Critics Say Money Should Go to ‘Pure’ R&D

By Gardner, Dave

Debate in Harrisburg about Gov. Ed Rendell’s Energy Independence Strategy plan is kindling philosophical arguments about government’s role in the stimulation of commerce and technology.

The complex plan’s stated goals are to urgently cut energy costs, move Pennsylvania toward energy independence and stimulate the state’s economy. This would be accomplished through creation of the $850 million Energy Independence Fund, plus the enactment of new laws and regulatory policies.

According to Gov. Rendell, the plan involves three major initiatives:

* One is to expand Pennsylvania’s energy production and energy technology sectors to create more jobs;

* The plan also seeks to reduce Pennsylvania’s reliance on foreign fuels; and

* Increase Pennsylvania’s clean energy production capacity.

Additionally, the governor wants to save consumers $10 billion in energy costs over the next 10 years.

Vital public debate

Rebecca Bagley, deputy secretary with the Department of Community and Economic Development (DCED), says the debate taking place in the state’s General Assembly will bring energy to the forefront of people’s minds. She comments that there is an overall belief in the assembly that the process is vital to the economic well-being of the state.

“We have certainly had plenty of different proposals being created, but the real debate is not on two different sides of the aisle, with the typical Republican against Democrat,” says Bagley. “It’s about the specific initiatives. We must bring together people from the public, private, educational and farm sectors to provide input for our policymakers”

One vital area of the proposal, according to Bagley, involves creation of the fund that would provide $850 million to different interests that can be involved in the state’s alternative fuels market.

“For business, this will mean dollars to early stage development capital, loans and grants and site preparation programs,” says Bagley.

Rep. Michael Gerber (D-Montgomery County), says that the possibilities that could be created from the plan should be exciting for the business community.

Gerber says that, if approved, the plan will seek to create new opportunities for energy and funding for growth opportunities, plus long-term energy cost savings for business.

The core bills include an emphasis on clean fuels, bio-fuels, stimulation of solar energy and energy conservation.

“We hope that we can take advantage of the burgeoning alternative energy market, because there currently is, no East Coast leader with energy,” says Gerber. “Wall Street is just waiting for traders to pop up so they can drop money.”

Concerning the $850 million fuels investment proposed by the governor, Gerber says that the concerns being expressed around the state are understandable. However, in his opinion, there has to be some investment in infrastructure to stimulate growth if the state is to take a leading place in energy development.

“There also has to be as system of checks and balances with this money, with formal structures, says Gerber. “These types of energy technologies are already at work in other countries, and we have the natural resources to make them work here.”

Commendable attention

Gene Barr, vice president of government and public affairs with the Pennsylvania Chamber of Business and Industry, openly says that the governor is to be commended for his attention to energy. However, his organization has deep reservations about the plan to borrow $850 million and then channel the funds to various business interests.

“The vague language of the governor’s proposals is speculative, says Barr. “But, in effect, the government will be picking winners and losers by spending over a three-year period. Who can pick technologies accurately? Wind, solar, and bio materials are all unknowns. The state will finance the borrowing over 25 to 30 years, and this will create a long-term financial commitment to technologies that may not pan out. Unexpected consequences will surely occur. Reliability, cost and environmental impact will be sorted out by decision, and not by the market.”

Barr charges that the plan offers very little detail about how the money will be distributed, and what companies will be mandated. He says the initiative will pay companies to move to Pennsylvania, and that the money will go to firms that specialize in various forms of energy development.

In Barr’s opinion, this will create a vested interest in a particular company by giving away government money. He also says a proposed tax on electricity will be meager for consumers, but companies that use a lot of electricity could pay as much as $10,000 annually.

“Energy intensive companies will suffer,” says Barr.

Technological choices

One of the fundamental questions offered by Barr concerns what specific energy-intensive technologies will be promoted by the state. He points out that synthetic fuels were, at one time, hailed as the nation’s energy solution, but that emphasis has simply “fizzled out.”

Other problems listed by Barr include how nuclear energy creates dangerous waste, the fact that wind energy can be sporadic, and that coal use has serious environmental issues.

He agrees with arguments that the technological past of the United States is littered with technologies that did pan out, such as the claims of cold nuclear fusion in 1989 and fuel cell technology for automobiles.

In regard to ethanol production, corn is tied to the nation’s commodity markets. In part because corn is being channeled for ethanol production, food prices are already rising.

However, according to Barr, ethanol that could potentially be produced from cellulose is in a vastly different category. This would involve new technologies and bio-chemical processes not related to a food commodity.

“In fact, with today’s technologies, there are no real solutions, but only trade-offs, says Barr. “It would be best for the market to sort this out, and not to have it attempted by government mandate. Real energy independence is a great idea. But the road to get there is unknown. Every energy answer out there also still uses a great deal of oil.”

Barr adds that his organization believes there is true value to financing pure research and development in regard to energy independence. He calls this approach a “whole different issue.”

Copyright Northeast Pennsylvania Business Journal Oct 2007

(c) 2007 Northeast Pennsylvania Business Journal. Provided by ProQuest Information and Learning. All rights Reserved.