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Mandating the impossible: The EPA and cellulosic ethanol

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January 3, 2012 | Posted by Ken Cohen

Here’s a New Year’s resolution worth making: Let’s not mandate the impossible.

Unfortunately, the Environmental Protection Agency did just that last week, setting new quotas for 2012 that will require the nation’s refiners to add 8.65 million gallons of cellulosic ethanol to America’s fuel supplies.

The only catch: America doesn’t have the cellulosic ethanol to meet that standard.

Cellulosic ethanol is intended to be an advanced alternative to corn-based ethanol. By deriving it from inedible plant matter such as switchgrass, wood chips, and wheat straw, the hope is that cellulosic ethanol could supplement our transportation fuels in a way that is more efficient and has fewer harmful impacts on the environment and food prices than corn-based ethanol.
In practical terms, cellulosic ethanol still faces significant challenges. The scientific community and American industry have yet to find a way to make the fuel cost competitive.

As the National Research Council stated last month in a lengthy study on biofuels, “Currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel.”

This technological fact hasn’t stopped the EPA from setting impossible standards in the past. It mandated cellulosic ethanol quotas in 2010 and 2011, which failed abysmally, according to the EPA’s own data. (See chart.) In other words, the EPA’s decision makers should know better by now – and choose a new course of action.

Congress gave the EPA discretionary power to set what is called the Renewable Fuel Standard to take into account the state of investment, innovation, and capabilities of the biofuels sector. When lawmakers passed the Energy Independence and Security Act in 2007, they set lofty goals that many throughout the broader economy knew were impossible to meet.

Congress set a goal of producing 36 billion gallons of renewable fuels by the year 2022. Of that 36 billion gallons, nearly half (16 billion gallons) was supposed to come from yet-to-be-discovered breakthroughs in non-corn based ethanol.

That’s why the EPA was given flexibility. So, who will be paying for the impossible-to-reach EPA standards in 2012? The American economy and the American consumer.

Under the current law, refiners (and, indirectly, consumers) have to pay a fee for failing to blend cellulosic ethanol into existing fuel supplies. Meanwhile, because there is no alternative but to pay the fee, it has quietly turned into a revenue-raising device that contributes nothing to energy, growth, or jobs.

What should EPA and Washington do? It’s easy. Stop picking winners and losers in the marketplace – and let industry compete and do what we do best, which is to invest and innovate to bring real and affordable energy to consumers in a safe, secure, and environmentally responsible way.

As the president of the National Petrochemical & Refiners Association said, “Instead of imposing an unreasonable biofuels mandate, which would raise energy costs and impact fuel supplies, government should allow consumer choice and the free market to determine the mix of energy sources to best meet our nation’s needs.”

Rather than mandating the impossible, lawmakers and regulators should instead resolve to let markets work.

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West in political crisis has echoes of 1930s

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By Stella Dawson
Sun Jan 1, 2012 8:04am EST

(Reuters) – Dysfunctional politics threatens to deliver a protracted period of slow global growth, possibly lasting well beyond 2012, which will only deepen the political and economic problems for the West.

The global financial crisis that began four years ago has morphed into a political crisis for the United States and Europe. Leaders incapable of wrestling their debt loads to manageable levels or reviving strong economic growth are stoking turmoil in markets and populist unrest among the citizenry.

The political malaise is also hastening the shift of world economic power toward developing countries led by China. At worst, it could cause a second global recession bringing with it political upheaval on a scale not seen since the 1930s.

These unpalatable scenarios are being sketched by a growing number of leading political strategists, academics and economists after an extraordinary year when the once unthinkable came to pass: the United States had its credit rating downgraded while the developing world enjoys upgrades; Europe went cap in hand to Beijing for a financial bailout; and Brazil overtook Britain within the G7 club of major economies.

The shifting international economic order toward developing countries is nothing new. But it has been happening at a faster pace than expected, accelerated by what these analysts have begun describing as Western democracy in crisis.

They see a government credibility problem in the United States and European Union, stemming from a perception that the political elite is too closely tied to the financial elite in the West, and their collusion caused the financial chaos of 2007 and 2008 and its messy aftermath, leaving the average citizen burdened with higher public debt, higher taxes, unemployment and austerity programs.

Left to pay for what voters see as the elite’s mistakes, public confidence in government has been undermined, and political paralysis has set in as Western leaders struggle to pull governmental levers that are not working effectively.

In contrast, developing nations have been modernizing their institutions and markets, delivering growth rates in the past decade triple those of the West. By 2020, the Centre for Economics and Business Research in London estimates that India and Russia will have joined China and Brazil in the G7 ranks as the biggest economies in the world based on total GDP output, ousting Britain and France. Only the United States, Japan and Germany will be left from the old G7 that dominated the international order since World War II.

Niall Ferguson, a prominent economic historian now at Harvard, calls this an historic power shift.

“For the better part of 500 years, it was Westerners on both sides of the Atlantic who could say that they had the best economic system, that they developed the best political system and so forth. And those claims have sounded increasingly hollow in our time,” Ferguson said in an interview.

The breakdown in public confidence caused by the financial crisis has revealed a deeper problem. “What we’re seeing in government is part of a wider crisis of Western institutions,” he said.

