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The Energy Spectator

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The phrase that kept echoing through my mind all day was a comment made recently by Jesse Ausubel, director of the Center for the Human Environment at Rockefeller University: "Alternate energy is going to be the next subprime mortgage meltdown." Four years from now we're going to be looking at a landscape littered with useless 50-story windmills and wondering why anybody ever thought they were worth building.

I tried this on a few venture capitalists, expecting a harsh response, and got a surprising answer. "You know, you're right," they all said. "It's already happening with gasohol. Look at those refineries closing in the Midwest. It'll probably happen here as well. As soon as the government removes those subsidies, the whole industry will collapse." There's a book waiting to be written, The Great Solar-and-Wind Meltdown of 2012.

The other thing I discovered is that there's a whole nuclear underground -- people who are convinced nuclear is the answer but are afraid to say it in public. At one point I sat down with a woman in her 50s who turned out to be a physicist. We nattered on cheerfully about alternate energy for a while until she finally asked me what I do. "I just wrote a book about nuclear power," I said. She immediately turned stone cold sober. "You know I was in nuclear in the 1980s. We thought we had the whole future ahead of us. Then everything fell apart. I think it's a tragedy this country abandoned nuclear. It would have given us all the clean energy we need."

Two other quiet enthusiasts were a pair of Haas Business School students, one from Spain, the other from Argentina. "I took a nuclear science course in Spain," said the young woman, "and the professor showed us there's nothing to be afraid of. I think it's ridiculous America isn't going ahead with nuclear power. Spain is even worse. They're trying to close reactors down. There's nothing else that's going to provide us with enough energy."

The high point of the afternoon came with the keynote speech by John Hofmeister, former president of Shell Oil and now head of some Washington NGO called Citizens for Affordable Energy. Hofmeister gave one of those speeches that makes you wonder why people ever think businessmen support the free market. "There is no free market in energy!" he thundered. "Look at OPEC! Look at the way the government won't let us drill offshore. How can you call that a free market?"

So instead of eliminating subsidies and mandates, of course, he wants to do away with markets altogether and let the government run the energy economy. "We need a Federal Energy Resources Board modeled on the Federal Reserve Board," he concluded. "Financial markets used to go through periodic manias and crashes in the 19th century but in 1913 and since then the peaks and valleys have smoothed out."

Hofmeister must not have been reading the papers since last August but fortunately there was an economist on hand to re-introduce a little reality. "The Federal Reserve is able to adjust the money supply because it effectively owns the currency of the United States," said Severin Borenstein, professor of economics at Haas, who served as conference gadfly. "You're not, I hope, suggesting we turn over ownership of all energy resources to the federal government."

I won't elaborate on Hofmeister's answer except to say that he obviously envisions himself as Chairman of the Federal Energy Resources Board.

The nuclear panel was a quiet little affair held in a small upstairs room with about 30 people in attendance. My fellow panelists, Scott Peterson, of the Nuclear Energy Institute, Cheryl Boggess, of Westinghouse, and John Conway, site vice president of Southern California Edison's Diablo Canyon, all spoke in favor. The audience, pretty much self-selected, mostly nodded their heads in agreement. (All the Greens were downstairs learning about financing renewables and the future of the U.S. auto industry.)

Boggess took exception when I said the U.S. nuclear industry was pretty much dead. (Westinghouse was bought by Toshiba in 2006.) "We're hiring right now!" she said. A reporter from the Contra Costa Times asked the obligatory question, "Won't nuclear power lead to the proliferation of nuclear weapons?" I pointed out that the world is going ahead with nuclear without us and the idea that we still control the technology is delusional. "Does anybody know who's building the reactor for Venezuela's Hugo Chavez?" I asked. Nobody did. (The answer is "Russia.")

Finally somebody got around to mentioning "The Stimulus." "Since what little money there was for nuclear was eventually cut out of the Stimulus Package," came the question, "isn't that bad news for the nuclear industry?"

Peterson of NEI responded. "Frankly, we don't need any money from The Stimulus. It would have been nice to have it but we don't need it."

"We don't even need the federal loan guarantees," chimed in Conway, of Southern California Edison. "There are 34 reactors under construction around the world. Nuclear is moving ahead so rapidly and reactors in this country are making so much money -- about $2 million a day -- all we need is for the federal government to grant us some licenses and let us go ahead and build. We don't need any government money."

It was nice to know in the Land of the Stimulus that somebody was still talking about economic value.