The Wind Lobby’s Policy Two-Step

On Tuesday, June 20, 2017, the American Wind Energy Association (AWEA) announced the publication of a report touting wind as both a cost-effective and a reliable source of energy for the electricity grid. The report—which was supported with AWEA funding and written by the Analysis Group—presents energy-source diversity on the grid as a necessary good and wind’s emergence as a product of market forces. IER’s initial response can be found here and today we will follow up with an addendum from IER’s chief economist, Dr. Robert Murphy. Murphy’s commentary can be read below:

The Analysis Group report illustrates the familiar two-step in current energy policy debates. On the one hand, it is considered critical to keep in place measures such as state-based Renewable Portfolio Standards (RPS) and federal measures such as the Production Tax Credit (PTC) and the so-called Clean Power Plan (CPP). On the other hand, when critics object to the distortions that these measures cause, the defenders rush to claim that these policies have very little impact on the energy sector, because the major changes are all driven by market fundamentals. So which is it? If most of the changes really are driven by the market, then the interventionists shouldn’t defend RPS, PTC, CPP, and so on with such vigor.

To reiterate, this contradiction is evident in the Analysis Group report. Ostensibly the report seems to knock down the objections to interventions that promote wind and solar power, by claiming that the major changes in the electricity generation sector are caused by fundamentals, rather than government policies:

[T]he evidence shows that electricity markets have undergone a fundamental shift, one that is dominated by fundamental forces of electricity market supply, demand, and pricing that took shape with the shale gas boom and the economic downturn in the 2008-2009 period, but that also includes the rapid growth of renewables as costs declined and performance improved. (Analysis Group, p. 23)

We don’t need to argue about this conclusion. Let’s assume for the sake of argument that the Analysis Group is right.

In that case, the strong advocates for RPS, PTC, CPP, and other energy-sector interventions are wrong for thinking their favorite measures are actually that important. They should join forces with IER, where we have been saying all along that we don’t favor one energy source versus another. Rather, our point has always been that a neutral tax and regulatory environment—where policymakers and officials do not penalize or reward particular technologies—is most conducive to consumer well-being.

Besides making economic sense, the de-politicization of energy markets would reduce conflict. For example, the Analysis Group authors are somewhat cynical about certain players in the debate, when they write that objections about grid reliability sometimes “reflect a first line of defense by opponents of the changes underway in the industry” (p. 2). But this claim only makes sense in the context of political interventions. If we had a relatively free market in energy, any industry group who saw their market share decreasing would have no one to complain to, except their customers. The only reason we are even talking about “offense” and “first line of defense” in this context, is that certain groups are advocating policy measures where the government will intervene to help some energy sources and hurt others. No wonder the debate has become politicized.

As an additional point, we should clarify the Analysis Group’s contention regarding consumers and diversification. On page 2 they write: “The ongoing diversification of generation supply…has lowered wholesale electricity costs in most parts of the U.S. and has contributed to recent declines in consumers’ overall cost of living.”

No doubt, the supporters of the PTC and other renewables mandates would take this as evidence that their policies help consumers.

However, it’s not the diversification of energy sources per se that causes electricity prices to drop. It depends on the cause of the diversification. For example, the fracking boom did indeed cause the price of natural gas to fall, which led to a shift away from coal-fired and into gas-fired power plants. This is a market phenomenon which clearly benefits consumers; falling costs of production ultimately lead to lower retail prices in a competitive market.

But if a change in the energy mix results not from market forces but instead from political mandates, then this raises energy prices for consumers (other things equal). And finally, to the extent that tax credits lower wholesale (and hence retail) prices, note that this outcome is still less advantageous than if a general tax cut were given to the energy sector as a whole (rather than singling out specific producers).

The post The Wind Lobby’s Policy Two-Step appeared first on IER.

from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2017/06/the-wind-lobbys-policy-two-step.html
via http://raymondcastleberry.blogspot.com

The Wind Lobby’s Policy Two-Step

On Tuesday, June 20, 2017, the American Wind Energy Association (AWEA) announced the publication of a report touting wind as both a cost-effective and a reliable source of energy for the electricity grid. The report—which was supported with AWEA funding and written by the Analysis Group—presents energy-source diversity on the grid as a necessary good and wind’s emergence as a product of market forces. IER’s initial response can be found here and today we will follow up with an addendum from IER’s chief economist, Dr. Robert Murphy. Murphy’s commentary can be read below:

The Analysis Group report illustrates the familiar two-step in current energy policy debates. On the one hand, it is considered critical to keep in place measures such as state-based Renewable Portfolio Standards (RPS) and federal measures such as the Production Tax Credit (PTC) and the so-called Clean Power Plan (CPP). On the other hand, when critics object to the distortions that these measures cause, the defenders rush to claim that these policies have very little impact on the energy sector, because the major changes are all driven by market fundamentals. So which is it? If most of the changes really are driven by the market, then the interventionists shouldn’t defend RPS, PTC, CPP, and so on with such vigor.

To reiterate, this contradiction is evident in the Analysis Group report. Ostensibly the report seems to knock down the objections to interventions that promote wind and solar power, by claiming that the major changes in the electricity generation sector are caused by fundamentals, rather than government policies:

[T]he evidence shows that electricity markets have undergone a fundamental shift, one that is dominated by fundamental forces of electricity market supply, demand, and pricing that took shape with the shale gas boom and the economic downturn in the 2008-2009 period, but that also includes the rapid growth of renewables as costs declined and performance improved. (Analysis Group, p. 23)

We don’t need to argue about this conclusion. Let’s assume for the sake of argument that the Analysis Group is right.

In that case, the strong advocates for RPS, PTC, CPP, and other energy-sector interventions are wrong for thinking their favorite measures are actually that important. They should join forces with IER, where we have been saying all along that we don’t favor one energy source versus another. Rather, our point has always been that a neutral tax and regulatory environment—where policymakers and officials do not penalize or reward particular technologies—is most conducive to consumer well-being.

Besides making economic sense, the de-politicization of energy markets would reduce conflict. For example, the Analysis Group authors are somewhat cynical about certain players in the debate, when they write that objections about grid reliability sometimes “reflect a first line of defense by opponents of the changes underway in the industry” (p. 2). But this claim only makes sense in the context of political interventions. If we had a relatively free market in energy, any industry group who saw their market share decreasing would have no one to complain to, except their customers. The only reason we are even talking about “offense” and “first line of defense” in this context, is that certain groups are advocating policy measures where the government will intervene to help some energy sources and hurt others. No wonder the debate has become politicized.

As an additional point, we should clarify the Analysis Group’s contention regarding consumers and diversification. On page 2 they write: “The ongoing diversification of generation supply…has lowered wholesale electricity costs in most parts of the U.S. and has contributed to recent declines in consumers’ overall cost of living.”

No doubt, the supporters of the PTC and other renewables mandates would take this as evidence that their policies help consumers.