The Tea Party movement in the United States, the Occupy Wall Street movement and riots in Europe all are populist expressions of this breakdown of trust. Institutionally, it is reflected in a U.S. Congress deadlocked over taxes and spending with lawmakers so polarized by different narratives on the causes and fixes for the financial crisis that it is nearly impossible to reach decisions, even though both sides recognize that if left unchanged, their policies will bankrupt the nation, he said.

In Europe, leaders lurch from summit to summit, making partial decisions on fixing a debt crisis and trying to save the 17-member monetary union. But in the process the political elite in Brussels and the capitals are losing touch with their democratic base, which is uncertain it wants to pay the price required for monetary union through deep cutbacks.

Heather Conley, a former U.S. Under Secretary of State for European Affairs and now a senior fellow at the Center for Strategic and International Studies, said this near political paralysis seen in the United States and Europe is common when governments are at an inflection point.

“Without decisive direction and leadership, we march in place or attempt to muddle through, uncertain of which path to take. The West is at such a moment,” she said.

“Only an external shock I fear will force us to take the uncertain (new) path. Or we will become so frustrated that the West will choose leaders who will take us in a radically new direction. I’m not sure our frustration level has reached that level, yet. But Europe may be arriving there soon.”

Governments in Greece, Italy and Spain have collapsed or been voted out of power in the past year, and 2012 brings presidential elections in the United States, France and Russia.

ASIA NOT IMMUNE

The fall-out from Europe’s debt crisis is being felt far and wide.

Japan already has endured nearly two decades of lost economic growth and weak political leadership after its financial bubble collapsed in the early 1990s.

George Friedman, geopolitical strategist and chief executive of Stratfor Global Intelligence, sees a distinct risk that China too will join the club of countries in political stalemate, subdued or stalled growth and popular unrest – with potentially serious consequences.

“When the United States, Europe and China go into a crisis of this sort, it can reasonably be said that the center of gravity of the world’s economy and most of its military power is in crisis. It is not a trivial moment,” Friedman wrote in “Dominoes of Doom” on the website EconomyWatch.com.

China’s economy, heavily dependent on exports, is slowing fast. Officials described the global economic outlook as “extremely grim” last month after its annual work conference, signaling deep concern as China enters a year of leadership change.

The Chinese government responded to the global recession spawned by the 2007-2008 financial meltdown with a massive credit expansion that has stoked inflation and fed a property boom. It also increased controls on the economy through state-owned companies, further concentrating state power, which Friedman sees as politically destabilizing as growth slows down.

Witness the past month villagers in southern China in a 10-day standoff with public officials over land expropriation, thousands marching in Haimen city to protest a power plant and a worker sit-in in Dongguan city demanding back pay after their paper plant closed.

ENDING PARALYSIS

The best that can be hoped for in 2012 is a muddling through, where economic growth in the United States averages around 2 percent compared with zero in the euro zone, analysts said. World growth, buoyed by emerging markets, looks set to average around 3 percent.

Martin Sass, founder of the New York based hedge fund M.D. Sass with $7.5 billion under management, is among those pinning his hopes on the elections breaking the stalemate. “I never expected the level of dysfunction in the U.S. and European lawmaking … and I never saw fundamentals count for so little in the stock market. Politics and contagion were the drivers of this underperforming market, not balance sheets and earnings.”

“It is going to take a new election in November (in the United States) to get any legislation through to deal with our problems,” Sass said.

If the political system starts functioning effectively again, Mohamed El-Erian, chief executive officer at PIMCO, the world’s largest bond fund, said it’s not too late for policymakers to catch up and avert serious economic downturn.

But elections alone may not prove the answer. To break the paralysis, political leaders need to offer a new vision, one that rebalances the cozy linkage between finance and politics, otherwise the credibility of the political system will remain compromised, said Scheherazade Rehman, professor of international affairs and finance at George Washington University.

“There has to be a shifting of our institutions. The banking system is at the heart of our economic system and with it extraordinary ties to the political system. We have to rethink the close relationship that caused the breakage,” she said.

The political crisis shot to the foreground this year as voters lost confidence in how governments responded to the 2007-2008 financial crisis, global recession and the resulting explosion in sovereign debt levels. Two narratives have emerged of what went wrong. The left casts the banker as the prime villain, unpunished by the political elite who allowed CEOs to violate all the principles of fiduciary and moral responsibility in pursuit of personal gain, which fuels the perception of a political system in collusion with a criminal financial elite it is unwilling to punish.

The right-wing narrative casts big government as the villain for exploiting the crisis to expand its regulatory powers that intrude on free markets, and to spend money on huge bailouts and social welfare programs that have only exploded the budget deficit.

In both narratives, the victim is the average citizen who is left paying a gigantic bill – through high unemployment, higher taxes and lost economic opportunity. Either way, the compact between political governance and economic life has broken.

“The political reaction, whether big government is seen at fault or big business, the reaction is that the system is tainted and there is too much crony capitalism at work,” said Raghuram Rajan, finance professor at the University of Chicago and former International Monetary Fund chief economist.

