Course:ECON371/UBCO2010WT1/GROUP8/Article2

== Article 2 ==[1]

Summary

The Secretary of the Interior, head of the U.S. Department of Interior, has announced a ground-breaking decision to let two large-scale solar power plants have freedom to build upon public land. No other private-sector renewable resource enterprise has ever had an opportunity quite like this. The two projects will use a total of 6,800 acres of land and are expected to provide 754 megawatts of electricity, which could supply approximately 566,000 average homes. This decision comes as a result of the president's focus on developing "clean" energy for households, industries, and businesses. The largest of the two projects features gigantic solar-reflective dishes that reflect and concentrate sunlight to a single point, much like a satellite dish. The second project consists of the usual solar panels; 40,500 of them to be exact. The projects have been reviewed by environmental agencies in order to lessen the impact on their surrounding ecosystems and find ways to alleviate any resulting damage. The director reminds us that the land in question only takes up a negligible amount of the well-managed conservation area. In the past, fossil fuel exploration were the only projects allowed to develop on the land. Now, thanks to a policy of exploring renewable resources, projects such as these may begin to take shape all around the U.S.

Analysis

The title of the article doesn't necessarily spark the greatest feeling of excitement, but this decision by the Department of the Interior - a branch of the U.S. government responsible for protecting natural resources, among many other things - has been a long time coming. This decision has serious implications for the renewable energy sector and the way it conducts business. Still arguably in its infancy, the renewable energy sector has been driven by both public and private organizations. A major difference between these lies in the fact that those involved in the private sector were not allowed to use public land upon which to establish and develop large-scale renewable energy projects. They were limited to land they rightfully owned, and this land may be less than ideal for the processes desired. The investment required to establish a large-scale solar energy plants was prohibitively substantial, and this meant that many beneficial projects would go unfunded. The supply of land for these types of projects has stayed the same for years, but that curve has suddenly pushed itself outwards with enough force to power half a million homes.

Government does not have the resources in terms of time and money, or necessarily the best or most focussed scientists, engineers, and innovators to devote to all avenues of research and development of renewable resources for the good of the people. It would be foolish to expect the government to solve all the problems revolving around the intelligent and sustainable procurement of renewable energy. Probably the most beneficial way for government to aid in this undertaking would be in the way of providing incentives for innovation. These incentives may be as simple as awarding research grants or sponsoring academic functions immersed in these topics, stimulating technological progress and advancement in the field. Governmental support may also come in the form of policy changes, providing certain freedoms to those who may have been reluctant to invest or engage in activities that tread in a political 'grey area'. For example, both the Chevron and the Tessera Solar's Projects needed government approval before being able to develop on public lands; a milestone that these - and many other - private companies have been trying to reach for years now. In terms of environmental issues, governmental policies are often, but mistakenly, designed in such a way as to place most of the burden on public agencies and provide very little incentive to private enterprises. However, with the Obama administration's increased focus on the development of renewable energies, private companies are seeing more opportunities opening up to them and are starting to break through the red tape. More than ever before, private enterprises are able to work with environmental protection agencies, local governments, and communities in order to minimize environmental impacts while exploring renewable energy resource development projects.

Such large-scale projects are bound to stir up some concern among stakeholders. Of course, cost-benefit analyses and willingness-to-pay estimates are considered before - we assume - any decisive action would ever take place. In order to preserve the ecosystems upon which they would be encroaching, The Chevron and the Tessera Solar's Projects' were allowed to proceed as long as certain specific conditions, outlined in site-specific Environmental Impact Analyses, were met. For example, mitigation of Tessera Solar's Imperial Valley Solar Project included compensation on a 2:1 ratio for special plants that will be affected during construction, as well as providing alternative habitats to lizards who populate the area. The Chevron Lucerne Valley Project will dedicate double the number of acres it uses for its site to accommodate tortoise habitat and migration through the area. Environmental Impact Analyses also examine the economic effects of such projects, such as tax revenues and employment opportunities - of which over 950 new jobs would be created by these two projects in the state of California alone.

These projects will establish precedence for others to follow in a new era of cooperation between private and public organizations on the path toward a more sustainable future. As new opportunities arise and possibilities emerge, the obstacles that stood in the way of large-scale renewable energy projects will be surmounted. It is important to realize that the floodgates have not opened in such a way as to sacrifice the ecosystems that surround these areas where such renewable resources are to be extracted. Slow and steady wins the race, and this initiative should remind us that we have only just begun.

Link to Tessera Solar's Imperial Valley Solar Project [2]

Link to the The Chevron Lucerne Valley Project [3]

Prof's Comments

A big issue I see in this article is the difference between opportunity cost and monetary cost. If these projects were profitable on their own, firms would find private land on which to build them. However, this has not happened. Why? Likely they are not profitable on their own. By allowing the firms to build on public lands, the firms are likely getting use of the land for far below the market price. Whether or not this is efficient depends, of course, on whether the social benefits deriving from the forgone alternative use of the land - conservation - is less than the benefits of the pollution abatement that occurs as a result of going ahead. You allude to these things, but don't discuss them much.