend critical renewable energy and energy efficiency tax credits, as well as support purchases of plug-in hybrid electric vehicles. Perhaps the third time's a charm, but this victory could be short lived, with President Bush again threatening to veto and a Republican-led filibuster in the Senate expected (again!).

But I guess if President Bush doesn't have a clue what oil and gasoline prices are really like these days, he can be forgiven for ignorantly and irresponsibly defending oil subsidies to Exxon, Chevron, ConocoPhillips and friends... These oil companies are incidentally reaping record profits off of the record prices paid by every-day Americans at the pumps, all while the economy tanks... But maybe President Bush doesn't know that either.

So maybe we should go light on President Bush... After all, he doesn't know any better!

But WE, the every day American tax payer do!

WE know that lavishing subsidies on established and highly profitable industries is a pretty poor use of taxpayer money.

We ALSO know that subsidizing the energy industries of the past will not help us solve the energy challenges of the future! To do that, we're going to have to be Energy Smart! We're going to have to invest in new, clean, domestic energy sources like wind, solar, geothermal, energy efficiency, new 100+ mpg plug-in hybrid cars and more in order to have an energy supply that is sustainable, both environmentally AND economically.

WE know better, so let's let the Senate and President Bush know it's time to re-invest! Let your Senators know it's time to be smart with our energy subsidies.

Tell the Senate to pass H.R. 5351 the Renewable Energy and Energy Conservation Tax Act of 2008 so we can take a step towards a sustainable, prosperous and secure America!

Keeping Up the Power Shift: Senate Set to Take Second Stab at Energy Bill

Bits and pieces of information are coming in today indicating that the Senate is gearing up to take a second stab at passing an energy bill later this week.

After failing to pass the full energy bill passed by the House last week, Senate leaders negotiated over the weekend to seek a compromise that would net the bill the crucial 60 votes to overcome a Republican-led filibuster threat.

It appears they are nearing that compromise and a second attempt to end debate and pass the bill is scheduled for Thursday, December 13th. If it passes the Senate, the bill will return to the House for passage on Friday before heading to President Bush's desk. Whether or not the President will veto a bill expected to save Americans billions at the pump and on their utilities bills at a time of record high gas prices remains to be seen...

Word has it that the renewable energy standard has been dropped from the bill and that the bill will include a stripped down package of tax incentives for renewable energy. The final makeup of that tax package is still under negotiation and details are sparse, although it is expected to include a two-year extension of critical credits for renewable energy generation, enough to get us into a new President's term and a new Congress.

Clearly losing the renewable energy standard, which would have required large utilities to acquire 15% of their electricity from renewable sources by 2020, is a major disappointment (although Reid has pledged to try to pass it as a stand-alone bill in 2008).

The fact that the Senate has had such difficulty passing an energy bill with strong support for clean, domestic renewable energy is a clear sign that we've got a lot of work ahead of us to keep up the Power Shift! We need to work hard to ensure that political realities change over the next year to closely match what real reality demands of Congress!

However, it still looks like an energy bill well worth passing is heading for a vote tomorrow and it's time again to get on the phone and urge your Senators to get the job done and pass a clean energy bill!

The bill heading for a vote is expected to include:

• The first increase in fuel economy standards in 30 years, up to 35 miles per gallon by 2020. These provisions will save American families $700 - $1000 per year at the pump, with $22 billion in net consumer savings in 2020 alone.


• The best energy efficiency standards in U.S. history, including new efficiency standards for lighting, appliances and boilers and incentives for home weatherization and industrial energy efficiency. The bill also directs the federal government to be a leader in energy efficiency with cutting-edge, efficient building practices and lighting in all federal buildings.


• A "Green Jobs" provision that creates an Energy Efficiency and Renewable Energy Worker Training Program to train a quality workforce for “green” collar jobs -- such as solar panel manufacturer and green building construction worker -- created by federal renewable energy and energy efficiency initiatives. This program will provide training opportunities to our veterans, to those displaced by national energy and environmental policy and economic globalization, to individuals seeking pathways out of poverty, to at risk youth and to those workers in the energy field needing to update their skills.


• A biofuels standard that requires 36 billion gallons of renewable fuels by 2022, including at least 21 billion gallons that come from advanced biofuels that do not rely on corn or other edible feedstocks. While the expansion of corn-based ethanol raises environmental, economic and justice concerns, advanced biofuels using inedible biomass or even algae could displace significant amounts of oil and help decrease greenhouse gas emissions from transportation.


• Some clean energy tax package. The House version of the bill included $21 billion in tax incentives for renewable energy, energy efficiency and plug-in hybrid vehicles, financed in part by reinvesting $13.5 billion in unnecessary tax subsidies for Big Oil in the clean energy technologies of the future. The final Senate version will likely include a smaller tax package but should retain critical renewable energy tax incentives that will ensure the industry can continue to grow, providing more and more clean, domestic renewable energy for America.

So call your Senators today and urge them to finish the job and pass a clean energy bill tomorrow! The future prosperity of this country depends on the success of the clean, domestic energy technologies of the 21st Century, and this bill is a critical first step towards unlocking a clean energy revolution.

You should feel free to let your Senators know you were disappointed that they couldn't pass the House version of the energy bill, but tell them you expect them to still pass a strong bill tomorrow, including critical tax incentives for renewable energy generation.

So what are you waiting for? Get on the phone...