There is a distinct possibility that political dysfunction will continue well after the 2012 elections – held in May for France and November for the United States, while China completes its leadership handover by the spring of 2013.

In the United States, voters could return a divided and polarized Congress again, continuing the legislative standoff. One-party rule may prove little better, if the path chosen toward budgetary discipline is excessive taxation or ultra-steep budget cuts. In France, the election winner’s relationship with Germany and fellow EU leaders will prove critical.

Although Western democracy has demonstrated the flexibility to reform when facing severe challenges, the shadow of the 1930s looms large. This uncertainty over whether strong political leadership can emerge in 2012 is haunting markets.

John Browne, senior economic consultant to Euro Pacific Capital, is among the pessimists. He told clients in his year end note that American and European Union politicians have shown utter unwillingness to take tough decisions they know should be enacted to avoid looming global economic disaster.

“With an estimated $6 trillion plus solvency shortfall of the euro zone banks, and $16 trillion in U.S. public debt, it will take leadership of far greater caliber to avert a disaster. Such leadership is nowhere in sight,” he said.

(Reporting By Stella Dawson; editing by Claudia Parsons)

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Obama Recruits Qaradawi

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The administration is working with a Muslim Brotherhood jurist.

By Andrew C. McCarthy

The surrender is complete now. The Hindu reports that the Obama administration has turned to Sheikh Yusuf al-Qaradawi, the Muslim Brotherhood’s leading jurist, to mediate secret negotiations between the United States and the Taliban.

I wrote about Qaradawi at length in The Grand Jihad and, here at NRO, have regularly catalogued his activities (see, e.g., here, here, here, here, and here; see also Andrew Bostom’s “Qaradawi’s Odious Vision”). For those who may be unfamiliar with him, he is the most influential Sunni Islamist in the world, thanks to such ventures as his al-Jazeera TV program (Sharia and Life) and website (IslamOnline.net). In 2003, he issued a fatwa calling for the killing of American troops in Iraq. As he put it,

Those killed fighting the American forces are martyrs given their good intentions since they consider these invading troops an enemy within their territories but without their will. . . . Although they are seen by some as being wrong, those defending against attempts to control Islamic countries have the intention of jihad and bear a spirit of the defense of their homeland.

Qaradawi urges that Islam must dominate the world, under a global caliphate governed by sharia. He maintains that Islam “will conquer Europe [and] will conquer America.” He sometimes qualifies that the conquering will be done “not through the sword but through da’wa,” but the qualification is a feint.

Da’wa sounds harmless — it refers to missionary work to spread Islam. Islam, however, is not like other religions. The idea is not to spread a set of spiritual principles but incrementally to impose a full-scale social system with its own authoritarian legal code, covering all aspects of life and instituting a caste system in which women and non-Muslims are subjugated. Nor is da’wa like other missionary work; it is the use of all available means of pressure — political campaigns, lawfare, infiltration of the media, control of the education system, etc. — to advance (a) the acceptance of Islamic principles and (b) the evisceration of principles (e.g., free speech, economic liberty) that undergird competitors, in particular, Western civilization. Moreover, the claim that da’wa is non-violent is frivolous. Much of the mission of da’wa is to rationalize terrorism as divinely mandated self-defense.

Thus does Sheikh Qaradawi champion Hamas, mass-murder attacks, and suicide bombings. “They are not suicide operations,” he brays. “These are heroic martyrdom operations.” Indeed, he elaborates, “The martyr operations is [sic] the greatest of all sorts of jihad in the cause of Allah.”

Thus does Qaradawi urge the destruction of Israel, rebuking clerics who dare counsel against killing civilians. “I am astonished,” he inveighs, “that some sheikhs deliver fatwas that betray the mujahideen, instead of supporting them and urging them to sacrifice and martyrdom.” As the Investigative Project on Terrorism recounts, when the imam of Mecca’s Grand Mosque issued guidance against the killing of civilians, Qaradawi upbraided him: “It is unfortunate to hear that the grand imam has said it was not permissible to kill civilians in any country or state, even in Israel.”

Not surprisingly, then, the sheikh is also wont to invoke what the West refuses to acknowledge: the Jew-hatred that is endemic in Islam because it is rooted in scripture — not in modern grievances that could be satisfied if only the West changed its policies and Israel had the good grace to disappear. As Qaradawi puts it, echoing the charter of Hamas (the Muslim Brotherhood’s Palestinian branch):

This is what is told in the Hadith of Ibn-Omar and the Hadith of Abu-Hurairah: “You shall continue to fight the Jews and they will fight you, until the Muslims will kill them. And the Jew will hide behind the stone and the tree, and the stone and the tree will say: ‘Oh servant of Allah, Oh Muslim, this is a Jew behind me. Come and kill him!’ The resurrection will not come before this happens.” This is a text from the good omens in which we believe.

Qaradawi uses his al-Jazeera platform to preach this message to the Muslim masses. As the Middle East Media Research Institute and Robert Spencer document, in one memorable Friday “sermon” broadcast in 2009, he prayed that Allah would kill all Jews: “Oh Allah, take this oppressive, Jewish, Zionist band of people. Oh Allah, do not spare a single one of them. Oh Allah, count their numbers and kill them, down to the very last one.” He added that throughout history, Allah had imposed upon Jews “people who would punish them for their corruption. The last punishment was carried out by Adolph Hitler.”

