Sunday, June 13, 2021

Solar Power’s Land Grab Hits a Snag: Environmentalists: Mojave Desert residents say they support clean energy, but not giant projects, citing threat to tortoises and views

Another case of tradeoffs. We might want more solar power but we might have to give up some other environmental goal

By Jim Carlton of The WSJ. Excerpts:

"This windswept desert community is full of clean energy supporters including Suzanne Rebich, an airline pilot who recently topped her house with 36 solar panels. About 200 homes generate their own solar energy and a quarter of the local electricity supply comes from hydroelectric power.

All the same, many here are dead set against a planned solar plant atop the Mormon Mesa, which overlooks this valley 50 miles northeast of Las Vegas. Slated to be the biggest solar plant in the U.S., the Battle Born Solar Project by California-based Arevia Power would carpet 14 square miles—the equivalent of 7,000 football fields—with more than a million solar panels 10 to 20 feet tall. It would be capable of producing 850 megawatts of electricity, or roughly one-tenth of Nevada’s current capacity.

“It will destroy this land forever,” Ms. Rebich, 33, said after riding her bicycle on the 600-foot high mesa.

Across the U.S., more than 800 utility-scale solar projects are under contract to generate nearly 70,000 megawatts of new capacity"

"More than half this capacity is being planned for the American Southwest, with its abundance of sunshine and open land.

These large projects are increasingly drawing opposition from environmental activists and local residents who say they are ardent supporters of clean energy. Their objections range from a desire to keep the land unspoiled to protection for endangered species to concerns that their views would no longer be as beautiful."

"Conservationists say clean energy shouldn’t come at the cost of damaging the environment or threatening endangered species. The Sierra Club, which describes itself as “a relentless advocate for the decarbonization of the electric grid via renewable energy sources,” is one of several environmental groups opposing a 690-megawatt solar plant on prime desert tortoise habitat off Interstate 15 about 35 miles northeast of Las Vegas."

"Solar generation has grown to 4.5% of the nation’s electricity supply from 0.1% in 2010"

"activists have blocked or are seeking to block projects in Nevada, Washington, Indiana and Virginia.

Similar battles have broken out over other big renewable energy projects, such as offshore wind turbines in places including Martha’s Vineyard, which on May 11 received a go-ahead from the Interior and Commerce departments 12 years after state and federal officials first started the process of building there.

San Bernardino County, Calif., which lists renewable energy as a foundation of its move toward sustainable development, in 2019 put the brakes on new proposals for large solar projects near more than a dozen rural communities, where residents complained of potential dust."

"Solar-industry executives say they construct their projects responsibly and that building them fast can help combat climate change."

"In 2009, California Democratic Sen. Dianne Feinstein—a longtime supporter of renewable energy—introduced a bill to create the Mojave Trails National Monument on one million acres to safeguard pristine desert where several solar plants had been planned. The bill didn’t try to stop those plants altogether, just redirect them onto private property and public lands that had already been disturbed, such as by grazing. President Barack Obama signed the bill into law in 2016."

"The $1 billion project, known as Gemini, would, like Battle Born, be developed by Glendale, Calif.-based Arevia and connect to the NV Energy Inc. transmission system."

"Kevin Emmerich, co-founder of the Nevada-based Basin and Range Watch environmental group . . . believes big solar projects represent a threat to a desert landscape he has worked for decades to protect. In particular, he worries about the impact on the threatened desert tortoise"

"Mr. Emmerich suggested the panels needed to run the Gemini plant could instead be installed atop buildings in Las Vegas—a possibility industry officials call too spread out to be economical."

"More common are the local residents who formed a group called Save Our Mesa and began campaigning against the site on Facebook, in sign-waving protests and at a public meeting held at a community center in Overton last October. Among their other concerns: more dust and hotter temperatures from the solar operation, as well as destruction of the mesa and the tourism industry it supports."

