Industrial Wind and the Wall Street Cap and Trade Fraud
Financial scandals are not new. Schemes to leverage risk and cheat the public are mainstays of the mad “Cap and Trade” stratagem, in the ongoing war, against genuine free enterprise. The latest ploy is the industrial wind swindle.
In the essay, Wall Street Reaps Big Bucks from the Wind, the strategy to defraud the public is explored. “The latest rage out of the boiler room sharks that hawk new equity issues touts alternative energy. The hype that is coming out of Wall Street resembles the internet band wagon before the bust . . . Goldman Sachs rushes to finance the offers with their expertise – using other peoples’ money . . . Understand from the outset, that producing useful energy is not the prime objective of wind projects.”
Understanding the complexity of industrial wind can be a challenge. The derogative knock NIMBY, is meant to deceive and distract from the reality that an ill “Wall Street” wind blows behind the heretical doctrine of global warming.
Jon Boone PhD is a leading voice against industrial wind. WHY WIND WON’T WORK is a primer that dispels the myth that wind factories are a sensible solution to electric generation, much less a remedy for climate change.
“The hope for wind energy stems from a belief that it will offset significant carbon emissions as it substitutes for dirty burning coal plants. But what is the evidence for this? Any analysis examining this issue must account for (1) what happens as wind energy enters the grid, causing grid operators to turn off or back conventional generators in response (or hold back generators that might otherwise have been deployed if there were no wind energy), and (2) what happens as operators seek to integrate wind’s wild fluctuations.
Wind adds another layer of instability that must be smoothed out so that demand and supply are balanced precisely. Controllers respond to the wind influx by dialing back the generation from the operation of conventional units, much as they do when demand decreases. And as the level of wind energy flutters about the grid, rising and falling at random, rapidly responsive conventional generators are deployed to balance this ebb and flow. When wind energy disappears from the grid, it is as if demand has again increased, and more power is required from conventional sources to match it.”
In a significant analysis, Less For More: The Rube Goldberg Nature of Industrial Wind Development, Dr. Boone concludes:
“Wind energy, at industrial scales operating within the grid system as a whole, must be considered as only one of the reciprocals in a fuel mix; it must be entangled with conventional fuel to make it viable even as a sporadic fuel substitute. Wind energy simply cannot be loosed on the grid by itself. Grid stability requires that the fluctuations of wind be backed or compensated for immediately by conventional, reliable generation on a minute by minute basis—that is, generation from highly flexible, rapidly responsive thermal or hydro units.”
Since generating usable and reliable electricity is not the prime purpose for a wind developer, what impact can the ratepayer expect in their electric bill?
A succinct explanation on The True Cost of Electricity from Wind is Always Underestimated and its Value Always Overestimated, in the Science & Public Policy Institute, comes from this Glenn R. Schleede report. Mr. Schleede states:
“When initially proposed, wind energy advocates argued that tax breaks and subsidies were necessary to permit a relatively “new and developing technology” to gain a foothold in competition with other sources of energy for producing electricity. However, industry demands for continuation, expansion and extension of subsidies have made it clear that there are no longer any serious expectations that wind energy is competitive or that improvements in the technology will eventually make it competitive.
Instead, it appears that the only hope that wind energy would become economically competitive with traditional energy sources is if the cost of electricity from traditional sources were driven much higher – with all the adverse impacts on electric customers and local and national economies that result from high electricity prices.”
Just how much more will consumers pay in higher rates over the conventional methods of electric generation?
In the report, RENEWABLE ENERGY Not Cheap, Not “Green” by Robert L. Bradley Jr. in the Cato Policy Analysis No. 280, August 27, 1997 wrote, “ratepayers typically pay three times more for wind power than they would pay for electricity in today’s spot market, and the premium could be higher. A conservative estimate of the total U.S. government (i.e., taxpayer) subsidy to wind power totals over $1,200 per installed kilowatt, even greater than the direct capital cost of wind under advanced technology of around $860 per kilowatt . . .”
These figures and estimates are well over a decade old. With the increase in size of wind turbines, 2.5 MW to even 10 MW nameplate capacities, just escalate the costs to levels that their 12-15% actual production performance can never earn a realistic pay back. With the half-baked rush for additional tax credits and subsidies, the proponents of industrial wind need to rely upon a different “Green” renewable; namely, the funny money printing press.