After thousands of young Americans have laid down their lives to protect the United States from jihadist terror, President Obama apparently seeks to end the war by asking Qaradawi, a jihad-stoking enemy of the United States, to help him strike a deal that will install our Taliban enemies as part of the sharia state we have been building in Afghanistan. If the Hindu report is accurate, the price tag will include the release of Taliban prisoners from Gitmo — an element of the deal Reuters has also reported. The administration will also agree to the lifting of U.N. sanctions against the Taliban, and recognition of the Taliban as a legitimate political party (yes, just like the Muslim Brotherhood!). In return, the Taliban will pretend to forswear violence, to sever ties with al-Qaeda, and to cooperate with the rival Karzai regime.

It would mark one of the most shameful chapters in American history.

— Andrew C. McCarthy, a senior fellow at the National Review Institute, is the author, most recently, of The Grand Jihad: How Islam and the Left Sabotage America.

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USA: Alliance to Protect Nantucket Sound Releases Statement Regarding Cape Wind Energy Deal

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Yesterday, Audra Parker, President & CEO of Alliance to Protect Nantucket Sound released a statement regarding SJC uphold of Cape Wind energy deal.

“Today’s ruling is a blow to ratepayers, businesses, and municipalities who are being asked to bear billions of dollars in new electricity costs when other green energy alternatives are available at a fraction of the cost.

The good news is the increasingly clear reality that Cape Wind will never be built. Cape Wind has been denied FAA approval, has been denied critical Federal loan guarantees, has no utility willing to buy half its power, and cannot find investors. Those facts alone render this decision moot.”

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Solyndra: Politics infused Obama energy programs

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By Joe Stephens and Carol D. Leonnig

Linda Sterio remembers the excitement when President Obama arrived at Solyndra last year and described how his administration’s financial support for the plant was helping create hundreds of jobs. The company’s prospects appeared unlimited as Solyndra executives described the backlog of orders for its solar panels.

Then came the August morning when Sterio heard a newscaster announce that more than a thousand Solyndra employees were out of work. Only recently did she learn that, within the Obama administration, the company’s potential collapse had long been discussed.

“It’s not about the people; it’s politics,” said Sterio, who remains jobless and at risk of losing her home. “We all feel betrayed.”

Since the failure of the company, Obama’s entire $80 billion clean-
technology program has begun to look like a political liability for an administration about to enter a bruising reelection campaign.

Meant to create jobs and cut reliance on foreign oil, Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e-mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.

The records, some previously unreported, show that when warned that financial disaster might lie ahead, the administration remained steadfast in its support for Solyndra.

The documents reviewed by The Post, which began examining the clean-technology program a year ago, provide a detailed look inside the day-to-day workings of the upper levels of the Obama administration. They also give an unprecedented glimpse into high-level maneuvering by politically connected clean-technology investors.

They show that as Solyndra tottered, officials discussed the political fallout from its troubles, the “optics” in Washington and the impact that the company’s failure could have on the president’s prospects for a second term. Rarely, if ever, was there discussion of the impact that Solyndra’s collapse would have on laid-off workers or on the development of clean-
energy technology.

“What’s so troubling is that politics seems to be the dominant factor,” said Ryan Alexander, president of Taxpayers for Common Sense, a nonpartisan watchdog group. “They’re not talking about what the taxpayers are losing; they’re not talking about the failure of the technology, whether we bet on the wrong horse. What they are talking about is ‘How are we going to manage this politically?’ ”

The administration, which excluded lobbyists from policymaking positions, gave easy access to venture capitalists with stakes in some of the companies backed by the administration, the records show. Many of those investors had given to Obama’s 2008 campaign. Some took jobs in the administration and helped manage the clean-
energy program.

Documents show that senior officials pushed career bureaucrats to rush their decision on the loan so Vice President Biden could announce it during a trip to California. The records do not establish that anyone pressured the Energy Department to approve the Solyndra loan to benefit political contributors, but they suggest that there was an unwavering focus on promoting Solyndra and clean energy. Officials with the company and the administration have said that nothing untoward occurred and that the loan was granted on its merits.

Most documents that have been made public in connection with a congressional investigation relate to the period after the loan was granted. The process began in the George W. Bush administration but resulted in the first loan in the program being granted under Obama. As a result, many factors that led to Solyndra winning a half-billion-dollar federal loan remain unknown.

White House officials said that all key records regarding Solyndra’s loan approval have been released.

Officials acknowledged that some of the records provide an unvarnished view that they might have preferred to keep private — such as a senior energy adviser’s reference to a conference call about Solyndra as a “[expletive] show,” or a company investor writing that when Solyndra was mentioned in a meeting, Biden’s office “about had an orgasm.”

Officials said those unflattering disclosures reinforce their position that they are not hiding their actions and that, despite the blemishes, nothing suggests political considerations affected the original decision to extend the loan to Solyndra. They stressed that the administration disregarded advice to avoid political problems by replacing senior Energy Department managers and moving to abort Obama’s visit to Solyndra.

