Russell Moore: Let’s Get Off the Grid
Monday, January 20, 2014
"New England is facing serious challenges in the energy sector. The first is cost - we have some of the highest in the country because we are at the end of the pipeline. The second is climate change," Chafee said.
Rhode Islanders have this proclivity to blame all of the state's economic woes on our penchant for over-taxing and over-regulating the private sector. Like any simple explanation for complex problems, this analysis misses the mark. And although we do tax and spend way too much, it's undeniable that our expensive energy costs are a massive and often unnoticed hindrance to economic growth in The Ocean State.
When we think of Texas' booming economy, its not enough to attribute their success to their low tax and cost structure. Companies in Texas also benefit tremendously from inexpensive energy and move their operations where everything's bigger and the energy's cheaper.
Ignore the ostriches
We're not going to match our rivals like Texas overnight, but with some smart investments today, we'll reap huge dividends tomorrow.
And despite the rhetoric of the ostrich-like science deniers, temperatures and sea levels are rising, and it's due in large part to human activity--mainly through the burning of fossil fuels. There will be consequences if we're not proactive and they're not pretty.
It's high time to reduce our dependence on the electric grid by diversifying our sources of electricity.
Electric Grid: outdated, ineffective, unsafe
There are serious problems with the electric grid. The electric grid is antiquated, ineffective, and unsafe. It's an outdated concept similar to how we used to network computer decades ago.
In the early days, we used mainframes that connected our computers to a massive computer. When the mainframe went down, so did our computers. In other words, we've gone from a centralized model to a distributed model, when it comes to personal computing.
For some reason, we still rely on this centralized model for the one thing we need the most - electricity. Businesses and houses are connected to the 100-year-old grid by telephone poles. When a pole goes down, all the houses and businesses on a street lose power. When the actual grid experiences trouble, so everything else goes to hell in a hand basket.
It's astonishing to think about the progress we've made with computers, but so little progress has come to the way we create and distribute energy. It's not only ancient, inconvenient, and ineffective--it's also dangerous. A terrorist plot against the grid is, in all likelihood, one of the biggest threats we face on a national security level.
Which is why we should do everything possible to diversify our energy supply and become less reliant on the antiquated electric grid. Deepwater wind, the project that will locate wind turbines off of the Rhode Island coastline and will be energy produces for generations to come, is a nice start. But it's not enough and we need to do more.
The state has a legitimate place to create incentives for companies to produce all kinds of green and clean energy. The state needs to include incentives such as tax credits, seed funding, and tax breaks for companies that create ways to get us off our dependence on foreign fossil fuels as well as the energy grid.
Yes, it will cost the state government money up front, but like any smart investment, it will pay serious dividends in the future.
A perfect example of an innovation that the state could incentivize would be fuel cells. Fuel cells convert either hydrogen or natural gas to electricity, without actually combusting the gas (burning them). Companies like Ballard Power or Proton Power Systems specialize in creating hydrogen fuel cells, whereas Bloom energy and Fuel Cell Energy (which is not the most creative name), specialize in converting natural gas to clean energy.
Fuel cell businesses create highly efficient, green, mini clean energy power plants. These fuel cells, which are relatively small – sometimes not much larger than a refrigerator – create a stationary power grid and are completely clean energy. Additionally, they emit very low amounts of carbon, and no other harmful chemicals.
Green and mean
Imagine a car running on gasoline which doesn't emit any harmful climate changing pollutants. Imagine living next to a power plant that's quiet, and doesn't create any nasty smoke. That's precisely what these companies are creating.
Instead of building a loud, nasty power plant in the middle of nowhere that you connect to, this type of energy gives the power directly to the customer. It's onsite, reliable, clean, personalized energy for the business.
What's most attractive about this particular form of green energy is the fact that it is continuous and not subject to the whims of the weather. While solar and wind power are certainly attractive forms of green energy, let's face it, when the sun isn't shining, and the wind isn't blowing, they're not creating energy.