However, it’s not the diversification of energy sources per se that causes electricity prices to drop. It depends on the cause of the diversification. For example, the fracking boom did indeed cause the price of natural gas to fall, which led to a shift away from coal-fired and into gas-fired power plants. This is a market phenomenon which clearly benefits consumers; falling costs of production ultimately lead to lower retail prices in a competitive market.

But if a change in the energy mix results not from market forces but instead from political mandates, then this raises energy prices for consumers (other things equal). And finally, to the extent that tax credits lower wholesale (and hence retail) prices, note that this outcome is still less advantageous than if a general tax cut were given to the energy sector as a whole (rather than singling out specific producers).

The post The Wind Lobby’s Policy Two-Step appeared first on IER.

Creating Influencer-Targeted Content to Earn Links + Coverage – Whiteboard Friday

Posted by randfish

Most SEO campaigns need three kinds of links to be successful; targeting your content to influencers can get you 2/3 of the way there. In this Whiteboard Friday, Rand covers the tactics that will help your content get seen and shared by those with a wide and relevant audience.

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How to create influencer-targeted content - Whiteboard Friday

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Video Transcription

Howdy, Moz fans, and welcome to another edition of Whiteboard Friday. This week we’re going to chat about how to create content that is specifically influencer-targeted in order to earn the links and attention and amplification that you often need.

Most SEO campaigns need 3 types of links:

So it’s the case that most SEO campaigns, as they’re trying to earn the rankings that they’re seeking, are trying to do a few things. You’re trying to grow your overall Domain Authority. You’re trying to get some specific keyword terms and phrases ranking on your site for those terms and phrases.

So you need kind of three kinds of links. This is most campaigns.

1. Links from broad, high-Domain Authority sites that are pointing — you kind of don’t care — anywhere on your site, the home page, internal pages, to your blog, to your news section. It’s totally fine. So a common one that we use here would be like the New York Times. I want the New York Times to link to me so that I have the authority and influence of a link from that domain and, hopefully, lots of domains like them, very high-Domain Authority domains.

2. Links to specific high-value keyword-targeted pages, hopefully, hopefully with specific anchor text, and that’s going to help me boost those individual URLs’ rankings. So I want this page over here to link to me and say “hairdryers,” to my page that is keyword targeted for the word “hairdryers.” Fingers crossed.

3. Links to my domain from other sites, in my sector or niche, that provide some of that topical authority and influence to help tell Google and the other search engines that this is what my site is about, that I belong in this sphere of influence, that I’m semantically and topically related to words and phrases like this. So I want appliancegal.com to link to my site if I’m trying to rank in the world of hairdryers and other kinds of appliances.

So of these, for one and three, we won’t talk about two today, but for one and three, much of the time the people that you’re trying to target are what we call in the industry influencers, and these influencers are going to be lots of people. I’ve illustrated them all here — mostly looking sideways at each other, not exactly sure why that is — but bloggers, and journalists, and authors, and conference organizers, and content marketers, and event speakers, and researchers, and editors, and podcasters, and influencers of a wide, wide variety. We could fill up the whole board with the types of people who are in the influencer world or have that title specifically, but they tend to share a few things in common. They are trying to produce content of one kind or another. They’re not dissimilar from us. They’re trying to produce things on the web, and when they do, they need certain elements to help fill in the gap. When they’re looking for those gap-filling elements, that is your opportunity to earn these kinds of links.

Content tactics

So a few tactics for that. First off, one of the most powerful ones, and we’ve talked about this a little bit here on Whiteboard Friday, but probably not in depth, is…

A. Statistics and data. The reason that this is such a powerful tool is because when you create data, especially if it’s either uniquely gathered by you, unique because you have it, because you can collect it and no one else can, or unique because you’ve put it together from many disparate sources, you’re the editorial curator of that data and statistics, everyone like this needs those types of statistics and data to support or challenge their arguments or their assertions or their coverage of the industry, whatever it is.

  • Why this works: This works well because this fills that gap. This gives them the relevant stats that they’re looking for. Because numbers are easy to use and easy to cite, and you can say, “Feel free to link to this. You’re welcome to copy this graph. You’re welcome to embed this chart.” All those kinds of things. That can make it even easier, but much of the time, just by having these statistics, you can do it.
  • The key is that you have to be visible at the time that these people are looking for them, and that means usually ranking for very hard to discover, through at least normal keyword research, long-tail types of terms that use words like “stats,” “data,” “charts,” “graphs,” and kind of these question formats like when, how much, how many, number of, etc.

It’s tough because you will not see many of those in your keyword research, because there’s a relatively few number of these people searching in any given month for this type of gap-filling data, so you have to intuit often what you should title those things. Put yourself in these people’s shoes and start Googling around for “What would I need if I had to write some industry coverage around this?” Then you’ll come up with these types of things, and you can try modifying your keyword research queries or doing some Google Suggest stuff with these words and phrases.

B. Visual content. Visual content is exceptionally valuable in this case because, again, it fills a gap that many of these folks have. When you are a content marketer, or when you’re a speaker at an event, or when you’re an author or a blogger, you need visual content that will help catch the eye, that will break up the writing that you’ve done, and it’s often much easier to get someone else’s visual content and simply cite your source and link to it than it is to create visual content of your own. These people often don’t have the resources to create their own visual content.

  • Why this works: So, for everyone who’s doing posts, and articles, and slide decks, and even videos, they say, “Why not let someone else do the work,” and you can be that someone else and fill these gaps.
  • Key: To do this well, you’re going to want to appear in a bunch of visual content search mediums that these folks are going to use. Those are places like…
    • Google Images most obviously, but also
    • Pinterest
    • SlideShare, meaning take your visuals, put them up in some sort of slide format, give some context to them and upload them to SlideShare. The nice thing about SlideShare, SlideShare actually reproduces each individual slide as a visual, and then Google Images can search those, and so you’ll often see SlideShare’s results inside Google Images. So this can be a great end around for that.
    • Instagram search, many folks are using that especially if you’re doing photos. You can see I’ve illustrated my own hair drying technique right here. This is clearly Rand. Look at me. I’ve got more hair than I know what to do with.
    • Flickr, still being used by many searchers, particularly because it has a Creative Commons search license, and that should bring up using a Creative Commons commercial use license that requires attribution with a link is your best bet for all of these platforms. It will mean you can get on lots of other Creative Commons visual and photography search engines, which can expose you to more of these types of people as they’re doing their searches.

C. Contrarian/counter-opinions. The last one I’ll cover here is contrarian or counter-opinions to the prevailing wisdom. So you might have an opinion like, “In the next three years, hairdryers will be completely obsolete because of X.”