“Everything disclosed . . . affirms what we said on day one: This was a merit-based decision made by expert staffers at the Department of Energy,” White House spokesman Eric Schultz said in a statement.

Officials said that concern for workers was reflected in the administration’s decision to allow Solyndra employees to receive aid under a program for workers displaced by foreign competition.

“When Solyndra’s liquidity crisis became clear, the Department of Energy underwent a robust effort to find a viable path forward for the company,” the White House’s prepared statement said. “This administration is one that will fiercely fight to protect jobs even when it’s not the popular thing to do.”

Star power in D.C.

Like most presidential appearances, Obama’s May 2010 stop at Solyndra’s headquarters was closely managed political theater.

Obama’s handlers had lengthy e-mail discussions about how solar panels should be displayed (from a robotic arm, it was decided). They cautioned the company’s chief executive against wearing a suit (he opted for an open-neck shirt and black slacks) and asked another executive to wear a hard hat and white smock. They instructed blue-collar employees to wear everyday work clothes, to preserve what they called “the construction-worker feel.”

White House e-mails suggest that the original idea for “POTUS involvement” originated with then-Chief of Staff Rahm Emanuel. Emanuel, now mayor of Chicago, did not respond to a request for comment from The Post.

Well beyond the details of the factory photo op, raw political considerations surfaced repeatedly in conversations among many in the administration.

Just two days before the visit, Obama fundraiser Steve Westly warned senior presidential adviser Valerie Jarrett that an appearance could be problematic. Westly, an investment fund manager with stakes in green-energy companies, said he was speaking for a number of Obama supporters in asking the president to postpone the visit because Solyndra’s financial prospects were dim and the company’s failure could generate negative media attention.

“The president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall,” Westly wrote. Westly did not respond to a request for comment from The Post.

Similar concerns arose repeatedly among officials inside the White House. One staffer at the Office of Management and Budget suggested to a colleague that the visit could “prove embarrassing to the administration in the not too distant future.” Even Ron Klain, Biden’s chief of staff, acknowledged “risk” in the trip.

But administration officials ultimately waved off the jitters, after assurances from Energy Department officials that their policy was sound and that Solyndra’s troubles would be fleeting. After Obama’s trip, the administration hung a photo from his visit on a wall in the West Wing, to underscore good things to come.

Solyndra’s financial picture did not improve, however, and by year’s end the company was crumbling. Its investors pitched bailout plans, seeking help from what a Solyndra executive referred to as the “Bank of Washington” — his apparent term for U.S. taxpayers. The Energy Department rebuffed the plans, at least initially.

In late 2010, Solyndra board member Steve Mitchell told his associates that Energy Department officials had conceded that additional financing was necessary yet said in private meetings that they lacked the political muscle to deliver it. “The DOE really thinks politically before it thinks economically,” Mitchell concluded. A spokesman for Mitchell said he would have no comment for this article. An Energy Department spokesman said that all decisions regarding the loan were based on merit.

Solyndra eventually realized that it had to lay off workers to stay afloat — no small step for a company that the president had backed to create jobs in a recession. But ­records indicate that the Energy Department urged company officials to delay the move until after the contentious November 2010 midterm elections, which imperiled Democratic control of Congress.

Despite the effect that timing might have on workers, one e-mail among company investors ended the discussion by asserting: “No announcement till after elections at doe request.” An Energy Department spokesman did not respond to requests for comment for this article.

More than once, investors wrote that the administration appeared to be making particular decisions to avoid looking “bad.” A December 2010 e-mail between administration officials’ staffers seemed to confirm the suspicions, concluding that “a meltdown” at Solyndra “would likely be very embarrassing for DOE and the Administration.”

An outside energy adviser foresaw serious political damage, writing to senior West Wing officials in February to warn that because federal loans went to companies linked to Obama donors, a wave of Republican attacks “are surely coming.” He recommended that Obama consider replacing Energy Secretary Steven Chu and his deputies, perhaps with a bipartisan management team.

A Solyndra board member, in a memo, described at length mistakes he thought that company founder Christian Gronet had made, saying that some of the stories about his actions “border on moronic” and that Gronet’s missteps had sparked an executive mutiny. ­Gronet survived, the board member suggested, only because of his close relationship with Energy Department leaders and because he had “star power in D.C.”

Gronet’s attorney, Miles Ehrlich, said in a statement last week that Gronet did his best but ­acknowledged that there had been internal debate about the business strategies he chose.

Political calculus was especially on display in an e-mail early this year between administration staffers who calibrated the damage that could result from pushing back Solyndra’s collapse by a few months at a time.

“The optics of a Solyndra default will be bad whenever it occurs,” an OMB staff member wrote to a colleague. “If Solyndra defaults down the road, the optics will arguably be worse later than they would be today. . . . In addition, the timing will likely coincide with the 2012 campaign season heating up.”

Solyndra executives and investors were attuned to the value of playing politics. Memos from Solyndra’s lobbying firm, McBee Strategic Consulting, stressed the need to “socialize” with leaders in Washington and to mobilize a lobbying effort described variously as quiet, surgical and aggressive.

