Pork Or Progress? Congress Wallows In The Tar Sands, While Passing Renewable Energy Credits

Last week we got word that renewable energy tax incentives would be included in the financial bailout bill. Knowing full well that the bill would make it through the House this time around (thanks primarily to an avalanche of pork that continues to feed the bureaucratic machine), solar and wind supporters began to cheer.

After a long year of begging for crumbs so we can strengthen our energy infrastructure and employ 4.2 million hard-working folks in the renewable energy sector, the lifeline was finally offered.

In the bill, investment tax credits for commercial and residential solar projects were extended through 2016, and the $2,000 cap on credits for residential solar projects was removed. Also extended was the production tax credit for wind through 2009, and biomass through 2010.In total, $17 billion has been set aside for renewable and low-emissions energy projects. Projects that will not only help strengthen our energy infrastructure, but contribute to a cleaner environment.

It is unfortunate, however, that this bill negates a significant chunk of those environmental benefits because unethical behavior and arrogance have once again trampled progress in D.C.

Playing in Tar

The first refinery to be built in the U.S. since 1976 is now expected to come online in Elk Point, SD. That facility is most likely going to cost about $10 billion, and is expected to be used to refine oil extracted from tar sand pits in Alberta. This refinery is also going to get a helping hand from Uncle Sam, thanks to a 50% tax write-off on refinery construction that weaseled its way into the bailout bill.

While one hand is working to clean up the place, the other is working to dirty it even more.

Tar sands -- which is a combination of clay, sand and a very heavy black viscous oil called bitumen -- is an environmental and energy-depleting nightmare. And while all those oil-hungry politicians love to play up tar sands as a necessity when talking about securing North American oil supplies, here are a few things they tend to overlook...

* At current levels of production, tar sands operations consume about 4% of Canada's natural gas supply. Why is this a problem? Because according to the Energy Information Administration, Canada's proven natural gas reserves could be gone in about eight years! And half of Canada's natural gas production already gets exported to the U.S.

* Greenhouse gas emissions from tar sands production are three times those of conventional oil and gas production.

* Tar sand operations use roughly two to four barrels of water to extract one barrel of oil. And according to a joint study by the University of Alberta and the University of Toronto, the projected tar sands expansion will kill the Athabasca River. This is the only abundant source of water in the area.

At What Cost?

Listen, I'm not so naïve to expect those on the Hill to care much about long-term environmental sustainability. But you'd think they'd be aware of the lack of long-term economic sustainability of tar sands development.

According to the energy analytics firm Wood Mackenzie, about $117 billion is going to be spent on the tar sands by 2015. That's $100 billion more than the $17 billion that was just set aside for renewable energy development! Have you heard even one bureaucrat on Washington mention this juicy piece of information?

And what about building this stuff out?

A couple of years ago, Shell Canada revealed that its tar sands operation would cost $11 billion to expand by 100,000 barrels per day. We consume more than 20 million barrels per day! And by the way, that $11 billion was six times the original cost estimate.

Let's not forget basic materials costs too. While the cost of steal and other building materials continues to skyrocket, so too will the cost overruns of these projects.

Bottom line: The folks in DC have not been upfront with us from day one, and we shouldn't expect them to be upfront with us now. They have one job – and that's to get re-elected. And while we're happy to see that the renewable energy industry finally got those tax credit extensions approved – that $17 billion is a drop in the bucket compared to what Big Oil continues to get to maintain business as usual.

Of course, even with all those tax dollars spent to prop up the oil industry (security costs, environmental clean up, below-cost loans, etc.), no amount of money can change the rapid depletion of this fossil fuel resource. Whether it's from an offshore oil rig off the coast of North Carolina or a tar sands pit in Alberta -- eventually, it's going to run out. And that's why clean alternatives to conventional transportation fuels are not only going to happen – but they'll be economically superior in the long run. And that's the game changer.

To a new way of life, and a new generation of wealth...

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Tags: Alberta | Canada | Tar Sands

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