  • Why it works: This works well because modern journalism has this idea and modern content, in fact, has this idea that they are supposed to create conflict and that they should cover both sides of an issue. In many industry specific sorts of fields, it’s often the case that that is a gap that goes unfilled. By being that sort of challenger to conventional wisdom or conventional thinking, you can fill that gap.
  • The key here is you want to either rank in Google search engine for some of those mid or long tail research type queries. These can be competitive, and so this is challenging, but presenting contrarian opinions is often great link bait. This is kind of a good way to earn links of all kinds in here.
  • Second, I would also urge you to do a little bit of comment marketing and some social media platforms, because what you want to start is to build a brand where you are known for having this contrarian opinion on this conventional topic in your space so that people point all these influencers to you when they’re asked about it. You’re trying to build up this branding of, “Well, I don’t agree with the conventional wisdom around hairdryers.” Hairdryers might be a tough topic for that one, but certainly these other two can work real well.

So using these tactics, I hope that you can go reach out and fill some gaps for these influencers and, as a result, earning two of the three exact kind of links that you need in order to rank well in the search results.

And we’ll see you again next week for another edition of Whiteboard Friday. Take care.

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from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2017/06/creating-influencer-targeted-content-to.html
via http://raymondcastleberry.blogspot.com

The Philosophic Roots of the Paris Agreement Part IV: Conservationism

Previous posts in this series have linked the philosophical roots of the global climate-change movement to the doctrines of Deep Ecology (optimal, fragile, sacrosanct nature) and Malthusianism (the people problem). A third sister intellectual/activist movement is conservationism, or less-is-more as a physical (versus economic) imperative.[1]

Nonuse or less use for its own sake is different and beyond self-interested, voluntary conservation, or market-based efficiency, wherein cost-minimization/profit-maximization by the economic actor reduces usage. In personal situations, it generally is an affordability decision to not buy; in business settings, it is paring inputs (reducing cost) for a desired, given output.

Unlike natural conservation, conservationism is thus about personal sacrifice (going without) and government intervention to reduce energy production or usage.

Market-based Conservation (Efficiency)

Less-is-more conservationism can be contrasted with more-from-less/less-to-more conservation. The history of the energy industry is replete with examples of increasing energy efficiency without the heavy hand of government.

“Today the [wellhead petroleum] conservation movement is led by sober business men and is based on the cold calculations of the engineers,” wrote resource economist Erich Zimmermann in 1933. “Conservation, no longer viewed as a political issue, has become a business proposition” (Zimmerman, p. 784).

Turning to electricity, the natural evolution of business efficiency can be appreciated in terms of how much coal is  required to generate a kilowatt hour of electricity. At Samuel Insull’s Commonwealth Edison Company in Chicago, for example, new power plants required the following pounds of coal to produce one kilowatt hour of electricity: 1888 (12 pounds), 1894 (6 pounds), 1903 (2.5 pounds), 1921 (1.8 pounds), and 1924 (1.5 pounds) (Bradley 2011, 483). That progress has continued. Approximately a pound of coal now is required per kWh in electric generation, and this efficiency can be expected to increase in the next decades.

From Conservation to Conservationism

The (Malthusian) fear of mineral energy depletion inspired conservationism, an “ism” predicated on the belief that less energy consumption is good per se. Such a policy was rejected in the 19th century by the father of energy economics, W. S. Jevons. He feared that freezing coal usage meant that “Britain should be stationary and lasting as she was, rather than of growing and world-wide influence as she is” (Bradley, 2009, p. 242).

A century later, amid America’s (regulation-created) energy crisis, when the mainstream view was that we were running out of oil and natural gas, neo-Malthusians saw salvation on the demand side.

Wholesale shortages of petroleum products that threatened the same at retail (to trigger gasoline lines) inspired the first congressional hearing on energy conservation. This March 1973 event (seven months before the Arab Embargo) attracted the first wave of energy conservationists and environmentalists from organizations such as the Environmental Defense Fund, Friends of the Earth, and the Sierra Club (Bradley, 2009, pp. 243–44).

An energy intelligentsia got busy promoting conservationism as a cure for the energy crisis. The Ford Foundation’s A Time to Choose: America’s Energy Future (1974) reached three major conclusions (Bradley, 2009, p. 244):

  • the energy crisis is real and long-lived;
  • “conservation is as important as supply”; and
  • the U.S. needs an integrated national energy policy.

Energy conservation in the Ford report, headed by S. David Freeman, went well beyond self-interested economic conservation—economizing by eliminating waste in response to higher prices. The report proposed ending energy demand growth by creating a federal-level Energy Policy Council. Assisted by a Citizens’ Advisory Board, the council would set conservation goals for the nation, for each region, and for each industry sector. A first step was to set “a uniform system of accounting for energy” for industry to follow. Government energy planning was born—and not to go away even when oil and gas shortages turned to surplus in the next decade (Bradley, 2009, p. 245).

Amory Lovins (Romantic Conservationism)

In 1976, the 29-year-old energy representative of the UK environmental group, Friends of the Earth, wrote an essay that impacted the energy policy world. “Energy Strategy: The Road Not Taken?”, the most reprinted piece in the history of Foreign Affairs, coined the term soft energy paths to differentiate energy conservation and decentralized renewable technology from the “hard” path of central-station power plants fueled by oil, gas, coal, or uranium.

Lovins was soon testifying before the US Congress and advising President Carter on the proposition that the least-cost energy option was not to produce energy, but to save it. In 1977, Lovins presented his case in romantic, something-for-everyone terms to a congressional subcommittee (Bradley, 2009, p. 251):

A final feature of the soft energy path that I wish to commend to this committee as politicians is that it helps to avoid conflict between constituencies by offering advantages to all of them; jobs for the unemployed, capital for businesspeople, environmental protection for conservationists, increased national security for the military, opportunities for small business to innovate and for big business to recycle itself, savings for consumers, world order and equity for globalists, energy independence for isolationists, exciting technologies for the secular, a rebirth of spiritual values for the religious, radical reforms for the young, traditional virtues for the old, civil rights for liberals and states’ rights for conservatives.

To critics, however, Lovins was “selling a dream without presenting the bill” (quoted in Bradley, 2009, p. 250).

Daniel Yergin: Fooled by Shortages

The esteemed energy historian Daniel Yergin went Malthusian during the energy crisis, believing that oil and gas reserves were fixed and rapidly depleting. Costs and prices could only rise, in his view, since demand had overtaken supply.

In their 1979 book, Energy Future: Report of the Energy Project at the Harvard Business School, Yergin and Robert Stobaugh concluded that “the government must be the champion of conservation and solar” (Stobaugh and Yergin, p. 229). One major policy goal was to reduce energy usage between 30 and 40 percent with only “modest adjustments in the way people live” (Yergin, p. 136) This was not a free market program or outcome.

Hayek on Conservationism

In The Constitution of Liberty (1960), economist F. A. Hayek evaluated “the necessity of central direction of the conservation of natural resources” (p. 370), a view that was “particularly strong in the United States, where the ‘conservation movement’ has to a great extent been the source of the agitation for economic planning and has contributed much to the indigenous ideology of the radical economic reformers” (pp. 367–68). The US debate was about keeping more oil and gas in the ground via state wellhead-conservation regulation to better the future.