Dinner in Vegas

Beyond the West Wing, the documents provide a vivid glimpse into high-level machinations inside the world of clean-energy entrepreneurs.

Solyndra’s strongest political connection was to George Kaiser, a Democratic fundraiser and oil industry billionaire who had once hosted Obama at his home in Oklahoma. Kaiser’s family foundation owned more than a third of the solar panel company, and Kaiser took a direct interest in its operations.

With the 2010 midterm elections just days away, Kaiser flew to Las Vegas to help the party cause. He was a guest at a private fundraising dinner for Senate Majority Leader Harry M. Reid (Nev.), but the real attraction at the event was its headliner — Obama. Realizing he might have an opportunity to talk with the president, Kaiser’s staff prepped him with talking points about Solyndra.

Kaiser did not have to angle for Obama’s attention. Organizers seated him next to the world’s most powerful man — for two hours.

“OK, I’ll admit it. It was pretty intoxicating,” Kaiser effused in an e-mail to an associate at 5:30 the next morning. “Charming and incisive as always. Casual conversation; not speechifying.”

Kaiser did not squander his time. While he avoided the use of the word “Solyndra,” according to the account he later gave to colleagues, he complained to the president about Chinese manufacturers dumping cheap solar panels on the U.S. market and pressed Obama’s deputy chief of staff about the need for a Buy American Act for federal agencies. The company was intent on making the federal government a major customer — part of what a Solyndra investment adviser called the “Uncle Sam” strategy — and the new act would give Solyndra an advantage.

Kaiser, who has declined in­terview requests, said through spokesman Renzi Stone that he has not discussed Solyndra’s loan “with the U.S. government.” Other e-mails show that he rejected requests to take a more forceful role in advocating for the company.

Nonetheless, records show that Kaiser, a frequent visitor to the White House, was in contact with officials at Solyndra and its biggest investors, and advised them on leveraging the power of the West Wing.

“Why don’t you pursue your contacts with the WH?” Kaiser advised a Solyndra board member in October 2010.

Nonprofit law specialists said that Kaiser’s focus on Solyndra was striking, because he had no official role at the company and had no personal investment in the corporation. After amassing a fortune in the oil and banking industries, Kaiser had endowed a nonprofit corporation that bore his name, but he did not sit on its board.

The nonprofit corporation, known as the George Kaiser Family Foundation, had its own investment fund, which owned a third of Solyndra. Mitchell, a Solyndra board member, was the fund’s manager.

Despite those walls between Kaiser and Solyndra, e-mail exchanges show that Mitchell repeatedly sought Kaiser’s counsel and in one instance requested ­“authority” to make a major move.

Nonprofit experts stressed that once Kaiser donated his money to charity — and thereby qualified for millions of dollars in tax breaks — the money was no longer his under federal law.

Kaiser arrived in Las Vegas on the Friday night of the fundraiser, carrying a photo of himself and the president, which Obama signed for him. Over the evening, the oilman’s conversation moved from social chatter to business.

“I talked in general about the Chinese and solar but didn’t want to get too specific with him,” Kaiser told associates. “I did talk to him about the Chinese subsidy over the past nine months and the effect it was having on U.S. solar and wind manufacturers. . . . I thought that a more aggressive trade policy with the Chinese was essential. . . . [Obama] said that these issues would be addressed aggressively at the G-20.”

As for majority leader Reid, Kaiser confided in his e-mails: “Harry was mushy nice . . . Barack said privately that Harry would win by a small margin. I hope he’s right.”

Stone said last week that the dinner was only the second time Kaiser had met the president and that there was nothing wrong with Kaiser taking an interest in the foundation and its investments. While the foundation’s board respected Kaiser’s advice, its members made all the financial decisions, he said.

Packing up

Today, a handful of Solyndra employees remain at its Silicon Valley factory, helping wind down operations. Of the 1,100 workers who lost their jobs, an estimated 90 percent remain unemployed, such as Sterio. She’s relying on help from relatives to make payments on her home, where she lives with her ailing husband and four grandchildren.

Solyndra has failed to attract a buyer who would keep the plant operating, so it is trying to unload its assets piecemeal to pay off its debts. The first $75 million recovered is expected to go to Kaiser’s nonprofit organization and other investors; it is unclear how much will be left for taxpayers.

Along with selling its microscopes and industrial robots, the company in November auctioned off the 30-foot-long blue banner that served as a backdrop for Obama’s factory visit.

Winning bidder Scott Logsdon, a laid-off Solyndra worker who’s been lucky enough to land a new job, snapped up the sign for $400. He’s hoping that with all of the political attention Solyndra’s failure has received, the value of the sign will appreciate by Election Day.

It reads: “Solyndra . . . Made in the USA.”

Research director Alice Crites contributed to this report.

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US farm drama: Predator drone assists an arrest

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A US family has been arrested with the help of a Predator drone, after a search for a missing cow did not go to plan.By “drone” we do mean military reconnaissance and assault flying machine used by the US Army and the CIA, mostly abroad.

This is the first time in American history that an unmanned aircraft has been used to assist police in making an arrest on US soil. To be precise, this is the same Predator drone that the US army uses in military missions across Afghanistan, Pakistan and any other theater of US-inspired conflict.

