Archive for May, 2009


Watering the Milk: Government Deficits and Inflation

Monday, May 25th, 2009

The following is an excerpt from The End of Money and the Future of Civilization by Thomas H. Greco, Jr.. It has been adapted for the Web.

Most bankers and politicians talk about inflation as if it were some mysterious natural phenomenon. The truth is that the only real mystery about inflation is why we allow it to continue. Most of the confusion about inflation comes from the failure to distinguish between cause and effect. Let us be clear, a general increase in the price level is the effect; inflation is the cause.

Improper Basis of Issue by Banks Is Inflationary

As pointed out earlier, the vast majority of money is created by commercial banks by the process of lending it into circulation. They have the power to make loans (issue money) on either a proper basis or an improper basis. It is not the amount of money per se that causes inflation, but the basis upon which it is created. Loans made on an improper basis have the effect of inflating the money supply. What would be an improper basis?

An improper basis is any loan that does not put goods or services into the market either immediately or in the very near term. Commercial banks play a dual role. They act both as “depositories” and as “banks of issue.” In their role of depository, banks lend out depositors’ funds (your savings and mine) to those who have need of them. That may be for either consumption or the creation of new productive capacity (capital formation). As banks for issue, they create new deposits (money) on the basis of short-term commercial bills that accompany the delivery of goods to market. That’s the way it is supposed to work.

In practice, however, banks these days make little distinction between these two roles and they commonly create deposits (money) by making loans to finance both the flow of goods and services into the market as well as making loans that take them out of the market. When a bank makes a loan for the purpose of financing consumer purchases or for investment in long-term productive assets, those newly created deposits are inflationary—because they deliver goods and services to the marketplace only in the distant future, or not at all. Improper bases of issue, then, include the purchase by banks of government bonds in excess of time deposits held by savers, as well as loans that finance market speculation.

Government Deficits and Inflation

We need to consider how governments inflate the money supply. In some countries governments spend their currency directly into circulation. The “greenbacks” that were spent into circulation by the United States government during the Civil War are one historical example. Such issuance is inflationary if it exceeds the short-term tax and other revenues of the government. In countries like the United States, the government does not inflate the money supply directly, but instead accomplishes it in collusion with the central bank and the banking system. When the Federal Reserve or a commercial bank buys government bonds as described above, money is added to the economy on an improper basis. The purchase of government bonds does not bring any additional goods or services into the market. Ron Paul has on many occasions reminded his colleagues in Congress how this collusion works. In 1997, he told them this:

The Congress will spend too much because there is tremendous pressure to spend on all these good things we do; all the welfare programs, and all the military expenditures to police the world and build bases around the world . . . lo and behold, there is not enough money to borrow and not enough tax money to go around, so they have to have one more vehicle, and that is the creation of money out of thin air, and this is what they do. They send the Treasury bills or the bonds to the Federal Reserve, and with a computer they can turn a switch and create a billion or $10 billion in a single day and that debases the currency. It diminishes the value of the money and alters interest rates and causes so much mischief that, if people are concerned about the economy or their standard of living or rising costs of living, this is the source of the problem. . . . Why do we allow the Government to counterfeit the money and make it worthless all the time?93

In response to inflation, vendors (including workers and professionals who sell their labor services) will raise their prices (if they have sufficient market power to do so) as the only way they have of compensating for the malfeasance of the government and banking sectors.

The process of inflation can be likened to a farmer adding water to his milk. Suppose the farmer were to divert half his milk production to his own use, leaving only half of the amount that he formerly delivered to his customers. With only half as much milk to sell now, he would have to leave many of his former customers to go without. In order to avoid a loss of income, a dishonest farmer might simply add water to the remaining milk to deceive his customers into believing that they were receiving just as much milk as before. If that process were extended little by little, with more and more water being added to less and less milk, it might go undetected. Thus there would be the appearance that customers would have the same amount of milk while they slowly starve to death. So it is with the creation of “money” that adds no value to the economy.

Illustration by Dennis Pacheco.

 


 

  1. Federal Reserve Has Monopoly over Money and Credit in United States, Congressional Record, (April 28, 1997): H 1901. www.house.gov/paul/congrec/congrec97/cr042897.htm.

Knowing the Difference Between Power and Energy Could Save You Money

Sunday, May 24th, 2009

Don’t get scammed by some unscrupulous wind turbine manufacturer’s bogus “power rating”—know your terms and take control of the conversation.

The following is an excerpt from Wind Energy Basics: A Guide to Home- and Community-Scale Wind Energy Systems by Paul Gipe. It has been adapted for the Web.

In casual conversation, we use the terms power and energy interchangeably. But knowing the difference between the two can save you a lot of headaches—and a lot of money.

Energy is the ability to do work or the amount of work actually performed. For our purposes here, energy is given in kilowatt-hours (kWh) of electricity produced by a wind turbine or consumed in a home or business. When most people pay their utility bill, they pay for the electricity they consumed in kWh.

Power is the rate at which energy is generated or consumed, that is, kilowatt-hours per hour (kWh/h) or kilowatts (kW). One kilowatt is 1,000 watts (W). One megawatt is 1,000 kilowatts or 1 million watts.

The distinction between kilowatts and kilowatt-hours is critically important. Knowing the difference can keep you from being confused by a wind turbine’s size in kilowatts (or for very small wind turbines, watts), and how much energy, in kilowatt-hours, it will actually produce. Some unscrupulous manufacturers play upon the public’s ignorance of this distinction and give their wind turbines a very high “power rating” when the actual turbine is unlikely to deliver as much electricity as a competitor with a low power rating.

