High Prices, Debt Crisis May Doom Obama's Green Energy Plans

(Reuters)

As Congress and President Obama spar over spending cuts for the next year and beyond, new questions are being raised over whether the U.S. can afford the clean energy subsidies that the president has championed in several appearances this year and in his budget for fiscal year 2012.

Obama is asking taxpayers to cough up $8 billion in clean energy subsidies next year -- $3.2 billion for energy efficiency and renewable energy programs, $300 million in credit subsidies to promote those projects, and another $550 million dollars to support "game-changing clean energy technologies."

Click here to get the taxpayer calculator to add up your contribution to clean energy spending.

"We say to the utilities, you've got to get this much energy from renewable sources, and then wind is competing with solar, which is competing with natural gas. And there's a healthy competition out there," the president said at a recent town hall meeting at a wind turbine plant run by Gamesa Technology Corporation in Fairless Hills, Pa.

But critics question whether there really is healthy competition among old fossil and new clean technologies when subsidies are taken out of the equation.

"When companies come to Congress or to the federal trough for their renewable project, it usually means that they have failed in the private sector," said Marc Morano, of Climate Depot, a website devoted to debunking the theory of man-made climate change.

He says an increasing number of studies point to deep inefficiencies of many so-called clean energies.

"In Europe, it's actually costing more to heat the windmills than the windmills are producing in the winter in the United Kingdom. I mean they're just not energy efficient," Morano said.

But supporters of the clean energy subsidies counter that fossil fuel production has long been subsidized.

"Clearly there's a double standard," said Kevin Smith of Solar Reserve, a company that builds utility scale solar arrays in the Southwest U.S. "If you look at what's happened with natural gas, oil and coal subsidies over the last 50 years, those industries have received billions and billions of dollars. They've built profitable industries that are now very successful."

Even Morano suggests that as the technologies evolve, renewable energies may one day prove to be more competitive. But that day may be a long way off.

Indeed, a recent article in the Las Vegas Sun which examines a heavily subsidized solar array project outside of Boulder City, Nev., supports much of what Morano claims.

The piece profiles a huge 775,000 solar panel array built and operated by Sempra Generation. Taxpayers fronted $42 million in tax credits for the array -- fully a third of it's total cost. While the project created about 350 construction jobs at a time of near record high unemployment, it now employs only five full time workers and provides no electricity to Nevada.

A spokesman for Sempra Generation told Fox News that the project, built last year, has now become a net revenue generator for taxpayers, and produces enough electricity for about 14,000 homes. The company mostly sells it's electricity to utilities in California.

For some, the larger question is whether the Obama administration, in the present climate of belt-tightening will allow carbon-based energies to truly compete with renewables on a level playing field -- a subsidy-free playing field.

Days before his confirmation as secretary of energy, Steven Chu told an interviewer that the United States needed to get gasoline prices up to European levels, where current prices are hovering around $8 a gallon.

More than two years later, that hope is approaching reality -- a result of increasing world demand, instability in key oil producing regions of the world and the Obama administration's resistance to freeing up domestic federal lands and waters to oil and natural gas drilling as well as coal mining.

The limit of a fragile economy's tolerance for high energy prices may be tested in the months to come, as will the president's hopes for a clean energy future.