The Political reasons for not supporting certain environmental legislation are different from the economics reasons. Often the valid arguments of conservative and moderate economics are lost under the rhetoric and value-based arguments of conservative politicians.
Many conservative economists believe in environmental health measures and climate change but not the alternatives offered by specific legislation or politicians are economically sound or sustainable.
Some fully or over-subsidized energy sources are not sustainable and can create threats to national and global economies that pose an equal threat to environmental damage. These sources are not competitive in aggregate costs or the market would readily accept them.
Looking for option C and other innovations are important. A move toward public transportation improvements makes more sense.
Some politicians are interested in tax rebates and complicated fiscal approaches but a key tenant of government accounting is transparency; taxing to cover expenses of legislated services and infrastructure not profit or financial engineering.
Many supporters of green and renewable energy sources claim innovations in technology, materials, and methods have drastically reduced the cost and prices of green energy sources like wind and solar. (Register, Chip, 2015). The price of solar cells in china has dropped significantly, about 75%, in the past five years but part of that was because of heavily subsided U.S. solar manufacturing (Register, Chip, 2015).
Companies like Northwestern Energy in Montana are known for providing electric energy rates from wind or hydroelectric that are comparable to fossil fuel costs. The aggregate profitability of Northwestern Energy is strong but it relies on a combination of wind, hydroelectric, coal, and natural gas similar to BP or other international oil companies known for fossil fuels. Most large companies have incorporated wind, solar, or hydroelectric options to their energy.
These are weighted amounts. For Northwestern Energy the base rate for electricity is $1,688,500,000 while the base rate for coal and natural gas is $1,066,900,000. This demonstrates that electric is considerably more expensive to produce because it is well over half the cost to consumers but a much smaller portion of energy provided. In the breakdown to the Montana energy used; coal accounted for 22 Megawatts (MW), Gas 150 MW, and Wind 40 MW. The cost to consumers to convert all energy sources to wind would be astronomical. The integration of a portion of the resources being supplied by wind can be mitigated by reductions in the firm.
Another consideration is the true conservation. Wind requires large expanses of land for turbines, rendering and manufacturing resources and chemicals, and significant waste. Fossil fuels can be extracted and transported and the primary pollutants are CO2 in the air rather than chemical, metal resources, and waste.
Northwestern Nationally, the Energy Information Administration’s (EIA) 2012 National Energy Outlook predicts that the percentage of renewable energy generation in the United States is going to increase due to reduced costs of renewable technologies. Continued limited subsides for research and development can further reduce the cost until it is more economically viable.”The primary advantage to wind is that after integration prices are stable unlike the fluctuations in oil (MEIC, 2015).” In addition, the technology is advancing and the turbines are increasing in power. (MEIC, 2015).
The sales price does not necessarily reflect profitability; fixed and variable costs are a factor. Building new infrastructure, marketing, labor costs, production costs, maintenance, repairs, and costs and value are much larger factors for solar and wind that require permanent and massive land commitment. This is a primary factor for businesses that turn profitability into dividends, stock value, and shares for investors.
While consumer cost is comparable, it is not the only factor in market competition. The aggregate government subsidy is important, investors need incentives to invest and will not commit to a new innovation “en masse” unless the incentives are greater. While to subsidizing a full transition to renewable energy is not yet fiscally sound, continuing to support research and development is important. Many smaller regional firms can offer a market rate for regional fossil fuels comparable to large international firms but do not provide the investor incentives that support the large scale international operations.
BP’s basic earnings per share ranged from $20.55 in 2014 and $123.85 in 2013, ordinary annual dividends yield 6%, and $5.9 billion paid in dividends in 2014. Northwestern Energy paid diluted earnings per share of $2.46 in 2013 and $2.99 in 2014, dividends of $65,019,000 in 2014 (Northwestern annual report, 2014). BP has a much larger economic stimulus to the economy. In addition, both firms use a mixture of green energy resources. The profit margins are similar between gas and electric but the costs to customers for wind and hydroelectricity is much higher. Electric resources have the highest base rates and the lowest MW.
BP produced 1,007 barrel of oil per day in 2014 with sales and other operating revenue of $323,486,000,000 in 2014 and $4,003,000,000 million in profit for 2014 (BP annual report, 2014).
Public Transportation is a more effective policy option for environmental protection. It is economically viable and offers a true reduction in environment waste and contaminants. It is estimated that public transportation reduces U.S. fuel consumption by 4.2 billion gallons of gasoline each year and is more effective than energy saving appliances or light bulbs (apta.com, 2015).
Households with proximity to public transportation average about 4,400 miles less each year than those without access to public transportation. It is estimated that 85% of greenhouse gas emissions from transportation are related to the surface transportation system (apta.com, 2015). In addition, developers work to integrate green and renewable energy to public transportation which functions as a multiplier to the reduction of automobiles.
“U.S. public transportation saves 37 million metric tons of carbon dioxide annually — equivalent to the emissions resulting from the electricity generated for the use of 4.9 million households or every household in Washington DC; New York City; Atlanta; Denver; and Los Angeles combined (apta.com, 2015).”
“The United States can create and support 1.3 million new green jobs within the next two years by implementing $47.8 billion in supplemental transit capital projects, according to a transit needs estimate by the American Public Transportation Association. Every $1.25 billion investment in the nation’s transportation infrastructure supports approximately 35,000 jobs. Every $10 million in capital investment in public transportation can return up to $30 million in business sales alone (apta.com, 2015).”
The automotive industry is a major American economic institution but can still survive if major cities transition to public transportation. Many small and midsized cities are not appropriate for public transportation, and even in larger cities, some people need automobiles to transport materials, equipment, objects or travel long distances. Automobiles are still necessary for trucks and shipping. The idea is to create a significant reduction not eliminate automobiles.
The conversion to electric power is not as effective in reducing air pollution as many people think. The two largest contributors to U.S. Greenhouse gas emissions are the Electric Power Industry at 33% and transportation at 28%. A 2007 Intergovernmental panel on climate change reported greenhouse gas emissions must be reduced by 50% to 85% by 2050 in order to limit global warming. At average capacity for the trip to work public transportation reduces CO2 emissions by more than half. Further steps to insure hydroelectric energy sources are used can further reduce the amount of CO2 emissions (apta.com, 2015).