Lamphier: Harsh Reality of Green Energy Doesn't Yet Match Its Spin

Date of Article: February 16, 2012

Source: Edmonton Journal

Author: Gary Lamphier

A few weeks ago, after I wrote a column on TransCanada's proposed Keystone XL pipeline, a West Coast environmental activist challenged my numbers.

TransCanada's claim that the project would create 20,000 jobs was vastly overblown, he argued, noting that U.S. studies, including one by the State Department, showed the real figure was far lower.

I wasn't surprised. I get dozens of similar calls or emails every week from activists who are keen to spin me one way or another. It's all part of the ideological war over the future of the oilsands.

Clearly, TransCanada does have an incentive to pump up its job numbers. I get it. I wasn't born yesterday.

But then, the greenies - and the Obama government - also have a vested interest in downplaying the benefits of the project, which they're only too happy to do. You can decide for yourself whose numbers to believe.

That aside, I found the sanctimonious, finger-wagging tone employed by my youthful green critic just a little rich.

After all, when it comes to job creation, the green lobby isn't exactly dealing from strength. The renewable energy sector it so avidly promotes is full of investor disaster stories, bankruptcies, plant closures, job losses, red ink, foregone taxpayer loans, and allegations of political meddling.

It ain't a pretty picture, and it's one the enviro activists would rather sweep under a rug, safely out of public view. After all, the gritty truth undercuts their utopian dream of a clean, green energy future, one without fossil fuels.

Consider. Last year, the Wilderhill New Energy Index - a global index of nearly 100 green energy companies - plunged by 40 per cent. And that was no blip. Since the index was formed in January 2006, it has lost a third of its value.

Meanwhile, the Bloomberg Wind Energy Index, which includes 64 global companies, slumped by 22 per cent in 2011.

Denmark's Vestas Wind Systems, the world's largest wind turbine maker, shed two-thirds of its value last year. After turfing its CEO last fall, the company has repeatedly slashed its sales forecasts in the face of stiff competition from China.

Early this month, after Vestas posted a 2011 loss of $220 million US - four times bigger than analyst estimates - the company's chief financial officer quit. The company's stock closed Wednesday at just over $3, down from a 2008 high of nearly $50.

Solyndra, a California-based solar panel maker the U.S. administration enthusiastically supported - with Obama staging photo ops at the plant to affirm his green credentials - went bankrupt last fall, leaving taxpayers on the hook for a cool $535 million.

"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 re-election campaign," the Washington Post reported in December.

"Meant to create jobs and cut reliance on foreign oil, Obama's green-technology pro-gram was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal e-mails," the paper reported.

"Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials."

The Post's investigation showed that many of Solyndra's backers had cozy ties with the Obama administration, and donated to his 2008 election campaign. Some even took jobs in the administration and helped manage the clean-energy program.

Fortunately, that kind of political favorit-ism to back select clean energy projects has been a rarity in Canada - at least since the Conservatives came to power.

A handful of fairly mature players - utilities such as Brookfield Renewable Energy, Algonquin Power, Northland Power and Innergex Renewable Energy - have actually done fairly well. All operate a diversified portfolio of hydro, wind and solar projects with assured rates of return.

Likewise, traditional Canadian coal-fired electric power producers such as Capital Power and TransAlta have expanded their wind power generating capacity wherever they can secure decent, regulated rates of return.

But that's where the good news ends. Faced with stiff competition from well-funded, low-cost Chinese players, most solar power players are fighting for their lives, like their U.S. counterparts. Some have already gone bust.

Waterloo-based Arise Technologies was delisted from the Toronto Stock Exchange in December, after its German plant folded.

Day4 Energy, a Vancouver-based maker of solar equipment, has seen its revenues plunge, its losses balloon, and its share price cut from a high of nearly $7 in 2008 to just 11 cents at Wednesday's close.

Canadian Solar, a Kitchener-based solar panel maker with plants all over the world, has seen its share price plunge by more than 75 per cent over the past 12 months alone, from more than $16 US to well below $4. In 2008, the shares traded in the $45 range.

The company lost $44 million or more than $1 a share in the third quarter of 2011, but it has yet to release its year-end results.

Ironically, it recently announced the $470 million sale of one of its major solar power projects in Ontario - one that will receive a guaranteed rate of return under Ontario's heavily subsidized feed-in tariff program - to TransCanada.