These generators create clean energy that allows hospitals, schools, and wastewater treatment facilities to operate when the next Hurricane Sandy or Irene wreaks havoc. Yes, diesel generators also do the job, but they're not designed to run more than two days and they're harmful to the environment.
This create jobs because people will be hired to install the boxes and run the gas lines--no different than wind and solar from a jobs perspective.
This also supports the domestic energy agenda. America is fast becoming the world's leading natural gas provider. Google, Apple, Coca Cola, Walmart, Staples, JP Morgan Chase, a long list of fortune 500 companies are using this form of energy.
All of the above
As Chafee hinted in his speech, the time has long past come for Rhode Island to lead the way on clean, green energy. The state needs to take an "all of the above" approach. There's no reason the state shouldn't create subsidies for wind, solar, hydropower, and fuel cells. With the right program, we could lead the way in protecting the planet, create jobs, and improve our economy.
It will be interesting, in the upcoming months, to hear what plans, if any, that the candidates for governor have to capitalize on our green energy opportunities. A failure to do so would be one of our greatest sins of omission to date.
Related Slideshow: The Ten Biggest Issues Facing the RI General Assembly in 2014
The latest report by the House Finance Committee illustrates that Rhode Island will start the next fiscal year, which starts in July 2014, with an estimated deficit of $149 million. The report shows the FY 2014 Budget contains numerous overspending problems—meaning that the General Assembly will have to cut costs somewhere.
So where will the cuts come from? Lawmakers will have to examine the state's costliest programs. According to the Rhode Island Public Expenditure Council, the most expensive government programs in Rhode Island are Elementary and Secondary Education, Public Welfare, Pensions, Higher Education, and Interest on Debt. Click here to view a comprehensive list of the state's costliest government programs.
The state may be two years removed from Central Falls filing for bankruptcy, but 2014 could be the year that other financially strapped Rhode Island communities follow suit—most notably Woonsocket and West Warwick.
With bankruptcy on the table in both 2012 and 2013, this year poses more financial uncertainty for the cash-strapped city of Woonsocket. Earlier this year, the city's bond rating was downgraded due to the city's numerous financial issues—including a growing deficit, increasing unfunded pension liability, and a severe cash crunch.
Similarly, the embattled town of West Warwick faces a variety of financial questions in 2014. With its pension fund set to run out by 2017, the town must address its unfunded liabilities this year if it hopes to regain financial stability. That, coupled with an increasing school department deficit, make West Warwick a contender for bankruptcy.
Look for Woonsocket and West Warwick's elected state officials to address their respective cities' financial issues in the upcoming legislative session.
With the Special Joint Legislative Commission to Study the Sales Tax Repeal set to report their findings to the General Assembly in February, the possibility of sales tax repeal in Rhode Island could become a reality in 2014.
"Our sales tax is killing small businesses, especially those in border communities," said Rep. Jan P. Malik (D-Dist. 67, Barrington, Warren), the commission's chair. "How can Rhode Island continue to compete at 7 percent, with Massachusetts already lower than us and considering reducing its sales tax even farther? How can Rhode Island restaurants compete at 8 percent? They can’t. We need to find a way to fix this, and a serious discussion of our sales tax is a discussion we need to have, now, before more small stores close their doors."
In addition to Malik, proponents of sales tax elimination include the Rhode Island Center for Freedom and Prosperity and Forbes Magazine.
EDC Reorganization to Commerce Corporation
On January 1, 2014, the Rhode Island Economic Development Corporation will be replaced with the Rhode Island Commerce Corporation—a move which has the potential to impact to adversely affect recipients of federal funding contracts made possible currently through the EDC.
This could include the state's Broadband Initiative, Brownfields program, and other contracts made through the EDC. As a result, recipients will now be required to re-apply for federal funding as of January 1st.
The massive overhaul of the EDC was prompted by the 38 Studios debacle, which is projected to cost Rhode Island taxpayers $102 million. 38 Studios, the now defunct video game company, filed bankruptcy in May 2012 just months after securing a $75 million loan from the EDC.