The “power” rating of a wind turbine is an unreliable and often very misleading shorthand for how much energy a wind turbine will capture.

In Wind Energy Basics the emphasis is on “energy.” The most reliable indicator of how much electricity a wind turbine will generate is its rotor diameter.

How to Make 3 Kinds of Kimchi

Saturday, May 23rd, 2009

If I may be graphic for a moment—my mouth is watering, literally, as I type this. I have a new food passion, and its name is kimchi. I haven’t tried making it myself yet, but it’s one of my favorite things to order at the local Korean restaurant. This tangy, spicy side dish can be cooked with pork, in savory pancakes, or as a soup stock. And imagine if you made it with your own fresh, home-grown vegetables! That is a one-way ticket to Delicious City (population: you).

The following is an excerpt from Fresh Food from Small Spaces: The Square-Inch Gardener’s Guide to Year-Round Growing, Fermenting, and Sprouting by R.J. Ruppenthal. It has been adapted for the Web.

Making Kimchi

Kimchi is Korea’s signature side dish, present in at least one form at every meal. Chock-full of fresh vegetables, vitamins, good bacteria, and enzymes, it is one of the healthiest things you can put in your body. There are hundreds of different varieties of kimchi, using all manner and combinations of fermented vegetables and other foods, but the most common kimchis are based on napa cabbage, radish, or cucumber, with a pasty sauce of crushed chili pepper, garlic, and salt. In this section, you will learn three simple kimchi recipes; feel free to improvise and repeat the basic technique with your favorite vegetables. If the spicy taste of crushed red chili and garlic is too strong for you, feel free to reduce these ingredients to fit your palate. A chili-free version of the following dish is called “white kimchi” and tastes much like sauerkraut. Kimchi is briefly ripened at room temperature and then moved to the refrigerator, but in cool temperatures it could be stored outside.

Napa Cabbage Kimchi

Kimchi, like sauerkraut, is fermented traditionally in large clay pots. You also can use a glass jar or any nonmetallic container, and this recipe also will require two mixing bowls (one large, one small). You will need:

  • 1 napa cabbage, preferably organic
  • 4 tablespoons sea salt
  • 2–3 green onions or scallions
  • 1 clove garlic, minced or crushed
  • 2⁄3 cup hot red pepper powder
  • 1/4 teaspoon ginger, crushed or grated
  • 1/2 tablespoon sugar
  • Optional: 1 tablespoon of water kefir, fermented shrimp paste, or other source of live culture, which will accelerate the fermentation.
  1. Wash the napa cabbage well, discarding the outer leaves.
  2. Chop the leaves. Their size should be similar to chopped lettuce in a typical salad.
  3. Put the chopped cabbage in the large bowl. Sprinkle in a little sea salt, rub it into the leaves, and mix together.
  4. In the smaller bowl, mix the crushed garlic, red pepper powder, ginger, sugar, remaining salt, and optional culture. This should form a pasty sauce. Add a spoonful or two of nonchlorinated water if it seems too dry.
  5. Pour the sauce paste over the chopped cabbage. Add the chopped green onion. Toss gently until it is coated.
  6. Place the whole mixture in a glass jar or other container. Cover it loosely with the lid or a cloth. Once the kimchi begins to give off a fermenting smell (which could be in a few hours or a day or two, depending on the climate/temperature), fasten the lid tightly and put the jar in the refrigerator to slow down the fermentation. Your kimchi is now ready to eat. It can be stored in the refrigerator for up to several months, but will begin to taste progressively stronger. If you like a fresher taste, eat it quickly. If you do not mind a sour kimchi, then allow it to continue ripening. Ripened kimchi, when chopped, can add incredible flavoring to fried rice, stir-fried noodles, or stew.

Radish Kimchi

This is made just like the cabbage kimchi above, except with daikon radish cubes as the main ingredient. Use one large daikon radish, which should be thoroughly washed and peeled (an alternate version uses roughly the same quantity of baby daikon radishes, which are fermented whole, roots and greens, without chopping them). You will use the same ingredients as above, plus 1/2 tablespoon of grated fresh ginger (more if you really like ginger). Again, the culture from kefir water or fermented shrimp is optional, but will speed things up.

  1. Chop the peeled radish into cubes. In a mixing bowl, add some of the salt and begin to rub it in.
  2. In the smaller bowl, mix together the remainder of the salt plus other sauce ingredients as in the previous recipe.
  3. Pour sauce mixture over cubed radish, add in chopped green onion, and stir until well coated. Transfer kimchi mixture into a jar or other container, cover loosely, and allow it to ferment as described in the napa kimchi recipe.
  4. Older radish kimchi, which has a stronger fermented flavor, makes an incredible base for soups and stews.

Water Kimchi

Water kimchi is a soupier version in which both the vegetables and their broth get fermented deliciously. If you like the taste of pickles, this is a good one to try. Start with a few leaves of napa cabbage, washed and chopped like salad lettuce. A small daikon radish, washed and peeled, should be cut lengthwise into quarters and then sliced. Other optional ingredients include sliced pear, apple, or pickling cucumber. For additional twists, you can add sliced jujubes (the shriveled red dates found in Asian markets) or a few sprigs of parsley or watercress. The remainder of the ingredients and directions are the same as for the recipes above, except that once you mix things together, you will cover the kimchi with nonchlorinated water plus enough extra salt to suit your taste buds. Put this mixture in a loosely covered jar or other container, and allow it to ferment for about 24 hours. At this point, you can store it in the refrigerator and start eating it; water kimchi is served in a small bowl and eaten like a cold soup. Pear and apple slices will ferment more quickly than the veggies, so you can pick these out and eat them sooner, as the fermentation will continue slowly even in the refrigerator. One warning: Water kimchi is very aromatic! In my family, we have a separate small refrigerator for fermented foods, and I am told that in Korea a separate kimchi refrigerator is now a standard home appliance.