Saturday, June 12, 2021

Psychologists uncover new details about how money influences the frequency and intensity of happiness

By Beth Ellwood of PsyPost. PsyPost is a psychology and neuroscience news website. 

Economists believe in the law of diminishing marginal utility. As you consume more of a good, its marginal utility falls. So the first slice of pizza is better than the second, the second better than the third and so on.

If, as the article suggests, people with lower incomes don't have the variety of activities and experiences that higher income people have, they will keep getting less and less utility (happiness?) from doing the same thing over again like just sitting at home and watching TV.

If the higher income people are often changing activities so they don't do any one thing alot, every activity has a higher utility and does not get the chance to diminish. Also, some studies (see related posts below) suggest that experiences lead to more happiness than buying things (although not everyone agrees).

Excerpts:

"Research from the journal Social Psychological and Personality Science offers insight into the long-contended claim that money improves life satisfaction. The researchers found consistent evidence that income affects the frequency with which a person experiences happiness, but not the intensity.

The research team, led by Jon M. Jachimowicz, proposed that the link between income and happiness can be explained by the way people tend to spend their free time. People with lower incomes tend to spend more time engaging in passive leisure activities, such as TV watching and relaxing, and less time partaking in active leisure activities like socializing and practicing hobbies.

Passive activities should contribute to less happiness over time due to a phenomenon called hedonic adaptation — the tendency to become accustomed to a positive event and quickly return to a baseline level of happiness. By contrast, active leisure activities that are habitual and intentional, such as exercising, should produce less intense but more frequent bouts of happiness that add up to encourage psychological well-being. Jachimowicz and his team therefore proposed that income should be positively correlated with happiness frequency but not happiness intensity."

"income was related to greater life satisfaction through increased happiness frequency."

Related posts:

What Brings More Happiness, More Time Or More Money? (this study found that people that chose more free time over more money tended to be happier)

Does Wealth Make Us Happier? (maybe wealth buys freedom that makes us happier)

Another interesting article is The pursuit of happiness: Author seeks to take its measure and find where people are most content. It quotes former University of Chicago psychologist Mihaly Csikszentmihalyi. He said "Without dreams, without risks, only a trivial semblance of living can be achieved."

Does Or Can Money Buy Happiness?

Interesting Book: Stumbling on Happiness

Does Money Make You Mean?

Money buys happiness after all

The happiness wars

Dagwood Bumpstead Explains The Hedonic Treadmill 

Do income and happiness tend to go together? Yes, both within and across countries

Science proves it: Money really can buy happiness .

More On The Economics Of Gift Giving.

Does Money Buy Happiness?

Friday, June 11, 2021

Life is full of tradeoffs, the case of federal renters assistance

Getting this aid to people is slow since it takes time to verify who is in need (to prevent fraud). So you can have more assistance or less fraud. We might not be able to get both. 

There has been fraud with unemployment. See Scott Peterson, thousands of California inmates carried out 'staggering' Covid fraud, officials say by Tim Stelloh of CBS News. 

See also How scammers siphoned $36B in fraudulent unemployment payments from US by Nick Penzenstadler of USA TODAY.

For the rental issue, see Logjams Are Keeping Much of $47 Billion in Federal Aid From Renters: Strict rules for eligibility and overburdened local officials prevent financial assistance from getting to struggling tenants by Will Parker of The WSJ. Excerpts:

"Some local programs report being overwhelmed with applications that they must manually vet and approve. New York state, for example, didn’t open applications for its $2.7 billion program until June 1.

Other local programs are reluctant to loosen too many requirements and run the risk of fraud.

“Being quick and making sure all the I’s are dotted and the T’s are crossed don’t usually work well together,” said Cynthia Lee Sheng, parish president of Jefferson Parish, La., near New Orleans, which is working to distribute $12.8 million to struggling renters. The parish has paid out less than $300,000, Ms. Lee Sheng said, and has hired a third-party group to help manage its 3,300-application backlog."