With the state's marijuana decriminalization law going into effect this past April, Rhode Island may be a candidate for marijuana legalization in 2014.
Legislation to legalize marijuana has been introduced in each of the last three years, but has never been voted on. Earlier this year, Rep. Edith Ajello (D-Dist. 3, Providence), who is chair of the Judiciary Committee, introduced the bill in the House. Roughly half of the Judiciary Committee supports the measure.
The bill also has the support of the Marijuana Policy Project, an organization focusing on drug policy reform, which hopes to legalize marijuana in ten states, including Rhode Island.
Approximately 52 percent of Rhode Island voters support legalizing marijuana for recreational use, according to a Public Policy Polling survey conducted in January.
Marijuana is currently legal in Colorado and Washington.
Come November 2014, Rhode Island voters will likely be asked whether they wish to convene a constitutional convention, which involves individuals gathering for the purpose of writing a new constitution or revising the existing one.
Every 10 years, Rhode Island voters are asked whether they wish to amend or revise the constitution. Voters rejected this opportunity in 1994 and 2004. Although rare, Rhode Islanders can vote to hold a constitutional convention and in effect, take control over the state government.
If approved, a special election is held to elect 75 delegates, who then convene to propose amendments to the Rhode Island Constitution. These amendments are then voted on in the next general election.
The likelihood of this occurring highly depends on if the General Assembly does its job to ensure residents that the state is heading in the right direction financially and structurally.
Rhode Island’s last constitutional convention took place in 1986. It proposed 14 amendments—eight of which were adopted by voters.
Education Board Structure
Less than a year after the General Assembly created the 11-member Rhode Island Board of Education to replace the Board of Regents for Elementary and Secondary Education and the Board of Governors for Higher Education, there are multiple questions surrounding the structure of this newly consolidated agency.
Although lawmakers voted to merge the state's two education boards in June, the Board of Education now wants to split its agency to create two separate councils—one with the statutory authority over kindergarten to grade 12 and another governing higher education.
The Board of Education will present its proposal to the General Assembly during its next legislative session and lawmakers will once again determine how the agency should be structured.
The Board of Education currently governs all public education in Rhode Island.
Sakonnet Bridge Tolls
Rhode Island may have implemented tolls on the Sakonnet River Bridge this past year, but they could be gone by 2014.
On January 15, the East Bay Bridge Commission—which was established to allow lawmakers and officials investigate various funding plans, potentially eliminating the need for tolls on the Sakonnet River Bridge—will report its findings to the General Assembly. The General Assembly is then required to vote on the issue by April 1.
The commission was established in July following the General Assembly's approval of the 10-cent toll.
Located on Westminster Street in Downtown Providence, the former Bank of America Building (commonly referred to as the Superman Building) may be the tallest building in the state, but as of right now, it's just a vacant piece of property.
The building's current owner, High Rock Westminster LLC, was most recently looking for a total of $75 million to rehabilitate the skyscraper—$39 million of which would come from the state.
With the sting of the 38 Studios deal still fresh in the minds of lawmakers, a $39 million tax credit appears unlikely.
The question of what will become of the Superman Building remains to be seen.
Championed by Republican gubernatorial candidate Ken Block (while head of the RI Moderate Party), the movement to eliminate the Master Level, which allows voters to vote for all candidates of one political party with a stroke of the pen, is poised to heat up in 2014.
Despite Block's strong push to repeal the 1939 law, the measure did not get a vote in the General Assembly last session.
In October, Block told GoLocal that he believes that House Speaker Gordon Fox is responsible for the General Assembly not voting on the proposal.
“Despite the support of a majority of 42 state Representatives, thousands of emails from concerned RI voters and unanimous testimony of more than 100 people who came to the State House in person to testify that the Master Lever had to go, the Speaker personally killed the bill in the most unaccountable way possible—he did not allow the House Judiciary Committee to vote on the bill,” Block told GoLocal.
Speaker Fox has stated on multiple occasions that he believes the Master Level is a legitimate tool that many voters use.
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