Last year BrightSource Energy received a $1.6 billion taxpayer-backed loan guarantee. It's the same type of loan that failed solar panel company Solyndra received but couldn’t pay back, costing taxpayers over $500 million.
BrightSource’s half-completed Ivanpah power station in Eastern Mohave aims to harness the sun’s rays to generate carbon free electricity and “green” jobs and has been touted by some as an exemplary environmental project. But when contractors discovered more desert tortoises than expected, the project earned the ire of environmentalists – and resulted in an expensive translocation program for the tortoises.
The desert tortoise is a remarkable creature. For thousands of years it has lived in the mostly-inhospitable environment of the Sonoran and Mojave deserts, eating the sparse grasses, herbs, shrubs, and early cacti, and escaping the searing 140 degree heat of the day by burrowing underground. But a combination of expanding human habitation, vandalism and capture has contributed to a rapid decline in tortoise numbers since the 1980s. Current estimates put the population at 100,000, making it a “threatened” species according to the Environmental Protection Agency’s criteria.
How much would you be willing to pay to save a single desert tortoise? $1? $10? $100? How about $108,910?
The Victor Valley Daily Press reports, “BrightSource so far has spent approximately $22 million to relocate and care for some 202 desert tortoises — a cost of $108,910 per tortoise.” But the spending doesn’t end with that $22 million. BrightSource plans to spend an additional $34 million to buy up and preserve around 7,000 acres of tortoise habitat in order to comply with federal and state conservation requirements.
Perhaps this fills your heart with admiration for a company behaving in such an environmentally conscious way. Or perhaps it makes you smirk with schadenfreude at the fact that a “green” energy company is being cajoled into spending millions of dollars to comply with environmental regulations. If the tortoise conservation were being undertaken entirely with private money, either response would be reasonable. But BrightSource has received $1.6 billion in loan guarantees from the federal government, which means that you really are paying for this project.
Ivanpah’s loan guarantee was given in hopes of reducing carbon emissions and creating green jobs. But recent reports show that US carbon emissions in the first quarter of 2012 were lower than any quarter since 1986 because companies have been switching from high-carbon coal to low-carbon natural gas. Meanwhile, once the solar plant is complete and the 1,000 or so construction jobs are terminated, there will be just 86 permanent jobs at the plant.
Investors in the Ivanpah project, including Google and NRG Energy, hope to recoup their investments by selling expensive electricity to PG&E, Edison and other California electricity suppliers, who will be required by law to buy 33 percent of their electricity from “renewable” sources in 2020, up from 20 percent today.
So those investors are hoping to cash in – not by creating something they think consumers want – but by selling renewable energy they expect the government will force others to buy under the Renewable Portfolio Standard, which mandates increased use of renewable energy.
It's an example of just how badly the government distorts what should be a free market where the best energy sources win. In this instance, the state government created the renewable energy standards. The federal government is subsidizing the company that will produce the energy. The federal and state governments’ environmental laws are requiring the company to spend more of the government-backed loan money on tortoises. And if BrightSource fails, the government’s funders – taxpayers – will lose the money they’ve loaned.
There’s a much simpler, cheaper solution. Since it is far more cost effective to cut carbon emissions by switching to natural gas, California should scrap its Renewable Portfolio Standard, which is propping up companies like BrightSource. Without that standard, Ivanpah would be sunk. Earlier this year, BrightSource had to ditch its plans for an initial public offering because of “adverse market conditions” and it seems like a prime candidate to follow in Solyndra’s bankrupt footsteps. BrightSource recently announced it is halfway to completion on Ivanpah, so scrapping it now would save taxpayers about $800 million, which, as bad as it sounds, beats losing the full $1.6 billion. And those desert tortoises would be happy too.
Julian Morris is vice president of research at Reason Foundation. This column first appeared in the Victorville Daily Press.