"Tenants also fail to complete applications. Louisiana, which administers a $161 million aid fund benefiting 57 of the state’s parishes, said this month that just over 3,000 of the 16,500 renters who began the application process have completed it.

A survey of 220 assistance programs last year by the National Low Income Housing Coalition found that incomplete applications were the most common barrier to distributing aid. “The programs that required the most documents were more likely to have that problem of incomplete applications,” said Andrew Aurand, vice president for research at the advocacy group."

"Texas, which has distributed about $250 million from its $1.3 billion program, asks applicants whether they are at risk of homelessness due to their rent debts, a criterion of the Treasury Department’s rules for the funds.

Many have been confused and answer no, disqualifying them from aid. But state administrators say that simply having back-rent debt or an eviction notice can demonstrate a risk of homelessness. Administrators are sending text messages to the applicants asking them to reconsider their answer, Mr. Gair said."

Thursday, June 10, 2021

The Unlikely Demise of Texas’ Biggest Corporate Tax Break

After 20 years, the state’s most lucrative corporate welfare program comes to an end. 

By Justin Miller of The Texas Observer. He gives a good overview of this history of this program. I did a post on this a few days ago (link at the end). Excerpts:

"In 2001, state lawmakers and business leaders warned that the state’s high property tax rates were discouraging corporations from locating big projects in Texas. At the time, Site Selection magazine—a trade publication about economic development—showed Texas’ national ranking on new manufacturing plants had plummeted to 37th in the nation, and without a state income tax, the Lone Star State had no choice but to lean on sales and local property tax revenue to fund basic services like public education. 

In order to attract large manufacturing projects, lawmakers proposed allowing school districts to offer generous property tax abatement deals—with the state picking up the tab—as a way to lure companies to Texas. Proponents promised that good-paying jobs and long-term investment that came with those projects would more than make up for the cost of the tax breaks. 

The bill, dubbed the Texas Economic Development Act, passed quickly, championed by then-state Representative Kim Brimer, a Fort Worth Republican, and backed by powerful business groups. Colloquially known as Chapter 313 due to its place in the state’s tax code, the program is immensely popular for both industry and school districts. For the last two decades, it’s been the state’s largest corporate welfare program. But data reveals that 313 projects routinely lose more value than originally estimated when they return to the tax rolls, at a total cost of nearly $10 billion to Texas since the program’s beginning, raising questions about whether the projects ever actually pay off.

Despite clear problems with the program, the state has overwhelmingly voted to extend it three times and is once again slated for its perennial expiration next year. The oil and gas, manufacturing, and other industries have been clear that the program must continue, but in an unexpected twist, Chapter 313 ran into heavy resistance this legislative session. The proposed bills to renew never even reached the governor’s desk, all but ensuring that for the first time since it became law, Chapter 313 would expire."

"But even if Chapter 313 goes away, Texas will feel the effects for years to come. There are more than 500 active deals that the state is on the hook for, and many don’t end until the 2030s. Meanwhile, corporations still have 19 months to secure new agreements before the program expires."

Related post: 

Texas' shameful Chapter 313 program is the sort of corporate welfare we don't need

Wednesday, June 09, 2021

Some provisions of the new law regulating the Texas power grid

See 'Everything that needed to be done': Gov. Abbott signs bill to strengthen Texas' electric grid by Jeremy Blackman of The San Antonio Express-News. Excerpts: 

"Gov. Greg Abbott on Tuesday signed sweeping legislation intended to strengthen the Texas electric market in response to this year’s deadly outage crisis.

The measures, including winter preparation at power plants and some natural gas facilities, the creation of a statewide alert system, and a regulatory overhaul, amount to the most significant changes to the market since deregulation two decades ago."

"The new weatherization mandates take effect after this coming winter, and will be enforced with flexible fines that escalate over time. They also leave oversight of the gas system, which fuels most of the grid, to regulators closely aligned with the oil and gas industry."