Plant-a-palooza! Your Three-Day Planting Weekend Starts…Now!

Friday, May 22nd, 2009

My co-worker (and co-blogger) Makenna Goodman tells me this weekend is known as “the planting weekend.” Now, I don’t know how official that is, but her being an honest-to-goodness farmer and me being a clueless city boy, I’ll take her word for it. Makes sense. It’s warm, sunny, and spring-like—even in Vermont. And it’s a three-day weekend.

So what are you waiting for? Go plant something!

Note: This excerpt was chosen by Harmony Spencer, the Chelsea High School student who helped us out on Friday, with all her pay going to the charity of her choice, for a program called “Operation Day’s Work.” Thanks again, Harmony!

The following is an excerpt from Winter Harvest Handbook: Year-Round Vegetable Production Using Deep Organic Techniques and Unheated Greenhouses by Eliot Coleman. It has been adapted for the Web.

Starting Tomato Plants When raising tomato plants from seed we repot the seedlings twice to ensure uninterrupted root growth. We germinate the seeds in mini-blocks on heat pads at 70°F and move them on to two-inch blocks as soon as we can (seven to eight days). We leave the 2-inch blocks on the heating pads for ten days or so. Before their leaves overlap one another, we put them in their final 5-inch square pots. (This is the only crop for which we use pots because the extra soil volume guarantees sturdy, wellrooted plants.) These pots sit side by side until the leaves begin to touch, and then we start moving them apart. Adequate spacing, so the leaves of one tomato plant don’t shade the leaves of another, keeps the plants short. It is much easier to move and transplant younger plants, so we start tomato seeds only six weeks before we plan to set the plants in the greenhouses. We grow tomatoes using the same system of 30-inch-wide beds with a 12-inch path between them that we use for all other crops. There are eight beds in a 30-foot-wide house and the middle six are planted to tomatoes. (For the two edge beds, which do not have enough headspace for staked tomatoes, we have found that both early celery and Tuscan kale transplants grow well and are excellent companion crops in a tomato house.) We set out the tomato plants 24 inches apart down the center of the bed. We could put them closer (down to 14 inches if we had a better native soil) but we enjoy the ease of working with the plants at this wider spacing, not only for the pruning and harvesting but also for the monthly topdressing with compost. The monthly topdressing is very important since, as mentioned earlier, these plants will keep producing till late in the fall. The wider spacing also aids with air circulation, which is important because humidity can be quite high in a plasticcovered hoop house in April.Vertical Growing We support our tomatoes with plastic twine that unrolls from small spools attached to wire frames that hang from horizontal wires running the length of the greenhouse. This is standard equipment in commercial tomato houses. We prune to a single stem by removing all suckers between the leaf branch and the stem. We use commercial tomato trellis clips to secure the tomato stem to the twine, placing a clip about every 12 inches as the plant stem elongates. We limit the fruit clusters on beefsteak varieties to four fruits and those on the medium-sized varieties to five fruits by pruning off the extras. As soon as a cherry tomato cluster begins ripening the first fruit, we pinch off any further blossoms at the end of the cluster. By the time the plants’ growing tips reach the support wire, ideally about 8 feet above the ground, we have harvested the lowest fruit and removed the lower branches up to the height of the lowest fruit cluster. At that point we unroll a turn or two of twine from each spool, lower the top of each plant about 12 inches, and move the tops horizontally by sliding the wire frame that holds the spool along the support wire. At the end of the row, the plants are curved around the corner and over to the partner row that moves horizontally in the other direction. The paired rows resemble those circular trolleys for moving clothes in large dry-cleaning establishments. This dropping of the plant tops and moving them sideways is repeated every time the tops grow to the height of the support wire. The bare stems end up lying along the ground (some growers use low wickets to keep the stems from actually contacting the soil, but we have found no need to do that), and the top 8 feet of each vine keeps producing tomatoes. In this way a crop set out early in the spring stays in vigorous production until late in the fall. Managing Timing and Soil Temperature In our present rotation the largest greenhouse in which we grow tomatoes is occupied all winter by a mid-September-sown unheated spinach crop from which we get four to five harvests before the end of March. We pull the spinach crop in late March/early April just before it begins to go to seed (later-planted spinach in another house allows for uninterrupted production on through the spring) and then immediately refertilize the beds with an inch of compost. We set out the tomato plants on April 7. Since the house has been unheated, we need to warm the soil as much as possible before the tomatoes go in. To do so we pull back the inner covers protecting the spinach every sunny day during March in order to allow more direct solar heating of the soil. Once we remove the spinach plants, we turn on a propane heater for a few days before the tomatoes are transplanted to prevent the night temperatures from falling below 60˚F. In another greenhouse, we clear out the previous crop a month or more before we need the house for tomatoes. We remove the wickets and the row-cover inner layer. We then prepare the soil for the tomato crop and lay a sheet of clear plastic directly on the soil. This is the most effective way to trap incoming solar heat in the soil. It also stimulates weed seed germination, and we flame off the weed seedlings before transplanting the tomatoes (see chapter 14 for more on flaming). By using plastic laid on the soil to create an extra-warm inner layer we have gotten the soil temperature at the 4-inch depth up to 65˚F with only solar heat. We cannot get it that warm while continuing to harvest spinach, but we think the income from the spinach more than makes up for the slightly slower start of the tomatoes. These are the sorts of choices the multiple-crop grower must be constantly making.

