'It’s not easy being green'

Fibrominn began operating the nation’s first poultry litter-fired electric power plant in Benson, Minn., in May of this year. Generating electricity by burning biomass would seem to be the model of sustainability, but the Fibrominn plant still has environmentalists who are critical of the enterprise. As Kermit the frog once said, “It isn’t easy being green.”

According to an article about the Fibrominn plant which appeared in the New York Times, environmental groups are critical of the litter burning plant for a couple of reasons. First, some critics say that poultry litter would be best used as fertilizer, probably right up until the time that someone actually starts to spread the litter on a field, and that’s when something else should be done with it. The other major complaint about the Fibrominn plant is that it is “just another pollutant-spewing, old-technology incinerator dressed up in green clothing.”

Some groups just don’t like the idea of burning fuels which produce carbon dioxide as a byproduct of combustion. Generally, using biomass as fuel is considered to be “carbon neutral” for the atmosphere. The plants grown to produce the biomass remove as much carbon dioxide from the atmosphere as is released when the biomass is burned, but there is debate within environmental groups as to whether burning biomass is a carbon neutral process or not. Many environmentalists are concerned about carbon dioxide emissions, because carbon dioxide is considered to be a greenhouse gas which is contributing to global warming. If you are like me and are not convinced that global warming is caused by human activity, then you may not care whether or not your electric power is generated in a carbon neutral way or not.

Many states have instituted or are considering mandates or subsidies for utilities to produce electric power using “green” fuels. These mandates and subsidies will mean that consumers of electric power will pay higher rates. In the Times article, David Morris, vice president of the Institute for Local Self-Reliance, an advocacy group with offices in Minneapolis and Washington, said: “As a matter of public policy, it stinks. The problem is that it’s using a resource in an inefficient way, and required huge subsidies to create a more inferior product than what was already being sold on the market.”

Adam Smith’s “invisible hand” of the free market will always be more efficient than any government program. Subsidies, mandates and loan guarantees are all used to circumvent free market forces when governments try to do things for the “greater good” that just won’t pay for themselves. In the case of poultry litter being burned as a fuel to generate electricity, it doesn’t make economic sense at the present time given the price of coal. Coal is an easier fuel to handle than poultry litter and it produces more energy per pound when burned. Burning poultry litter only makes sense if there is a “true” surplus of litter in a geographic area. Without mandates or subsidies, using poultry litter to generate electricity makes economic sense only if producers of the litter paid a tipping fee high enough to offset the advantages for the power company that coal provides.

Mandates, loan guarantees and subsidies are stealth taxes. Each of these creates inefficiencies and will ultimately raises costs for consumers. The reason to be against corn subsidies for ethanol production is not because your corn for your poultry will cost more. Corn subsidies for ethanol production are bad policy because it distorts grain markets and interferes with free-market forces. Subsidies for burning litter would only make sense if litter is in such surplus in a given area that it is cheaper to burn it in place than it is to haul it to an area where it can be used as fertilizer. Just because a subsidy, mandate or loan guarantee distorts that market in your favor, doesn’t make it a good idea.