The drone was called to the rescue when… six cows went missing in North Dakota.

Nelson County Sheriff Kelly Janke went searching for them on the Brossart family farm, armed with a warrant. Next thing he knew, he was chased off by three armed men – Alex, Thomas and Jacob Brossart.

Next thing they knew – a mini army and a Predator B drone have been called in.

State Highway Patrol, a regional SWAT team, a bomb squad, ambulance, deputy sheriffs from three other counties and a drone arrived at the scene, reports the Los Angeles Times. The drone was on its way back to its hangar from a mission on the US-Canadian border, and since it had fuel left in its tank, the pilot agreed to send it to the farm.

The drone circled the farm while Janke and other officers watched live thermal images from the comfort of their van. Once the suspects had been spotted and it was confirmed that they were not armed, police moved in and arrests were made. A property search turned up two rifles, two shotguns, assorted bows and a samurai sword, reports the Los Angeles Times.

The missing cows have been found too.

A total of five people were arrested – Rodney Brossart, his sons Alex, Thomas and Jacob and their sister Abby. All face a total of 11 felony charges. Later they were all released on bail.

Earlier this year, Janke attended a briefing on how Customs and Border Protection drones can assist police, and when an opportunity presented itself, he called for the unmanned aircraft.

In November, the Federal Aviation Administration had been considering rules that would bring the controversial aircraft into the country.And voilà! Here they are.

According to the Department of Homeland Security’s website, the government has already been using drones domestically for several years, but mostly keeps mum on their missions, saying only that they are regularly used for “support of disaster relief efforts.”

But with missile-equipped drones causing thousands of deaths overseas, the introduction of a drone program Stateside could be detrimental to America as it would mean the government considered its own territory a war zone.

“It’s going to happen,” Dan Elwell, vice president of civil aviation at the Aerospace Industries Association, toldthe Times. “Now it’s about figuring out how to safely assimilate the technology into national airspace.”

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Draft U.N. climate accord emerges, debate turns ugly

Kyoto Protocol participation map 2005 Iraq

By Jon Herskovitz and Nina Chestney

DURBAN | Sat Dec 10, 2011 6:11pm EST

(Reuters) – The chairwoman of U.N. climate talks urged delegates to approve a compromise deal on fighting global warming in the interests of the planet, but an accord remained elusive on Sunday and rich and poor states traded barbs over the limited scope of the package.

South African Foreign Minister Maite Nkoana-Mashabane said the four separate texts represented a good outcome after two weeks of sometimes angry debates in the port city of Durban.

“I think we all realize they are not perfect. But we should not let the perfect become the enemy of the good and the possible,” she told the conference.

Much of the discussion has focused on an EU plan designed to push major polluters — from developed and fast-growing emerging economies like China and India — to accept legally binding cuts in their greenhouse gas emissions.

EU negotiators had accepted “legal instrument” in one draft as a phrase implying a more binding commitment. But the latest version spoke of a “protocol, another legal instrument or a legal outcome,” the sort of weak phrasing that almost collapsed the talks on Friday.

Asked if the latest language was acceptable, Karl Hood, who represents an alliance of 43 small island states, said: “No it’s not. Never was and never will be. It’s too broad a statement.”

His alliance colleague MJ Mace, added: “You need a legally binding instrument. You have legal outcomes all the time. A decision is an outcome. You need something treaty like.”

“BLACKMAIL”

The discussions took an increasingly bitter turn as they headed into Sunday, a second extra day that made the negotiations the longest in two decades of U.N. climate talks.

Venezuela’s climate envoy Claudia Salerno said she had received threats because of her objections to the draft texts.

“In the corridor, I have received two threats. One, that if Venezuela do not adopt the text, they will not give us the second commitment period,” she said, referring to an extension of the Kyoto Protocol, the only global pact enforcing carbon cuts.

“The most pathetic and the most lowest threat… we are not going to have the Green Climate Fund,” which is designed to help poor nations tackle global warming and nudge them towards a new global effort to fight climate change.

She did not say who had made the threat and delegates heard her allegation in silence.

Among the sticking points holding up a deal were an extension of the Kyoto Protocol. The draft text says the second Kyoto phase should end in 2017, but that clashes with the EU’s own binding goal to cut carbon emissions by 20 percent by 2020.

U.S. VS CHINA AND INDIA

But behind the back and forth over language and technical details, the talks have boiled down to a tussle between the United States, which wants all polluters to be held to the same legal standard on emissions cuts, and China and India who want to ensure their fast growing economies are not shackled.

The fractious late night exchanges punctured the earlier mood of cautious optimism which had suggested agreement on the four separate accord in the package was possible.

Should the talks collapse on Sunday, that would represent a major setback for host South Africa and raise the prospect that the Kyoto Protocol could expire at the end of 2012 with no successor treaty in place.

Scientists warn that time is running out to close the gap between current pledges on cutting greenhouse gases and avoiding a catastrophic rise in average global temperatures.

U.N. reports released in the last month warned delays on a global agreement to cut greenhouse gas emissions will make it harder to keep the average temperature rise to within 2 Celsius over the next century.