Glenn R. Schleede’s review, highly recommends the book, “The Wind Farm Scam” by Dr. John Etherington. “It explains wind energy and its limitations and environmental insults in easily understood terms. It explains why wind will never provide a significant, reliable source of electricity. As in the US, “wind farms” are being built in the UK primarily because of government fiat and huge government-forced subsidies, not because of their true environmental, economic or energy benefits.”
Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future by Robert Bryce provides an insightful account on energy and future developments. A review of this book concludes: “Power Hungry demolishes the notion that oil is dirty; that carbon capture/sequestration schemes can be globally effective; that cap-and-trade/taxation/renewable energy credit ideas for reducing carbon dioxide emissions can do anything but worsen the situation, at the expense of tax and ratepayers. “When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.” By eliminating the imposters and exposing the disingenuous, he is then able to engage in rational discourse about the genuinely probable technologies that will in future slake our ginormous craving for power.”
Eliminating industrial wind as a viable alternative makes good common sense. Jon Boone offers this description for industrial wind.
“There is little that is cognitively more dissonant than supporting the concept of minimizing the human footprint on the earth while cheerleading for the rude intrusiveness of physically massive/energy feckless wind projects. The slap and tickle of wind propaganda flatters the gullible, exploits the well intentioned, and nurtures the craven. Industrial wind is a bunco scheme of enormous consequence. And people who value intellectual honesty should not quietly be fleeced by such mendacity, even from their government.”
Such a backlash against wind energy inevitably receives stern retaliation from the designers of the new energy economy. Nothing will stand in the way of the cover up and tax abuses of energy exploitation. How can people benefit from this plutocrat plot?
Cap and Trade blowback
What is the primary reason that Wall Street wants to finance, maintain huge equity interests and underwrite industrial wind development? Cap and Trade is the hidden motive behind this defective alternative energy technology and wind turbine development.
The environment and the economy will suffer incalculable greater harm.
The Adverse Economic Impacts from Cap & Trade Regulations on CO2 by Arthur Laffer and Wayne Winegarden concludes: “As currently conceived, cap-and-trade regulations are an economically harmful and ineffective policy for addressing global warming concerns. Because the regulations would constrain GHG (Greenhouse Gas) emissions, significant price volatility for emissions allowances, such as the volatility that has been evident in the European Union’s emissions market, are a natural consequence. Citing the price volatility issue, the Congressional Budget Office has concluded that cap-and trade regulations are not a sound policy for addressing global warming issues.”
Simply put, Rachel Morris in Mother Jones: Could Cap and Trade Cause Another Market Meltdown?, describes the ruse, clearly and to the point.
“Cap and trade would create what Commodity Futures Trading commissioner Bart Chilton anticipates as a $2 trillion market, “the biggest of any [commodities] derivatives product in the next five years.” That derivatives market will be based on two main instruments. First, there are the carbon allowance permits that form the nuts and bolts of any cap-and-trade scheme. Under cap and trade, the government would issue permits that allow companies to emit a certain amount of greenhouse gases. Companies that emit too much can buy allowances from companies that produce less than their limit. Then there are carbon offsets, which allow companies to emit greenhouse gases in excess of a federally mandated cap if they invest in a project that cuts emissions somewhere else—usually in developing countries.
In addition to trading the allowances and offsets themselves, participants in carbon markets can also deal in their derivatives—such as futures contracts to deliver a certain number of allowances at an agreed price and time. These instruments will be traded not only by polluters that need to buy credits to comply with environmental regulations, but also by financial services firms. In fact, a study (PDF) by Duke University’s Nicholas Institute for Environmental Policy Solutions anticipates that if the United States passes a cap-and-trade law, the derivatives trade will probably exceed the market for the allowances themselves. “We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market,” says Robert Shapiro, a former undersecretary of commerce in the Clinton administration and a cofounder of the US Climate Task Force.”
The real world consequence of allowing bribes for a continued offset to pollute is obscene.
The Economist has described the theoretical workings of cap-and-trade by stating, “The basic idea is that power plants and manufacturers will be allowed to emit a certain number of tons of carbon. If they exceed that amount, they must buy ‘credits’ from companies that pollute less than their allowance. One day the price of a ton of carbon may be as widely quoted as that of a barrel of oil.”
Those riches would be paper claims on imaginary credits. REC credits (Renewal Energy Certificates) are central to the financiers of industrial wind projects. Trading, hedging, swaps, options and futures are all part of the payday that Wall Street sees for supporting the wind industry. The hoax is real and defies any minimum standard of accountability.
Oreste Vigorito once owned IVPC with Brian Caffyn. When asked about his ongoing involvement with Vigorito, Caffyn who “helped found controversial wind-energy developers Cape Wind and First Wind expressed surprise late last week at news that his one-time partner in a separate wind-energy company in Italy has been arrested and charged with fraud.” The London Financial Times report.