Employee Free Choice and a Higher Minimum Wage

Friday, May 22nd, 2009

The following is an excerpt from The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It by Les Leopold. It has been adapted for the Web.

Employee Free Choice Act

The New Deal came about in part because of pressure from a growing labor movement. And the New Deal itself further strengthened unions. New Deal policy makers believed that, as union members, working people would have a better chance at getting their fair share of productivity. Roosevelt welcomed a new wave of union organizing. He supported the Wagner Act, which made it much easier for workers to unionize. And history shows that the plan worked: Postwar unionization did boost workers’ real wages—and in a way that was perfectly compatible with innovation and profits for business owners. We could do it again by passing the Employee Free Choice Act, now before Congress.21

Since the late 1940s, labor law has been whittled away—and employers have become increasingly aggressive in squelching union drives. Workers who try to organize a union are routinely harassed or even fired. For unions, it has become extremely costly and difficult to conduct an organizing drive. Without question the playing field has been tilted toward employers. Cornell University professor Kate Bronfenbrenner found in a survey of NLRB election campaigns in 1998 and 1999 that employers illegally fired employees for union activity in 25 percent of organizing drives.22 An updated study done by the Center for Economic and Policy Research estimates that in 2007, one in five union organizers or activists was illegally fired during organizing drives.23

It’s estimated that about 60 million Americans would like to join a union. If we remove the roadblocks, many of them could. And then they could win better wages and safer working conditions— at least 50,000 American workers die from job-related injuries or disease every year.24 Even if EFCA doesn’t result in a sudden rise in unionization, nonunion firms are likely to raise wages just to keep workers from turning to unions.25 And rising wages will stabilize our economy. Working people will stop holding back on spending, and that will chase deflation away. The Chamber of Commerce ought to promote unionism—it was good for business in years past and would be good for business again today.

Raising the Minimum Wage

A higher minimum wage would also guard against deflation and direct additional wealth away from the casino. And it’s the right thing to do. No one can live a decent life at the current minimum wage, which rises from $6.55 to $7.25 in 2009. If you adjust for inflation you can see that the real buying power of the minimum wage peaked in 1979 at about $8.89 in current dollars (see chart 11). This is an excellent time to jump the minimum wage to at least $10 an hour and index it permanently to inflation. (For those worried about potential job loss, see studies by David Carr and Alan Kreuger.)26

Will raising real wages through unionization and increasing the minimum wage actually pull us out of this crisis? We won’t know until we try. But we do know what happened when we let real wages decline—the top 1 percent ended up with more money than they knew what to do with. We tried deregulation and got “exotic and opaque derivatives” and the worst financial meltdown since the Great Depression. We tried trickle down and it widened the income gap. We tried to encourage investment by and for the rich, and we got a fantasy-finance boom and a slew of billionaires. We created a finance-heavy economy that was supposed to be the wave of the future. Instead we got a taste of the past—a near 1930s depression. Let’s find out what happens if we allow middle class and lower-income people to earn decent wages.

It’s not that these two changes can guarantee that we will never have another financial crash. They can’t. No amount of reform can guarantee that, as long as we have a free-enterprise financial sector. But the occasional mild recession is not what we’re worried—and angry—about. It’s the wild swings of excess and catastrophe that need taming. And unionization and a livable minimum wage will go a long way in moving us toward that goal.

This is the time to try these pro-worker strategies precisely because the financial world is changing so dramatically. Our financial elites have wheedled the government into handing the banking industry over a trillion dollars. More corporate handouts are sure to come. The orthodoxy of deregulation—embraced for years by both Republicans and Democrats—is being trashed by many of the very policy makers who once touted it. Right now, it’s going to be hard for financial leaders to argue that the minimum wage, unions, and fairer trade agreements interfere with free markets. We’ve needed a new direction for decades. Now is the best chance we’ll ever have to make it happen. Let us learn from the bankers and take bold action while we can.

 


 

Notes

  1. For a detailed description of EFCA, see the AFL-CIO website at www.aflcio.org/joinaunion/voiceatwork/efca/whatis.cfm.
  2. Kate Bronfenbrenner, “Uneasy Terrain: The Impact of Capital Mobility on Workers, Wages, and Union Organizing,” Cornell University ILR School Research Studies and Reports (September 2000), p. 43, at http://digitalcommons.ilr.cornell.edu/reports/3/.
  3. John Schmitt and Ben Zipperer, “Dropping the Ax: Illegal Firings during Union Election Campaigns, 1951–2007,” Center for Economic and Policy Research, March 2009, Summary, at www.cepr.net/documents/publications/dropping-theax-2009-03.pdf.
  4. Patrice Woeppel, “On Worker Deaths,” Center for Popular Economics, March 17, 2009, at www.fguide.org/?p=228.
  5. In fact, Kate Bronfenbrenner’s survey (p. 44) found that 20 percent of all employers reacted to a union campaign by increasing wages, even before the unionization effort succeeded.
  6. See David Card and Alan Krueger’s 1997 book, Myth and Measurement: The New Economics of the Minimum Wage (Princeton, NJ: Princeton University Press), which provides real-world evidence that the minimum wage does not kill jobs. Also see Robert Pollin and Stephanie Luce, The Living Wage: Building a Fair Economy (New York: The New Press, 2000), and the research published at the Political Economy Research Institute, Labor Markets and Living Wage Program at www.peri.umass.edu/Labor-Market-L.197.0.html.