"State lawmakers have separately approved billions in debt relief to electric companies, municipal co-ops and gas suppliers that were hit hard by the February storm, which killed at least 200 people. Ordinary ratepayers across the state are expected to pay for that bailout through monthly surcharges over the coming decades."

"The bills signed Tuesday call on the Texas Railroad Commission to regularly inspect gas facilities and force those that directly supply power plants to prepare for extreme cold."

"They will decide when and how much to fine gas companies that don’t comply with the new mandates."

"It’s unclear how regulators plan to identify which facilities feed power plants directly, since gas is typically mixed in large pipelines once it leaves the field. Some of it may be shipped to storage facilities, piped out of state or sent offshore in the form of liquid natural gas."

"The legislation signed Tuesday also carried through on an earlier commitment to overhaul the Electric Reliability Council of Texas, which manages the grid and which Abbott and others had blamed for some aspects of the blackouts. Under the new provisions, board members will be required to live in Texas, and most will be direct nominees of the governor, the lieutenant governor and the House speaker."

 

 Rules for weatherization of power plants and some natural gas suppliers

 Creates a new statewide emergency alert system

 Creates a new energy subcommittee bringing together regulators and industry players from electric generation and natural gas

 Requires regulators to consult with the state's climatologist when drafting weatherization rules

 Mandates that critical gas facilities be mapped and registered with utility providers so their power stays on during emergencies

 

Tuesday, June 08, 2021

Will higher commodity prices lead to more inflation?

See Commodity Price Surges Add to Inflation Fears: Higher prices for commodities are flowing through to more companies and consumers, making it harder for central bankers to ignore them by Tom Fairless, Alistair MacDonald and Jesse Newman of The WSJ. Excerpts: 

"Commodities generally make up a relatively small part of consumer prices. They are mainly used for producing goods as opposed to services, which are a bigger part of developed-world economies. Goods make up about 20% of the weighting of the U.S. consumer-price index.

Academic work also suggests that the impact of commodity-price shocks on inflation has fallen in recent decades, as elements such as branding have become important in final costs. Kevin Kliesen, a business economist at the Federal Reserve Bank of St. Louis, recently found there was a fairly small correlation between the costs of an index composed of industrial materials and one looking at prices for durable goods.

Commodities also have come to play a smaller role in final production as businesses become more efficient, according to research by economists at the Federal Reserve Bank of New York. The U.S. roughly tripled its economic output per kilogram of oil consumed between 1990 and 2015, according to the World Bank.

“Oil used to be important enough to swing inflation [see the high inflation rates of the 1970s in the table below], but now no commodity is,” said Dirk Schumacher, a former ECB economist now at Natixis."

"Economists note that some commodity prices, notably crude oil, are merely returning to pre-pandemic levels. Recent sharp increases are built on comparisons with mid-2020, when consumption was depressed due to the pandemic.

Many also believe commodity-price growth will subside later this year as some U.S. consumer spending shifts to services, which are less commodity-intensive. Chinese consumption of industrial metals, which is about half of global demand, is expected to fall as Beijing reins in credit growth, according to Capital Economics.

“Oil has gone from $35 to $70 [a barrel.] It’s not going to rise to $140,” said Dan Smith, special adviser at Oxford Economics in London. “A lot of commodity prices will go broadly sideways for the next three to six months.”

Michael Hanson, senior global economist at JPMorgan Chase Bank, says that while higher prices for raw materials will probably result in temporary inflation pressures, it won’t make much of a dent in the U.S. economy.

Much of the recent inflation uptick is due to the frenzied nature of the economy’s reopening, with firms scrambling to find workers and resolve freight bottlenecks, he said, and the economy is strong enough to weather it.

The commodity boom also has winners: It is creating a windfall for farmers and agribusinesses, lifting prices for U.S. farmland and benefiting commodity-exporting nations."