“Gone with the wind”, mounted by the finance ministry’s anti-fraud police, started in 2007 and began by blocking public subsidies worth €9.4m ($14m, £8.4m) granted by the ministry for economic development. Last year, police confiscated seven wind farms with 185 turbines in Sicily linked to IVPC.
Anti-mafia prosecutors in Sicily have launched a parallel investigation. The Financial Times was told in April that a large number of wind farms had been built with public subsidies but had never functioned.”
In September 2009, after First Wind affiliates received $115 million in federal stimulus money, $74.6 million of which for the Cohocton NY project, U.S. Rep. Eric J. Massa (D-N.Y.) wrote to President Barack Obama, calling the grants “very alarming” and saying the company “abused the public trust. “No electricity has been produced for sale out of the projects,” but the company “has already collected production rewards for non-existent energy,” Massa told Obama.
Back in the First Wind SEC IPO application is the acknowledgement that hedging on REC’s was a common practice. One of the projects inclusive in non-existing electric production hedging was the proposed Prattsburgh, NY development. That venture was never built and the developer ultimately made a formal withdrawal from the town and terminated their land leases.
Will the public get an accurate account if those hedges were legal or complied with government regulations? Do not expect federal authorities to keep First Wind honest. The financial ownership of First Wind resides with Madison Dearborn and DE Shaw hedge funds, 42 % for each firm. Madison Dearborn has friends in high places, Rahm Emanuel being one.
After leaving the Clinton administration, Emanuel engaged in investment banking at Wasserstein Perella. Madison Dearborn did business through Emanuel. Madison Dearborn Partners, a Chicago private equity firm is located is in the same building as Wasserstein’s offices.
The New York Times writes,
“Back in 1998 John Simpson, who ran the Chicago office of the investment banking boutique Wasserstein Perella & Company, had flown to Washington to meet with Mr. Emanuel at the behest of Mr. Simpson’s boss, Bruce Wasserstein, a major Democratic donor and renowned Wall Street dealmaker who had gotten to know Mr. Emanuel. “I had this idea that this could work and that it had upside,” Mr. Wasserstein, now chairman and chief executive of Lazard, the investment bank, told The Times. “It worked out better than I could have hoped.”
“And better than Mr. Emanuel could have imagined as well. Over the course of a three-hour-plus dinner, Mr. Simpson and Mr. Emanuel discussed how they might work together.”
Upon leaving the private sector, Emanuel received campaign contributions from Madison Dearborn Partners, in the amount of $98,200 from 2002-2010.
Larry Summers did even better. The Wall Street Journal reports, “Mr. Summers joined D.E. Shaw Group in late 2006 as a managing director. He helped develop strategies including new businesses and also helped evaluate investments for the New York firm, which oversees about $30 billion in assets, making it one of the biggest hedge-fund managers in the world.”
The New York Times publishes, “Mr. Summers and Shaw executives say his role there was to be a sounding board for Shaw’s traders. But interviews with friends and former colleagues suggest that Mr. Summers’s role at D. E. Shaw was wider and more complex.”
The Business Insider goes further. “According to the NYT, Larry Summers worked just one day a week while making $5.2 million in two years at hedge fund D.E. Shaw.”
Brian Caffyn’s high-powered friends in the Obama’s Washington translate into “special treatment” for First Wind. Cap and Trade would be a god sent for an industrial wind developer with a history of failed projects (see Cohocton Wind Watch), equity and hedge fund firms, a corrupt – pay to play – presidential administration and every other Wall Street guru who believes that the privileged deserve every ill-gotten penny they can steal.
The Street drives this next generation and refined Enron wind swindle industry, into a financial abyss every bit as deep as the lack of meaningful electric generation, from their inefficient wind turbines. The government pours subsidies, grants, guaranteed loans and tax credit monies down a black hole, in a futile attempt to spend our county into energy independence.
Did you ever wonder why the state refuses to foster a true independent energy economy for the nation, while conducting privileged cronyism for friends of the financial ruling class? Well, look no further than the rewards given to crooked industrial wind developers for building useless projects that do not generate useable electricity, but sell phony REC credits for energy that is never produced. Criminal indictments are long overdue. The next financial bubble assures to have the stench and foul odor of the Cap and Trade system. Allowing State/Capitalism to pervert the financial markets cost us much more than just higher electric bills.
James Hall – April 13, 2010