While not denying that economic error could produce real waste in the “consumption of irreplaceable resources” (p. 369), Hayek cautioned that government was unlikely to have the knowledge of future conditions of price and scarcity that would enable it to impose the “right” solution.

“Any natural resource represents just one item of our total endowment of exhaustible resources, and our problem is not to preserve this stock in any particular form, but always to maintain it in a form that will make the most desirable contribution to total income,” he wrote (p. 374).

Hayek also noticed a circularity problem in the conservationist argument: postponed consumption was still supply lost for the future. Quoting fellow economist Anthony Scott, Hayek noted the irony that “the conservationist who urges us ‘to make greater provision for the future’ is in fact urging a lesser provision for posterity” (p. 374). In other words, production had to be avoided indefinitely, not merely postponed, or it was not supply-side conservation. Yet this would create perpetual non-usage in the present—an impossibility.

Conclusion

Conservationism, substituting a physical standard for a consumer-driven one, is market conservation gone too far. An individual or business can overinvest in conservation just as it can underinvest in the same. Personal preferences and net-present-value economics, not engineering, dictate energy usage in a free society.

The hidden premise of conservationism—the unsustainability of carbon-based energies—is in full intellectual debate. Depletion, pollution, energy security, climate change—these issues, one by one, have been exaggerated by anti-fossil-fuel activists, a story told in many other posts at this website.

Natural consumer decisions about energy are not a “market failure” requiring government subsidies and mandates. No wise government planner or bureaucracy can know the “optimal” level of energy consumption, and any government involvement must be evaluated against public-sector failures.

The case for government conservationism has not been made. Energy policy predicated on market conservation is merited on consumer, producer, taxpayer, and civil grounds.


Bibliography

Bradley, Robert. Capitalism at Work: Business, Government, and Energy. Salem, MA: M & M Scrivener Press, 2009.

Bradley, Robert. Edison to Enron: Energy Markets and Political Strategies. Hoboken, NJ: John Wiley & Sons and Scrivener Publishing, 2011.

Hayek, F. A. The Constitution of Liberty. Chicago, IL: University of Chicago Press, 1960.

Lovins, Amory. “Energy Strategy: The Road Not Taken?” Foreign Affairs 55 (1): 65–96 (October 1976).

Stobaugh, Robert, and Yergin, Daniel. “Conclusion: Towards a Balanced Energy Program.” In Energy Future: Report of the Energy Project at the Harvard Business School, edited by Stobaugh and Yergin, 216–33. New York: Random House, 1979.

Yergin, Daniel. “Conservation: The Key Energy Source.” In Energy Future: Report of the Energy Project at the Harvard Business School, edited by Stobaugh and Yergin, 136–82. New York: Random House, 1979.

Zimmermann, Erich. World Resources and Industries. New York: Harper & Brothers, 1933.

[1] Conservationism as a political-economy term was introduced in Bradley (2009), including pp. 187, 218, 242, and Bradley (2011), including pp. 226-27, 509. A fourth intellectual/activist strand, small-is-beautiful (E. F. Schumacher), will be next in this Paris series.

The post The Philosophic Roots of the Paris Agreement Part IV: Conservationism appeared first on IER.

from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2017/06/the-philosophic-roots-of-paris_22.html
via http://raymondcastleberry.blogspot.com

The Philosophic Roots of the Paris Agreement Part IV: Conservationism

Previous posts in this series have linked the philosophical roots of the global climate-change movement to the doctrines of Deep Ecology (optimal, fragile, sacrosanct nature) and Malthusianism (the people problem). A third sister intellectual/activist movement is conservationism, or less-is-more as a physical (versus economic) imperative.[1]

Nonuse or less use for its own sake is different and beyond self-interested, voluntary conservation, or market-based efficiency, wherein cost-minimization/profit-maximization by the economic actor reduces usage. In personal situations, it generally is an affordability decision to not buy; in business settings, it is paring inputs (reducing cost) for a desired, given output.

Unlike natural conservation, conservationism is thus about personal sacrifice (going without) and government intervention to reduce energy production or usage.

Market-based Conservation (Efficiency)

Less-is-more conservationism can be contrasted with more-from-less/less-to-more conservation. The history of the energy industry is replete with examples of increasing energy efficiency without the heavy hand of government.

“Today the [wellhead petroleum] conservation movement is led by sober business men and is based on the cold calculations of the engineers,” wrote resource economist Erich Zimmermann in 1933. “Conservation, no longer viewed as a political issue, has become a business proposition” (Zimmerman, p. 784).

Turning to electricity, the natural evolution of business efficiency can be appreciated in terms of how much coal is  required to generate a kilowatt hour of electricity. At Samuel Insull’s Commonwealth Edison Company in Chicago, for example, new power plants required the following pounds of coal to produce one kilowatt hour of electricity: 1888 (12 pounds), 1894 (6 pounds), 1903 (2.5 pounds), 1921 (1.8 pounds), and 1924 (1.5 pounds) (Bradley 2011, 483). That progress has continued. Approximately a pound of coal now is required per kWh in electric generation, and this efficiency can be expected to increase in the next decades.

From Conservation to Conservationism

The (Malthusian) fear of mineral energy depletion inspired conservationism, an “ism” predicated on the belief that less energy consumption is good per se. Such a policy was rejected in the 19th century by the father of energy economics, W. S. Jevons. He feared that freezing coal usage meant that “Britain should be stationary and lasting as she was, rather than of growing and world-wide influence as she is” (Bradley, 2009, p. 242).

A century later, amid America’s (regulation-created) energy crisis, when the mainstream view was that we were running out of oil and natural gas, neo-Malthusians saw salvation on the demand side.

Wholesale shortages of petroleum products that threatened the same at retail (to trigger gasoline lines) inspired the first congressional hearing on energy conservation. This March 1973 event (seven months before the Arab Embargo) attracted the first wave of energy conservationists and environmentalists from organizations such as the Environmental Defense Fund, Friends of the Earth, and the Sierra Club (Bradley, 2009, pp. 243–44).

An energy intelligentsia got busy promoting conservationism as a cure for the energy crisis. The Ford Foundation’s A Time to Choose: America’s Energy Future (1974) reached three major conclusions (Bradley, 2009, p. 244):

  • the energy crisis is real and long-lived;
  • “conservation is as important as supply”; and
  • the U.S. needs an integrated national energy policy.

Energy conservation in the Ford report, headed by S. David Freeman, went well beyond self-interested economic conservation—economizing by eliminating waste in response to higher prices. The report proposed ending energy demand growth by creating a federal-level Energy Policy Council. Assisted by a Citizens’ Advisory Board, the council would set conservation goals for the nation, for each region, and for each industry sector. A first step was to set “a uniform system of accounting for energy” for industry to follow. Government energy planning was born—and not to go away even when oil and gas shortages turned to surplus in the next decade (Bradley, 2009, p. 245).