Environment Report Interviews New Head of EPA Lisa Jackson

Friday, May 22nd, 2009

New head of the Environmental Protection Agency Lisa Jackson wants to earn back the trust of the American people. After the disastrous policies of the Bush administration, she’s got one long row to hoe.

Here she is talking to the folks at Environment Report about her plans for the future of U.S. climate change policy.

Listen Now

Here’s a partial transcript, also courtesy of Environment Report:

Some members of Congress feel they’re being coerced into approving a Climate Change bill that would force industry to reduce greenhouse gases. Republicans and some Democrats feel the Obama administration is telling Congress to either approve legislation or the Environmental Protection Agency will use its authority to restrict greenhouse gases. Lester Graham spoke with the Administrator of the EPA, Lisa Jackson about that perception.

Administrator Lisa Jackson: They want to say that it’s EPA’s action that’s compelling them to be forced to address energy and climate change legislation. I certainly hope that’s not the case. We are actually in a race here to move to a greener energy economy. And the rest of the world is certainly doing it. And I always tell people that if you don’t want to do it for the environmental reasons, you need to look at the economics and where the world is going, and realize we need to break our dependence on fossil fuels that come from out of our country. We need to move to clean energy. That should be the imperative. I hope it becomes the imperative.

Lester Graham: There’s a new treaty coming up to replace the Kyoto Protocol, the UN Climate Change Conference will meet in Copenhagen in December for a new climate change agreement – if Congress does not pass climate change legislation by that point, how will it affect the standing of the United States in those talks?

Administrator Jackson: Well, certainly it’s fair to say the eyes of the world are upon us, to some degree. Each country is dealing individually with their own situation on energy and climate, and then obviously those are big multi-lateral talks. But I do think people are watching to see if the United States is in this game of clean energy and addressing carbon.

Can Feed-In Tariffs Power a Renewables Revolution?

Thursday, May 21st, 2009

First, the obvious question: What the heck is a feed-in tariff? Well, as I learned from visiting author Paul Gipe‘s website, Wind-Works.org, feed-in tariffs are simply payments per kilowatt-hour for electricity generated by a renewable resource.

You generate your own electricity, with your wind turbines or solar panels, and sell it to the power companies at a better-than-market rate.

Now that the basics are out of the way…

The following is an excerpt from Wind Energy Basics: A Guide to Home- and Community-Scale Wind Energy Systems by Paul Gipe. It has been adapted for the Web.

Electricity Feed Laws

Electricity feed laws are the world’s most successful policy mechanism for stimulating the rapid development of massive amounts of renewable energy. Feed laws are also the most egalitarian method for determining where, when, and how much renewable generating capacity will be installed. Feed laws enable homeowners, farmers, small businesses, community groups, and the continent’s indigenous population to become renewable energy entrepreneurs. All can sell electricity to their utility company for a profit, whether it’s homeowners installing solar photovoltaic systems on their rooftops, farmers installing large wind turbines on their land, or cooperatives building small wind farms in their communities. John Geesman, a former commissioner on the California Energy Commission, suggests that it is this feature of feed laws that makes them so powerful: They can democratize the generation of electricity by distributing the opportunity for ownership to all.

Feed laws, like all policy mechanisms for spurring the renewable generation of electricity, must, at a minimum, include measures for priority access to the grid and payment of a fair price for the electricity produced. These elements are the two essential parts of the development equation. One without the other will not lead to the kind of rapid growth required to meet any but the most unambitious target. Germany’s groundbreaking feed law provided both elements: access and price.

The idea is not foreign to North America. In 1978 the US Congress passed the Public Utility Regulatory Policies Act that permitted interconnection of renewable energy generators with the grid. Unfortunately, PURPA didn’t specify the price, only the means for calculating it. Feed laws, like PURPA, grant priority to the interconnection of renewable sources of electricity with the electric utility network. Unlike PURPA, however, feed laws specify the tariffs, or rates, that renewable generators are paid for their electricity.

Germany’s more recent Erneuerbare Energien Gesetz (Renewable Energy Sources Act), for example, in its preamble again clearly provides for access to the grid. The law, one of several examples of Advanced Renewable Tariffs, is formally known as the “act on granting priority to renewable energy sources” and goes on to specify in detail the prices that will be paid for different sources of renewable generation.

Successful feed laws—those that produce the rapid growth of a diverse mix of renewable technologies—provide a payment for feeding electricity into the grid that is both fair and reasonable, while encouraging robust growth. Balancing these demands is less difficult than it first appears. Geesman, a former regulator himself, points out that utility commissions in both Canada and the United States have been making just such judgment calls for decades.

The objective is to calculate a tariff based on the cost of renewable generation plus a reasonable profit. This is in fact how we used to regulate the price of electricity. Regulators were charged with ensuring that utility companies made a fair profit while at the same time protecting ratepayers from price gouging because of the utility’s monopoly power.

The difference with past practice is that we determine the appropriate price up front, and then make it available to all comers. We say, in effect, Here’s the tariff. If you can build a renewable energy project and make a profit, go right ahead. The sooner you can build it, the better. We need clean, renewable generation and we need it now.