This table shows the average, high and low inflation rates for the last several decades:

Decade

AVG

HIGH

LOW

1950s

2.25%

6.00%

-0.70%

1960s

2.53%

6.20%

0.70%

1970s

7.41%

13.30%

3.30%

1980s

5.14%

12.50%

1.10%

1990s

2.92%

6.10%

1.60%

2000s

2.54%

4.10%

0.10%

2010s

1.76%

3.00%

0.70%

 

Monday, June 07, 2021

Texas' shameful Chapter 313 program is the sort of corporate welfare we don't need

By Michael Taylor of The San Antonio Express-News

This program is costly for all tax payers in Texas and seems to only benefit a few corporations. So why does it persist? Why can't we get rid of it?

It reminds me of something from the sub-field of economics called "Public Choice" which uses economic theories and concepts to study politics. One of its tenets is "concentrated benefits, dispersed costs."

This program in Texas concentrates the benefits of the program in a few people who will lobby very hard to  get it (including campaign contributions). So the politicians listen to them while the costs are dispersed among all the citizens. Since each citizen pays just a small amount for the program it does not pay for any of us to try to get our state senators and representatives to change things. Spending time making phone calls or writing letters or emails will not likely make a difference.

Excerpts from the article:

"Here’s how it works: A private company plans to build a thing in Texas it says will provide jobs. It applies to the local school district where the thing will be built, asking for a limit on the taxable value of the property for 10 years. With a reduced value, the private company can save hundreds of thousands, or even millions, of dollars over the coming decade, depending on the size of the project and the property tax cap.

The local school board nominally has oversight and decision-making authority, but for reasons we’ll see in a moment it almost always agrees to this limit. The company then applies to the Texas Comptroller’s office, which has to review the school district’s decision. The comptroller’s office is supposed to make sure a tax break is necessary to incentivize the new construction, which otherwise might be built somewhere outside of Texas. That’s the key justification for the Chapter 313 tax break — to retain and attract business activity and jobs in the state.

School district tax breaks last 10 years. Over the 10 years, however, school districts do not actually lose any tax revenue because under this program the state promises to reimburse them for lost taxes. The state — that’s all of us taxpayers — ends up paying the school district for forgone taxes.

In a sign the tax breaks are too generous, in most cases the beneficiary companies agree to make a “payment in lieu of taxes” back to school districts. Strangely, the payment occurs outside of the normal school district funding process to an “educational foundation.” That feature itself creates weird incentives for districts to green-light Chapter 313 projects. They lose no revenue but gain flexible funding they wouldn’t get from a normal state educational funding mechanism.

Hearst’s four-part investigation found the following key points:

Many companies announced construction before applying for the tax break. In most cases, it was nearly inevitable they would have built without the tax break, undermining the stated purpose of the incentive.

  The Comptroller’s office always says yes. Fewer than 2.5 percent of Chapter 313 applicants have been turned down, and even some of those initially rejected reapplied and subsequently received the subsidies.

  Thirty companies violated their agreements about promised job creation, but faced no consequences.

  The cost of the program will increase to $1 billion per year by 2023 and is projected to keep growing.

None of that is popular with observers on either side of the political spectrum. The conservative think tank Texas Public Policy Foundation and the progressive think tank Every Texas are united in calling for the Chapter 313 program to be ended." [it might be "Every Texan"]

"Nathan Jensen, a University of Texas at Austin professor of government who studies economic development, wrote a 2017 paper in which he found only 15 percent of firms were swayed to stay in Texas by their Chapter 313 subsidy. By implication, the other 85 percent would have made the same decision to build without the subsidy. But they sure appreciated the free money."

"Supporters of the program inevitably cite “job creation” as the program’s justification. The Hearst investigation cites estimates ranging from $211,000 to $1.1 million per job created. That’s an absurdly high cost, even at the low end. Jensen’s paper found the often-bandied estimates of $350,000 per job created to be too low. “The majority of tax dollars generate zero new jobs and no economic benefit for the state,” he wrote.

As Jensen told me recently, “It’s a complex program and I do feel like some government officials are starting to get the problems with it. But there are tons of supporters lobbying for it and not many lobbying against it.”"