Amory Lovins (Romantic Conservationism)

In 1976, the 29-year-old energy representative of the UK environmental group, Friends of the Earth, wrote an essay that impacted the energy policy world. “Energy Strategy: The Road Not Taken?”, the most reprinted piece in the history of Foreign Affairs, coined the term soft energy paths to differentiate energy conservation and decentralized renewable technology from the “hard” path of central-station power plants fueled by oil, gas, coal, or uranium.

Lovins was soon testifying before the US Congress and advising President Carter on the proposition that the least-cost energy option was not to produce energy, but to save it. In 1977, Lovins presented his case in romantic, something-for-everyone terms to a congressional subcommittee (Bradley, 2009, p. 251):

A final feature of the soft energy path that I wish to commend to this committee as politicians is that it helps to avoid conflict between constituencies by offering advantages to all of them; jobs for the unemployed, capital for businesspeople, environmental protection for conservationists, increased national security for the military, opportunities for small business to innovate and for big business to recycle itself, savings for consumers, world order and equity for globalists, energy independence for isolationists, exciting technologies for the secular, a rebirth of spiritual values for the religious, radical reforms for the young, traditional virtues for the old, civil rights for liberals and states’ rights for conservatives.

To critics, however, Lovins was “selling a dream without presenting the bill” (quoted in Bradley, 2009, p. 250).

Daniel Yergin: Fooled by Shortages

The esteemed energy historian Daniel Yergin went Malthusian during the energy crisis, believing that oil and gas reserves were fixed and rapidly depleting. Costs and prices could only rise, in his view, since demand had overtaken supply.

In their 1979 book, Energy Future: Report of the Energy Project at the Harvard Business School, Yergin and Robert Stobaugh concluded that “the government must be the champion of conservation and solar” (Stobaugh and Yergin, p. 229). One major policy goal was to reduce energy usage between 30 and 40 percent with only “modest adjustments in the way people live” (Yergin, p. 136) This was not a free market program or outcome.

Hayek on Conservationism

In The Constitution of Liberty (1960), economist F. A. Hayek evaluated “the necessity of central direction of the conservation of natural resources” (p. 370), a view that was “particularly strong in the United States, where the ‘conservation movement’ has to a great extent been the source of the agitation for economic planning and has contributed much to the indigenous ideology of the radical economic reformers” (pp. 367–68). The US debate was about keeping more oil and gas in the ground via state wellhead-conservation regulation to better the future.

While not denying that economic error could produce real waste in the “consumption of irreplaceable resources” (p. 369), Hayek cautioned that government was unlikely to have the knowledge of future conditions of price and scarcity that would enable it to impose the “right” solution.

“Any natural resource represents just one item of our total endowment of exhaustible resources, and our problem is not to preserve this stock in any particular form, but always to maintain it in a form that will make the most desirable contribution to total income,” he wrote (p. 374).

Hayek also noticed a circularity problem in the conservationist argument: postponed consumption was still supply lost for the future. Quoting fellow economist Anthony Scott, Hayek noted the irony that “the conservationist who urges us ‘to make greater provision for the future’ is in fact urging a lesser provision for posterity” (p. 374). In other words, production had to be avoided indefinitely, not merely postponed, or it was not supply-side conservation. Yet this would create perpetual non-usage in the present—an impossibility.

Conclusion

Conservationism, substituting a physical standard for a consumer-driven one, is market conservation gone too far. An individual or business can overinvest in conservation just as it can underinvest in the same. Personal preferences and net-present-value economics, not engineering, dictate energy usage in a free society.

The hidden premise of conservationism—the unsustainability of carbon-based energies—is in full intellectual debate. Depletion, pollution, energy security, climate change—these issues, one by one, have been exaggerated by anti-fossil-fuel activists, a story told in many other posts at this website.

Natural consumer decisions about energy are not a “market failure” requiring government subsidies and mandates. No wise government planner or bureaucracy can know the “optimal” level of energy consumption, and any government involvement must be evaluated against public-sector failures.

The case for government conservationism has not been made. Energy policy predicated on market conservation is merited on consumer, producer, taxpayer, and civil grounds.


Bibliography

Bradley, Robert. Capitalism at Work: Business, Government, and Energy. Salem, MA: M & M Scrivener Press, 2009.

Bradley, Robert. Edison to Enron: Energy Markets and Political Strategies. Hoboken, NJ: John Wiley & Sons and Scrivener Publishing, 2011.

Hayek, F. A. The Constitution of Liberty. Chicago, IL: University of Chicago Press, 1960.

Lovins, Amory. “Energy Strategy: The Road Not Taken?” Foreign Affairs 55 (1): 65–96 (October 1976).

Stobaugh, Robert, and Yergin, Daniel. “Conclusion: Towards a Balanced Energy Program.” In Energy Future: Report of the Energy Project at the Harvard Business School, edited by Stobaugh and Yergin, 216–33. New York: Random House, 1979.

Yergin, Daniel. “Conservation: The Key Energy Source.” In Energy Future: Report of the Energy Project at the Harvard Business School, edited by Stobaugh and Yergin, 136–82. New York: Random House, 1979.

Zimmermann, Erich. World Resources and Industries. New York: Harper & Brothers, 1933.

[1] Conservationism as a political-economy term was introduced in Bradley (2009), including pp. 187, 218, 242, and Bradley (2011), including pp. 226-27, 509. A fourth intellectual/activist strand, small-is-beautiful (E. F. Schumacher), will be next in this Paris series.

The post The Philosophic Roots of the Paris Agreement Part IV: Conservationism appeared first on IER.

The Case For & Against Attending Marketing Conferences

Posted by randfish

I just finished reading Jan Schaumann’s short post on Why Companies Should Pay for Their Employees to Attend Conferences. I liked it. I generally agree with it. But I have more to add.

First off, I think it’s reasonable for managers and company leaders to be wary of conferences and events. It is absolutely true that if your employees attend them, there will be costs associated, and it’s logical for businesses to seek a return on investment.

What do you sacrifice when sending a team member to an event?