Advanced Renewable Tariffs differ from simpler feed-in tariffs by differentiating the tariffs according to several factors. Tariffs within each technology can be differentiated by project size and application or, in the case of wind energy, by the productivity of the resource. There can be several different prices for wind energy, several different tariffs for solar, and so on. What makes the tariffs “advanced” is the increased sophistication in fine-tuning them to achieve the desired objectives. Where we want rapid growth, for example, we increase the profitability by raising the tariff. If we want to spur rooftop solar over ground-mounted solar power plants, we pay more for rooftop solar than we do for ground-mounted systems. This is in fact what Germany and France do with their solar tariffs.

Such tariffs are not a subsidy, explains Jérôme Guillet, a French banker who specializes in financing wind power plants. They offer a fair transaction where the public regulatory authority or elected representatives in effect purchase the guarantee of prices that are capped into the future in exchange for somewhat higher prices today. These tariffs, says Guillet, not only become a hedge against both the volatility of fossil fuel prices and the cost to society of this volatility, but also a hedge against the inevitable increase in the cost of fossil fuels. That’s the grand bargain.

Because renewable sources of generation are capital-intensive, they require long periods of time to return their investments and earn a profit. Consequently, the prerequisite for a successful renewable energy program, above all else, is the political desire—the political will— for the program to succeed. And for it to succeed there must be the willingness to pay what it costs for renewable energy generation. Where the will exists, there is the stability of public policy that ensures investors, and the banks that loan to them, that there will be a fair opportunity to earn a return on their investment.

Feed laws don’t guarantee a profit. They only guarantee that if the project is built, and it generates electricity, the owners will be paid for their electricity at the price—the tariff—that’s advertised. The burden remains on the owner to make sure the wind turbine operates as expected. If it doesn’t, or if it doesn’t produce as much electricity as planned, the owner suffers the loss.

Successful programs must be simple, comprehensible, and transparent. They must provide simplified interconnection requirements with priority access to the grid. They must provide sufficient price per kilowatt-hour to drive rapid development, and they must provide a contract length sufficiently long to reward investment.

Aggressive targets require aggressive programs. Feed laws and the Advanced Renewable Tariffs that make them work are not for the politically faint of heart. We won’t get to 100 percent renewables from where we are today with incremental change in response to timid targets. As one political observer noted, “Incremental change will only get you incremental results.”

Further, successful programs either have no cap on the program size—or the cap is so high that there is no fear of reaching it in the early years of the program. This discourages gaming and the hoarding of contracts. Of course, a target of 100 percent renewables or a goal of eliminating all fossil-fired generation is the equivalent of no cap on the program—it’s the very definition of an aggressive target.

Importantly, renewable tariffs must be sufficiently differentiated to deliver the kind of renewable development from the technology desired in the location desired. There must be tariffs for each technology under a variety of conditions, such as a tariff for small wind turbines as well as large ones. And the tariffs must be high enough to spur development.

Small Wind Tariff

As an example of how aggressive programs must become, consider the special case of small wind. As we’ve seen, small wind turbines must be paid a high price for their generation in order to have any possibility of earning a profit. The tariff needed is far higher than anyone in North America has considered before. It’s not as high as what is needed for solar photovoltaics— the most expensive of the new renewable technologies available today—but a small wind tariff must be far higher than that necessary for its bigger brother, large wind.

France, Germany, and Spain specify tariffs for a host of technologies, but not for small wind turbines. Switzerland introduced its system of Advanced Renewable Tariffs in 2008. This was the first program to offer a specific tariff for small wind: $0.20/kWh. In 2007 several midwestern states introduced bills into their assemblies calling for Advanced Renewable Tariffs; these bills included a tariff for small wind turbines of $0.25/kWh. (As Wind Energy Basics went to press in 2009, none had yet passed.)

Higher tariffs may actually be needed. There’s surprisingly little real-world performance data on small wind turbines. The Swiss tariff or the proposed Midwest tariffs may be a good place to start, until regulators can make a more informed decision.

Tariffs for Distributed Wind

Fortunately, we know a lot more about the costs and productivity of large wind turbines than those of small turbines. The problem with the existing tariffs in Ontario and California is that they’re designed so that one size fits all conditions. That will never work to spur broad geographic development.

If there’s only one price for wind energy and that tariff is low, as in Ontario, then wind development is limited to only certain areas. Commercial developers can move their projects to wherever they like. They will concentrate only on the windiest sites to maximize their profits. Farmers and other landowners, in contrast, are landlocked. Unlike a commercial developer, they can’t move to a windy location to install their own turbines. A one-price-for-all policy favors some, but denies opportunity to everyone else. It can also allow some developers to earn excessive profits, above and beyond those needed to encourage profitable development.

Germany and France wanted to avoid concentrating wind development on scenic coastlines or mountain ridges. They wanted to avoid the kind of wind development seen in California’s windy passes. Instead, they wanted to distribute wind development across the landscape, to gain more of the benefits of this renewable energy technology by moving the turbines closer to the load—the people. As a result, they pioneered renewable tariffs differentiated by wind resource intensity. They have been followed recently by Switzerland. In all three countries, the tariffs for wind energy vary by the productivity of the wind turbine. The turbine’s productivity, or yield, is a surrogate for the wind resource.

The objective was twofold: to lessen development pressure on the windiest sites by enabling development in other, less windy, sites; and to provide siting flexibility. The programs in Germany and France have been successful in spreading development across the landscape of each country. (Switzerland’s program is too new to see any results as yet.) While development still favors the windier regions, development is not solely concentrated in the windiest areas. As a result of the German policy, nearly 60 percent of German wind development is now in the interior of the country and has moved away from the coastline. As in Denmark, wind turbines can now be seen in almost every part of Germany.