A warming planet has already intensified droughts and floods, increased crop failures and sea levels could rise to levels that would submerge several small island nations, who are holding out for more ambitious targets in emissions cuts.

(Reporting by Nina Chestney, Barbara Lewis, Agnieszka Flak, Andrew Allan, Michael Szabo and Stian Reklev; editing by Jon Boyle)

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Gone with the Wind Subsidies

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Nicolas Loris
December 9, 2011 at 10:52 am

The year 2012 marks a monumental yet depressing milestone for the wind energy industry: 20 years of tax credits.

The federal renewable energy production tax credit, which allows wind producers to take a 30 percent investment tax credit or receive a 2.2-cents-per-kilowatt-hour production tax credit, has been around since 1992. The tax credit expires at the end of 2012, and the wind energy advocates are already ramping up their efforts to include an extension in any end-of-the-year must-pass legislation. It’s time to let this wasteful, unnecessary subsidy run out.

The Wrong Way to Promote Technology

Let’s take it back to 1992. The parents are watching Murphy Brown, the kids are watching Full House, and people are rockin’ out to Nirvana and Dr. Dre. (Some things never change.) And wind was ready to usher in a new era of energy production. In fact, Matthew Wald wrote in a 1992 New York Times article, “A New Era for Windmill Power,” that “striking improvements in technology, the commercial use of these windmills, or wind turbines as the builders call them, has shown that in addition to being pollution free, they can now compete with fossil fuels in the cost of producing electricity.”

He went on: “Kingsley E. Chatton, president of U.S. Windpower, which operates 22 new-generation windmills here, said the economics of wind power was at the point where it ‘will compete with fossil fuel.’ Others agree.”

Twenty years of subsidies later, wind still only provides a paltry 2.3 percent of America’s electricity in 2010, and it still needs subsidies.

Jim Nelson, CEO of Solar3D, argues that government subsidies are obstructing innovation in the renewable-energy sector:

Operating subsidies, or installation subsidies, helps get clean energy sources installed but the problem is that current technology is not economically competitive. Everything we do needs to be done with a view toward global competitiveness. Unfortunately, because current technology is not economical relative to alternatives, it does not promote our competitiveness.

The problem is that subsidies promote technological malaise. They take away the incentive to innovate and lower cost by promoting business models geared more toward gaining favor with politicians than on technological innovation. The result is that subsidized industries quickly become dependent on government. At that point, long-term competitiveness becomes secondary to near-term survival, which is generally conditioned on more handouts.

Thus when the government support is threatened, the propped-up industry responds with pleas for more handouts. Recognizing that their survival depends more on securing subsidies than on technological innovation, subsidized industries reject such investments to the extent that they too are not subsidized by government. Hence, the vicious cycle of subsidies inevitably result in technological stagnation.

When 2.2 Cents Adds Up

That 2.2 cents doesn’t sound like much, but it is on average 40 percent of the wholesale price of electricity. Treasury says the tax credits costs taxpayers $1.5 billion annually. This is uncalled for. Not only is the nation facing $15 trillion of debt, but it already has access to ample supplies of diverse electricity sources that are perfectly capable of meeting our energy demands so long as government gets out of the way. Not only are the subsidies not needed, but they do not work. So regardless of our debt problems, taxpayers shouldn’t be subsidizing any energy source.

Artificially Creating Politically Preferred Jobs and More Lobbying Jobs Will Not Grow Our Economy

Wind-energy advocacy groups are on their megaphones screaming that without the extension of the tax credits, thousands of jobs will be lost. This is a half true, at best.

Subsidizing uneconomical industries, as perhaps the wind-energy tax credit has done for two decades, shifts labor and capital away from other sectors of the economy. Removing the subsidy would free up these resources to be more productive elsewhere in the U.S. economy. In the process, jobs that rely on taxpayer handouts would likely go away. But the newly available resources could then go toward the likely creation of more and better jobs.

If we produce more wind energy without subsidies, all the better, but the American Wind Energy Association says that may not be the case if the tax credit expires. Spokesman Peter Kelly said, “Industrywide we are seeing a slowdown in orders for towers and turbines after 2012 that is rippling down the supply chain and the big issue is the lack of certainty around the production tax credit that gives a favorable low tax rate to renewable energy.”

President of the Cheyenne and Laramie County economic development organization Randy Bruns echoed, “A lot of these projects, the economics change without that tax credit.”

If wind energy is not economically viable without the taxpayers’ crutch, then we’re propping up a market loser. If wind energy is a market winner, the subsidy is taking money out of the taxpayers’ wallets and putting into the hands of the wind producers. Neither case makes any sense.

Removing the government’s influence in the market reduces the need for more office space on K Street in Washington, D.C., the central hub of lobbyists. Just yesterday, Occupy Wall Street shut down K Street with protests, but they should direct their message to the root cause of lobbying—government controlling decisions that are best left for the private sector. If Occupy Wall Street is sincere in its fight against crony capitalism, it would be arguing for less government intervention into the economy, not more.

These problems will continue to persist so long as politicians continue to expand subsidies for their pet projects. When it comes to energy subsidies, we need to prevent the new and repeal the old.

That’s my 2.2 cents. I’d like to keep them in my own pocket.

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