Let’s start by attempting to tally up the costs:

  • Lost productivity – Usually on the order of 1 to 4 days depending on the length of the event, travel distance, tiredness from travel, whether the team member does some work at the event or makes up with evenings/weekends, etc. Given marketing salaries ranging from $40K–$100K, this could be as little as $150 (~1 day’s cost at the lower end) to $1,900 (a week’s cost on the high end).
  • Cost of tickets – In the web marketing world, the range of events is fairly standard, between ~$1,000 and $2,000, with discounts of 20–50% off those prices for early registration (or with speaker codes). Some examples:
    • CTAConf in Vancouver is $999 ($849 if you’re an Unbounce customer)
    • Content Marketing World in Cleveland is $1,195 (early rate) or $1,395 later
    • Pubcon Las Vegas in $1,099 (early rate), not sure what it goes up to
    • HubSpot’s INBOUND is $1,299 (or $1,899 for a VIP pass)
    • SMX East is $1,795 (or $2,595 for all access)
    • SearchLove London is $890 (or $1,208 for VIP)
    • MozCon in Seattle is $1,549 (or $1,049 for Moz subscribers)
  • Cost of travel and lodging – Often between $1,000–$3,000/person depending on location, length, and flight+hotel costs.
  • Potential loss of employee through recruitment or networking – It’s a thorny one, but it has to be addressed. I know many employers who fear sending their staff to events because they worry that the great networking opportunities will yield a higher-paying or more exciting offer in the future. Let’s say that for every 30 employees you send (or every 30 events you send an employee to), you’ll lose one to an opportunity that otherwise wouldn’t have had them considering a departure. I think that’s way too high (not because marketers don’t leave their jobs but because they almost always leave for reasons other than an opportunity that came through a conference), but we’ll use it anyway. On the low end, that might cost you $10K (if you’ve lost a relatively junior person who can be replaced fairly quickly) and on the high end, might be as much as $100K (if you lose a senior person and have a long period without rehiring + training). We’ll divide that cost by 30 using our formula of one lost employee per thirty events.

Total: $4,630–$10,230

That’s no small barrier. For many small businesses or agencies, it’s a month or two of their marketing expenses or the salary for an employee. There needs to be significant return on those dollars to make it worthwhile. Thankfully, in all of my experiences over hundreds of marketing events the last 12 years, there is.

What do you gain by sending a team member to an event?

Nearly all the benefits of events come from three sources: the growth (in skills, relationships, exposure to ideas, etc) of the attendee(s), applicable tactics & strategies (including all the indirect ones that come from serendipitous touch points), and the extension of your organization’s brand and network.

In the personal growth department, we see benefits like:

  • New skills, often gained through exposure at events and then followed up on through individual research and effort. It’s absolutely true that few attendees will learn enough at a 30-minute talk to excel at some new tactic. But what they will learn is that tactic’s existence, and a way to potentially invest in it.
  • Unique ideas, undiscoverable through solo work or in existing team structures. I’ve experienced this benefit myself many times, and I’ve seen it on Moz’s team countless times.
  • The courage, commitment, inspiration, or simply the catalyst for experimentation or investment. Sometimes it’s not even something new, or something you’ve never talked about as a team. You might even be frustrated to find that your coworker comes back from an event, puts their head down for a week, and shows you a brilliant new process or meaningful result that you’ve been trying to convince them to do for months. Months! The will to do new things strikes whenever and however it strikes. Events often deliver that strike. I’ve sat next to engineers whom I’ve tried to convince for years to make something happen in our tools, but when they see a presenter at MozCon show off another tool that does it or bemoan the manual process currently required, they suddenly set their minds to it and deliver. That inspiration and motivation are priceless.
  • New relationships that unlock additional skill growth, amplification opportunities, business development or partnership possibilities, references, testimonials, social networking, peer validation, and all the other myriad advancements that accompany human connections.
  • Upgrading the ability to learn, to process data and stories and turn them into useful takeaways.
  • Alongside that, upgraded abilities to interact with others, form connections, learn from people, and form or strengthen bonds with colleagues. We learn, even in adulthood, through observation and imitation, and events bring people together in ways that are more memorable, more imprinted, and more likely to resonate and be copied than our day-to-day office interactions.

A gentleman at SearchLove London 2016 gives me an excellent (though slightly blurry) thumbs up

In the applicable tactics & strategies, we get benefits like:

  • New tools or processes that can speed up work, or make the impossible possible.
  • Resources for advancing skills and information on a topic that’s important to one’s job or to a project in particular.
  • Actionable ideas to make an existing task, process, or result easier to achieve or more likely to produce improved results.
  • Bigger-picture concepts that spur an examination of existing direction and can improve broad, strategic approaches.
  • People & organizations who can help with all above, formally or informally, paid as consultants, or just happy to answer a couple questions over email or Twitter.

Purna Virji at SMX Munich 2017

In the extension of organizational brand/network, we get benefits like:

  • Brand exposure to people you meet and interact with at conferences. Since we know the world of sales & marketing is multi-touch, this can have a big impact, especially if either your customers or your amplification targets include anyone in your professional field.
  • Contacts at other companies that can help you reach people or organizations (this benefit has grown massively thanks to the proliferation of professional social networks like those on LinkedIn and Twitter)
  • Potential media contacts, including the more traditional (journalists, news publications) and the emerging (bloggers, online publishers, powerful social amplifiers, etc)
  • A direct introduction point to speakers and organizers (e.g. if anyone emails me saying “I saw you speak at XYZ and wanted to follow up about…” the likelihood of an invested reply goes way up vs. purely online outreach)

But I said above that these three included “nearly all” the benefits, didn’t I? 🙂

Daisy Quaker at MozCon Ignite

It’s true. There are more intangible forms of value events provide. I think one of the biggest is the trust gained between a manager and their team or an employer and their employees. When organizations offer an events budget, especially when they offer it with relative freedom for the team member to choose how and where to spend it, a clear message is sent. The organization believes in its people. It trusts its people. It is willing to sacrifice short-term work for the long-term good of its people. The organization accepts that someone might be recruited away through the network they gain at an event, but is willing to make the trade-off for a more trusting, more valuable team. As the meme goes:

CFO: What if we invest in our people and they leave?
CEO: What if we don’t and they stay?

Total: $A Lot?

How do you measure the returns?

The challenge comes in because these are hard things for which to calculate ROI. In fact, any number I throw out for any of these above will absolutely be wrong for your particular situation and organization. The only true way to estimate value is through hindsight, and that means having faith that the future will look like the past (or rigorous, statistically sound models with large sample sizes, validated through years of controlled comparison… which only a handful of the world’s biggest and richest companies do).

It’s easy to see stories like “The biggest deals I’ve ever done, mostly (80%) came from meeting people at conferences” and “I’ve had the opportunity to open the door of conversations previously thought locked” and “When I send people on my team I almost always find they come back more inspired, rejuvenated, and full of fire” and dismiss them as outliers or invent reasons why the same won’t apply to you. It’s also easy explain away past successes gained through events as not necessarily requiring the in-person component.

I see this happen a lot. I’m embarrassed to say I’ve seen it at Moz. Remember last summer, when we did layoffs? One of the benefits cut was the conference and events budget for team members. While I think that was the right decision, I’m also hopeful & pushing for that to be one of the first benefits we reinstate now that we’re profitable again.

Lexi Mills at Turing Festival in Edinburgh

Over the years of my event participation, first as an attendee, and later as a speaker, I can measure my personal and Moz’s professional benefits, and come up with some ballpark range. It’s harder to do with my team members because I can’t observe every benefit, but I can certainly see every cost in line-item format. Human beings are pretty awful in situations like these. We bias to loss aversion over potential gain. We rationalize why others benefit when we don’t. We don’t know what we’re missing so we use logic to convince ourselves it’s ROI negative to justify our decision.