Germany and France each use a different mechanism for determining site productivity. However, both use a trial period after which the productivity is calculated and a subsequent tariff is determined. Thus, the maximum tariff is fixed, in order to provide a targeted profitability at the targeted sites, but the final tariff paid for more productive—windier—sites declines on a sliding scale as a function of productivity.

Table 8-3: OSEA Estimate of the Tariff Necessary for
the Profitable Operation of a Large Wind Turbine
Average Annual
Specific Yield
Average Annual
Wind Speed at
Hub Height
Tariff
Needed
kWh/m2/yr ~m/s ~mph CAD/kWh
550 5.2 12 ~0.15
750 5.9 13 ~0.12
1,000 6.7 15 ~0.10

In table 8-3, OSEA Estimate of the Tariff Necessary for the Profitable Operation of a Large Wind Turbine, the wind tariffs calculated by the Ontario Sustainable Energy Association embody this principle. OSEA recommended that for the first five years all wind turbines should be paid a base tariff of $0.15 CAD/ kWh, after which the specific yield of the wind turbine or group of turbines would be calculated. The tariff for the time remaining in the contract, years 6 through 20, would then be found from a formula that includes a measure for the profitability. In this case, a windy site would receive $0.10 CAD/kWh—or less. Wind turbines at low-wind sites would continue to receive the base rate of $0.15 CAD/kWh. Turbines at moderately windy sites would be paid a tariff less than $0.15C CAD/kWh but more than $0.10 CAD/kWh, on a sliding scale.

This principle must be part of any aggressive renewable energy policy. If we are to see wind development from the windy Great Plains to modestly windy sites around the Midwest and throughout Ontario, we’ll need differentiated wind tariffs to make it possible.

Wind tariffs differentiated by productivity can

  • Increase distributed generation,
  • Distribute wind development across a geographic area,
  • Reduce (but not eliminate) development pressure on the windiest sites,
  • Reduce (but not eliminate) social friction by spreading development among many sites,
  • Increase program flexibility by lessening pressure to get prices exactly right the first time,
  • Reduce wind and technology development risk by determining the final tariff after five years of operation,
  • Spread opportunity to all, not just to those fortunate enough to live in the windiest locales, and
  • Enable fair profits at medium wind sites while limiting excessive profits at windy sites.

Tariffs differentiated by site productivity are a powerful tool for encouraging wind development where it is needed most, near the load— that is, urban areas. And the principle is not limited to wind energy; it could be applied to solar photovoltaics as well. Clearly, solar systems installed in the blistering sun of the Southwest will need lower renewable energy payments than a rooftop solar system on a home in Detroit.

Who pays for these tariffs? We do, of course. The cost of Advanced Renewable Tariffs is spread across all of a utility’s ratepayers as a slight increase in the cost per kilowatt-hour of electricity. It’s a far more equitable and stable strategy than billing taxpayers, because those who use more electricity pay more for renewable generation. Besides, we are changing the way we produce and consume electricity. We pay for electricity from conventional sources. As we begin to eliminate those, we can reasonably be expected to start paying for our renewable sources of generation as well.

A Grain Raising Book That Will Keep You Up Nights

Thursday, May 21st, 2009

“Did you know that you can grow sufficient grains to feed your family and many of your animals all year on less than an acre of land with just a few hand tools?”
—Hank Will, Grit

More than thirty years after its first publication, Gene Logsdon‘s classic Small-Scale Grain Raising: An Organic Guide to Growing, Processing, and Using Nutritious Whole Grains for Home Gardeners and Local Farmers is back in an updated and expanded edition.

Most people don’t think about grains when they think backyard-scale agriculture to supplement their families’ diets. But grain raising doesn’t have to require a massive outlay for tools and equipment. And it’s not even that difficult.

I was thrilled to take a look at Gene Logsdon’s updated 2009 edition of an old favorite of mine, Small Scale Grain Raising. Now in its second edition, the book is even more apropos today than the first edition was in 1977, when I was a budding young agriculturist. I devoured the first edition in the lab between analytical chemistry procedures and dreamed of growing all kinds of grains on a small-scale level. When I obtained a copy of the second edition, which was released last April, I devoured it in five evenings, between chores and bedtime. Actually it kept me up late one night – apologies to the GRIT staff for my fatigue the other day.

Small Scale Grain Raising is a stellar work that will inspire gardeners, farmers, dreamers and just about anyone else who cares about good food, good flavors and asking questions. Most small-scale agriculturists and gardeners never even consider adding grains other than corn (maize) to their crop rotation. This is in part because producing small grains like wheat and barley, or even pseudo-grains like buckwheat, is considered to be an arduous task at best that requires seed drills and combines to accomplish. Heck, the capital outlay for equipment is enough to turn off even medium-sized farmers who are tapped into the corn-soybean rotation. But it doesn’t have to be so. And Logsdon shows you how to make it happen on a backyard scale. Did you know that you can grow sufficient grains to feed your family and many of your animals all year on less than an acre of land with just a few hand tools?

Read the whole article here.

 

Related Articles:

Green Winners and Losers, with HuffPo’s Dave Burdick

Thursday, May 21st, 2009

Our good friend Dave Burdick, editor of Huffington Post Green, has a new video up on Current.com this week. It’s a feature they like to call Green Winners & Losers.

This week, Dave gives mad props to wind turbines, President Obama, and new head of the EPA Lisa Jackson. And he sends a big thumbs down to those two employees of Yellowstone National Park for treating Old Faithful like a New York City subway elevator. (Eww.)

Doctors Warn: Avoid Genetically Modified Food

Thursday, May 21st, 2009

Once you hear what Jeffrey Smith has to say, you may want to think twice about eating that genetically modified corn you bought at the supermarket.

More and more doctors are telling their patients to avoid genetically modified foods whenever possible, based on some very disturbing scientific evidence. Lab animals fed GM foods, for example, showed higher rates of infertility and immune problems, accelerated aging, problems regulating insulin, and changes in major organs and the gastrointestinal system. And that’s not the worst of it.

The article below appeared originally online at Responsible Technology:

Doctors Warn: Avoid Genetically Modified Food

 

By Jeffrey M. Smith

 

On May 19th, the American Academy of Environmental Medicine (AAEM) called on “Physicians to educate their patients, the medical community, and the public to avoid GM (genetically modified) foods when possible and provide educational materials concerning GM foods and health risks.”[1] They called for a moratorium on GM foods, long-term independent studies, and labeling. AAEM’s position paper stated, “Several animal studies indicate serious health risks associated with GM food,” including infertility, immune problems, accelerated aging, insulin regulation, and changes in major organs and the gastrointestinal system. They conclude, “There is more than a casual association between GM foods and adverse health effects. There is causation,” as defined by recognized scientific criteria. “The strength of association and consistency between GM foods and disease is confirmed in several animal studies.”

 

More and more doctors are already prescribing GM-free diets. Dr. Amy Dean, a Michigan internal medicine specialist, and board member of AAEM says, “I strongly recommend patients eat strictly non-genetically modified foods.” Ohio allergist Dr. John Boyles says “I used to test for soy allergies all the time, but now that soy is genetically engineered, it is so dangerous that I tell people never to eat it.”

 

Dr. Jennifer Armstrong, President of AAEM, says, “Physicians are probably seeing the effects in their patients, but need to know how to ask the right questions.” World renowned biologist Pushpa M. Bhargava goes one step further. After reviewing more than 600 scientific journals, he concludes that genetically modified organisms (GMOs) are a major contributor to the sharply deteriorating health of Americans.

 

Pregnant women and babies at great risk

 

Among the population, biologist David Schubert of the Salk Institute warns that “children are the most likely to be adversely effected by toxins and other dietary problems” related to GM foods. He says without adequate studies, the children become “the experimental animals.”[2]

 

The experience of actual GM-fed experimental animals is scary. When GM soy was fed to female rats, most of their babies died within three weeks—compared to a 10% death rate among the control group fed natural soy.[3] The GM-fed babies were also smaller, and later had problems getting pregnant.[4]

 

When male rats were fed GM soy, their testicles actually changed color—from the normal pink to dark blue.[5] Mice fed GM soy had altered young sperm.[6] Even the embryos of GM fed parent mice had significant changes in their DNA.[7] Mice fed GM corn in an Austrian government study had fewer babies, which were also smaller than normal.[8]

 

Reproductive problems also plague livestock. Investigations in the state of Haryana, India revealed that most buffalo that ate GM cottonseed had complications such as premature deliveries, abortions, infertility, and prolapsed uteruses. Many calves died. In the US, about two dozen farmers reported thousands of pigs became sterile after consuming certain GM corn varieties. Some had false pregnancies; others gave birth to bags of water. Cows and bulls also became infertile when fed the same corn.[9]

 

In the US population, the incidence of low birth weight babies, infertility, and infant mortality are all escalating.

 

Food designed to produce toxin

 

GM corn and cotton are engineered to produce their own built-in pesticide in every cell. When bugs bite the plant, the poison splits open their stomach and kills them. Biotech companies claim that the pesticide, called Bt—produced from soil bacteria Bacillus thuringiensis—has a history of safe use, since organic farmers and others use Bt bacteria spray for natural insect control. Genetic engineers insert Bt genes into corn and cotton, so the plants do the killing.

The Bt-toxin produced in GM plants, however, is thousands of times more concentrated than natural Bt spray, is designed to be more toxic,[10] has properties of an allergen, and unlike the spray, cannot be washed off the plant.

Moreover, studies confirm that even the less toxic natural bacterial spray is harmful. When dispersed by plane to kill gypsy moths in the Pacific Northwest, about 500 people reported allergy or flu-like symptoms. Some had to go to the emergency room.[11],[12]

The exact same symptoms are now being reported by farm workers throughout India, from handling Bt cotton.[13] In 2008, based on medical records, the Sunday India reported, “Victims of itching have increased massively this year . . . related to BT cotton farming.”[14]

 

GMOs provoke immune reactions

 

AAEM states, “Multiple animal studies show significant immune dysregulation,” including increase in cytokines, which are “associated with asthma, allergy, and inflammation”—all on the rise in the US.

 

According to GM food safety expert Dr. Arpad Pusztai, changes in the immune status of GM animals are “a consistent feature of all the studies.”[15] Even Monsanto’s own research showed significant immune system changes in rats fed Bt corn.[16] A November 2008 by the Italian government also found that mice have an immune reaction to Bt corn.[17]

GM soy and corn each contain two new proteins with allergenic properties,[18] GM soy has up to seven times more trypsin inhibitor—a known soy allergen,[19] and skin prick tests show some people react to GM, but not to non-GM soy.[20] Soon after GM soy was introduced to the UK, soy allergies skyrocketed by 50%. Perhaps the US epidemic of food allergies and asthma is a casualty of genetic manipulation.

Read the whole article here.


Follow us
Get every new post delivered to your inbox
Join millions of other followers
Powered By WPFruits.com