It’s the same principle that often makes hard-to-measure marketing channels the best ROI ones.

Some broader discussions around marketing event issues

Before writing this post, I asked on Twitter about the pros and cons of marketing conferences that folks felt were less often covered. A number of the responses were insightful and worthy of discussion follow-ups, so I wanted to include them here, with some thoughts.

If you’re a conference organizer, you know how tough a conversation this is. Want to bring in outside food vendors (which are much more affordable and interesting than what venues themselves usually offer)? 90% of venues have restrictions against it. Want to get great food for attendees? That same 90% are going to charge you on the order of hundreds of dollars per attendee. MozCon’s food costs are literally 25%+ of our entire budget, and considering we usually break even or lose a little money, that’s huge.

If you’re a media company and you run events for profit, or you’re a smaller business that can’t afford to have your events be a money-losing endeavor, you’re between a rock and a hard place. At places like MozCon and CTAConf, the food is pretty killer, but the flip side is there’s no margin at all. Many conferences simply can’t afford to swing that.

Totally agree with Ross — interesting one, and pros/cons to each. At smaller shows, I love the more intimate connections, but I’m also well aware that for most speakers, it’s a tough proposition to ask for a new presentation or to bring their best stuff. It’s also hard to get many big-name speakers. And, as Ross points out, the networking can be deeper, but with a smaller group. If you’re hoping to meet someone from company X or run into colleagues from the past, small size may inhibit.

For years prior to MozCon, I’d only ever been to events with a couple keynotes and then panels of 3–6 people in breakout sessions the rest of the day. I naively thought we’d invented some brilliant new system with the all-keynote-style conference (it had obviously been around for decades; I just wasn’t exposed to it). It also became clear over time that many other marketing conferences had the same idea and today, it’s an even split between those that do all-keynotes vs. those with a hybrid of breakouts, panels, and keynotes.

Personally, my preference is still all-keynote. I agree with Greg that, on occasion, a speaker won’t do a great job, and sitting through those 20–40 minutes can be frustrating. But I can count on a single hand the number of panel sessions I’ve ever found value in, and I strongly dislike being forced to choose between sessions and not sharing the same experience with other attendees. Even when the session I’ve chosen is a good one, I have FOMO (“what if that other session around the corner is even better?!”) and that drives my quality of experience down.

This, though, is personal preference. If you like panels, breakouts, and multi-track options, stick to SMX, Content Marketing World, INBOUND, and others like them. If you’re like me and prefer all keynotes, single track, go for CTAConf, Searchlove, Inbounder, MozCon, and their ilk.

I agree this is a real problem. Being a conference organizer, I get to see a lot of the feedback and requests, and I think that’s where the issue stems from. For example, a few years back, Brittan Bright, who now does sales at Google in New York, gave a brilliant talk about the soft skills of selling and client relations. It scored OK in the lineup, but a lot of the feedback overall that year was from people who wanted more “tactical tips” and “technical tricks” and less “soft skills” content. Every conference has to deal with this demand and supply issue. You might respond (as my friend Wil Reynolds often does) with “who cares what people say they want?! Give them what they don’t know they need!”

That’s how conferences go broke, my friends. 🙂 Every year, we try to include at least a few sessions that focus on these softer skills (in numerous ways), and every year, there’s pushback from folks who wish we’d just show them how to get more easy links, or present some new tool they haven’t heard of before. It’s a tough give and take, but I’m empathetic to both sides on this issue. Actionable tactics matter, and they make for big, immediate wins. Soft skills are important, too, but there’s a significant portion of the audience who’ll get frustrated seeing talks on these topics.

Hrm… I think I agree more with Freja than with Herman, but it’s entirely a personal preference. If you know yourself well enough to know that you’ll benefit more (or less) by attending with others from your team, make the call. This is one reason I love the idea of businesses offering the freedom of choice on how to use their event budget.

There were a number of these conflicting points-of-view in reply to my tweet, and I think they indicate the challenge for attendees and organizers. Opinions vary about what makes for a great conference, a great speaker or session, or the best way to get value from them.

Which marketing conferences do I recommend?

I get this question a lot (which is fair, I go to *a lot* of events). It really depends what you like, so I’ll try to break down my recommendations in that format.

Big, industry-wide events with many thousands of attendees, big name keynotes, famous musical acts, and hundreds of breakout session options:

  • INBOUND by Hubspot (Boston, MA 9/25–9/28) is a clear choice here. If you craft your experience well, you can get an immense amount of value.
  • Content Marketing World (Cleveland, OH 9/5–9/8) is always a good show, and they’ve recently focused on getting more gender-diverse.
  • Dreamforce by Salesforce (San Francisco, CA 11/6–11/9) has a similar feel to INBOUND in size and format, though it’s generally more classic sales & marketing focused, and has less programming that overlaps with our/my world of SEO, social media, content marketing, etc.
  • Web Summit (Lisbon, Portugal 11/6–11/9) is even broader, focusing on technology, startups, entrepreneurship, and sales+marketing. If you’re looking to break out of the marketing bubble and get a chance to see some “where are we going” and “what’s driving innovation” content, this is a good one.
  • SMX Munich (Munich, Germany 3/20–3/21 2018) is one of the best produced and best attended shows in Europe. This event consistently delivers great presentations. Because of its location on the calendar, it’s also where many speakers debut their theses and tactics each year, and since it’s in Germany (or, more probably because it’s run by the amazing Sandra & Matthew Finlay), everything is executed to perfection.

Mid-tier events with 1,000–1,500 attendee:

  • MozCon by Moz (Seattle, WA 7/17–7/19) I’m obviously biased, but I also get to see the survey data from attendees. The ratings of “excellent” or “outstanding” and the high number of people who buy tickets for the following year within a few days of leaving give me confidence that this is still one of the best events in the web marketing world.
  • CTAConf by Unbounce (Vancouver, BC 6/25–6/27) Oli Gardner, who’s become an exceptional speaker himself, works directly with every presenter (all invitation-only, like MozCon) to make sure the decks are top notch. In addition, the setting in Vancouver, the food trucks, the staging, the networking, and the kindness of Canada are all wonderful.
  • Inbounder (Valencia, Spain 5/2018) This event only happens every other year, but if 2016 was anything to judge by, it’s one of Europe’s best. Certainly, you won’t find a more incredible city or a better location. The conference hall is inside a spaceship that’s landed on a grassy park surrounding an ancient walled city. Even Seattle’s glacier-ringed beauty can’t top that.
  • ConversionXL Live (Austin, TX 3/28–3/30) Peep Laja and crew put on a terrific event with a lovely venue and clear attention paid to the actionable, tactical value of takeaways. I came back from the few sessions I attended with all sorts of suggestions for the Moz team to try (if only webdev resources weren’t so difficult to wrangle).
  • SMX Advanced (Seattle, WA TBD 2018) I haven’t been in a couple years, but many search marketers rave about this show’s location, production quality, panels, and speakers. It’s one of the few places that still attracts the big-name representatives from Google & Bing, so if you want to hear directly from the horse’s mouth a few seconds before it’s broadcast and analyzed a million ways on Twitter, this is the spot.

Outside The Inbounder Conference in Valencia, Spain

Smaller, local, & niche events with a few hundred attendees and a more intimate setting:

  • SearchLove (San Diego, Boston, & London 10/16–10/17) It’s somewhat extraordinary that this event remains small, like a hidden secret in the web marketing world. The quality of content and presentations are on par with MozCon (as are the ratings, and I know from other events how rare those are), but the settings are more intimate with only 2-300 participants in San Diego & Boston, and a larger, but still convivial crowd of 4-600 in London. I personally learn more at Searchlove than any other show.
  • Engage (formerly Searchfest) The SEMPDX crew has always had a unique, wonderful event, and Portland, OR is one of my favorite cities to visit.
  • MNSearch (Minneapolis 6/23) One of the exciting up-and-coming local events in our space. The MNSearch folks have brought together great speakers in fun venues at a surprisingly affordable price, and with some killer after-hours events, too. I’ve been twice and was very impressed both times.

This list is by no means exhaustive, and I’m certain there are many other events that give great value. I can only speak from my own experiences, which are going to carry the bias of what I’ve seen and what I like.

Help us better understand the value of conferences to you

Two years ago, I ran a survey about marketing conferences and received, analyzed, then published the results. I’d like to repeat that again, and see what’s changed. Please contribute and tell us what matters to you:

Take the survey here

I look forward to the discussion in the comments. If the Twitter thread was any indication, there’s a lot of passion and interest around this topic, one that I share. And of course, if you’d like to chat in person about this and see how we’re doing things at Moz, I hope you’ll consider MozCon in just a few weeks in Seattle.


Roger MozBotRoger’s note: *beep* Rogerbot here! I think Rand forgot an important benefit of one conference: At MozCon, you can hug a robot. If you’re considering joining us in Seattle this July, we’re over 75% sold out! Be sure to grab your ticket while you can.

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from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2017/06/the-case-for-against-attending.html
via http://raymondcastleberry.blogspot.com

New York’s Bet on Silevo’s Solar Technology Fails to Deliver

New York’s deal with Silevo Inc. is a sham and illustrates the problems that arise when politicians use taxpayer money to attract and reward favored industries. Silevo, which was acquired by Solar City, is a photovoltaic cell and module technology company that developed the proprietary Triex solar modules. New York’s deal with Silevo was to establish a manufacturing facility to produce 1 gigawatt worth (10,000 solar panels a day) of its Triex module technology with the potential of adding an additional 5 gigawatts of capacity in a later phase.

The agreement granted Silevo the use of a 1,000,000-square-foot factory in Buffalo, occupying 88 acres, with a lease that runs for 10 years and a 10-year renewal right. The rent is $1 or $2 per year. New York promised to spend $750 million on the factory and purchasing manufacturing equipment.[i]

In return, Silevo agreed to employ at least 1,460 people in “high tech jobs” at the factory, with 900 of those hires to be made within two years after completion of the factory; to retain the 1,460 high tech workers for at least five years; and to employ an additional 2,000 people over the first five years to support downstream solar panel sales and installation activities within New York. In addition to those jobs, Silevo agreed to help attract and retain an additional 1,440 “support jobs” in New York, for a total of 4,900 jobs. It also agreed to spend approximately $5 billion in capital expenses, operating expenses, and other costs over a 10 year period after full production began.

After the initial agreement made in 2014, modifications were made with Solar City, who acquired Silevo in June 2014, which watered down the agreement. The 1,460 high tech jobs turned into just 1,460 jobs with no “high tech” requirement. Instead of Solar City being required to hire 900 of those employees during the first two years after factory completion, only 500 were required. Further, the wording regarding the 2,000 hires, “to support downstream solar panels sales and installation activities within New York” was removed. Also, 7 delays were made to the factory completion date originally set for December 15, 2015 and finally set for March 31, 2017.

At this point, 3 years after the original agreement, none of the achievements promised in 2014 has occurred: no solar cells have been produced at the factory, there are no Buffalo jobs and the Silevo solar cell technology, Triex, has been abandoned by Solar City. Solar City has pushed back the target date for full production at the Buffalo factory from the first quarter of 2017 to later in the year.[ii] (The plant is expected to open this summer, with full production expected by the end of the year.[iii])

In fact, Tesla, who acquired Solar City, has partnered with Panasonic to build solar cells and modules in Buffalo, New York, implying that Solar City’s Silevo endeavor is a failure.[iv] According to Tesla’s blog post, the factory will produce Panasonic’s “high-efficiency PV cells and modules” and Panasonic will invest over $256 million in the Buffalo factory.[v]

Conclusion

New York’s decision to spend $750 million in taxpayer funds for a highly automated factory creating just 500 manufacturing jobs equates to a gigantic $1.5 million subsidy per manufacturing job.[vi] New York politicians made the risky investment despite competition from China’s solar panel industry and rapid changes being underway in the domestic market.


[i] Seeking Alpha, Tesla: SolarCity’s Buffalo Deal Has Lots Of Crooked Bends In The River, June 12, 2017, https://seekingalpha.com/article/4080844-tesla-solarcitys-buffalo-deal-lots-crooked-bends-river?auth_param=1cqlaa:1cjtlcp:e54fc92607a58c8a898a1ebf4de907d6&dr=1

[ii] MIT Technology Review, SolarCity’s Gigafactory. https://www.technologyreview.com/s/600770/10-breakthrough-technologies-2016-solarcitys-gigafactory/

[iii] WIVB, SolarCity to open south Buffalo plant ‘soon after’ June, May 4, 2017, http://wivb.com/2017/05/04/solarcity-to-open-south-buffalo-plant-soon-after-june/

[iv] The Motley Fool, Is SolarCity’s Buffalo Solar Plant a Failure? Tesla Thinks So, October 17, 2017, https://www.fool.com/investing/2016/10/17/is-solarcitys-buffalo-solar-plant-a-failure-tesla.aspx

[v] Ars Technica, Panasonic will spend $256 million on Tesla solar panel factory in Buffalo, NY, December, 27, 2016, https://arstechnica.com/business/2016/12/panasonic-will-spend-256-million-on-tesla-solar-panel-factory-in-buffalo-ny/

[vi] Daily Energy Insider, Success of Buffalo Billion-backed SolarCity factory remains elusive, March 24, 2017, https://dailyenergyinsider.com/featured/3905-success-buffalo-billion-backed-solarcity-factory-remains-elusive/

The post New York’s Bet on Silevo’s Solar Technology Fails to Deliver appeared first on IER.

from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2017/06/new-yorks-bet-on-silevos-solar.html
via http://raymondcastleberry.blogspot.com