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Lack of Freedom Limits Delaware’s Prosperity

 By: Jane Brady, Chair, A Better Delaware

Recently, the Cato Institute did a study on freedom in each of the 50 states, measuring economic freedom and personal freedom indicators. The Cato approach is more to the libertarian view of government intervention, and I part ways on the issues of marijuana and some incarceration policies, but the standard they apply is consistent: less government interference through regulation, taxation, and social policy means more freedom.

The study measured each state on multiple criteria over the period from the year 2000 to 2023. Delaware did not fare well, and ranked, overall, 44 out of 50. Indeed, the report noted that Delaware had an “all around poor performance” on all three dimensions of freedom that were measured.

One measurement of economic freedom was fiscal policy, such as the tax burden on citizens and businesses, how much of the budget the government “consumes” and how large the government workforce is. By their measure, the states with lower taxes and smaller government rank higher, and higher is better. Delaware is at the bottom and ranked 47th out of the 50 states. Our tax burden is high, and our overall tax burden is worse than average, about 12.7% of adjusted personal income. The State of Delaware is our largest employer, and a huge percentage of our budget goes to government programs. In fact, of all the categories, this is Delaware’s worst performance.

The second measurement of economic freedom was regulatory policy, including consideration of such factors as land-use restrictions, healthcare, labor regulations, like occupational licensing requirements, and policies related to the ease of bringing lawsuits. They compare the regulations in the states to the state and federal constitutional guarantees. When the regulations restricted those guarantees the impact of that restriction was weighed as greater than others. Delaware fared a little better in this category coming in at 33 out of 50, giving us an overall economic freedom rating of 42. But the authors noted that much of Delaware’s “touted advantage of corporate laws now is significantly overstated.” Our business climate is not what it once was. And the report noted our certificate of need requirements for health care facilities.

The evaluation of personal freedom included such factors as incarceration rates, gambling freedom, gun rights, tobacco freedom, education choice and marijuana freedom. Delaware ranked number 43 in the area of personal freedom, even with our expansive marijuana, marriage, and abortion laws. That means that a lot of our personal decisions are regulated by the government in Delaware. Our land-use and energy freedom has declined because of an aggressive, renewable portfolio standard.

We are ranked below average on gun rights. Our laws on gambling, and our expanded legal sports betting are rated high. Our civil asset forfeiture law is tied for the worst in the country with few protections for innocent owners of property seized by law enforcement. Everyone should care about these issues. Importantly, fiscal, and regulatory policies affect specific groups, certain types of businesses, or particular types of transactions, but personal freedom measures government intervention that affects every citizen.

A Better Delaware advocates for lower taxes, less regulation, and more open and transparent government. We believe that the gross receipts tax and transfer taxes on real estate transactions should be lower. We believe the obstacles to small businesses forming and thriving should be removed, and we believe that economic prosperity is adversely affected when government is the largest source of employment and contractual work in the state. We believe in school choice, and advocate against a certificate of need requirement.

A Better Delaware also advocates for transparency and accountability in government. While it is important to know the numbers in this report and to identify the issues holding Delawareans back from better economic success, it is critical that you can know the rules by which to seek and implement any change. Government transparency and accountability are essential to assure an informed citizenry and a responsive elected government.

I encourage everyone to read the report and to consider how government intervention has affected your life and work. Then, contact your elected officials and tell them you want more freedom, fewer taxes, and a more open and transparent process in our government so you can know what action is being considered and how you might affect it.

Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.

EV BUSES—INVESTOR BEWARE

By: David R. Legates

 In August, Governor Carney signed into law House Bill 10, which “establishes targets for annual purchase of electric school buses through fiscal year 2030.”  Like Delaware’s school bus fleet, many transit agencies are moving to battery-powered buses as a result of the Biden Administration’s goal of having all transit and school buses be zero-emission vehicles by 2030.  So, if you are a venture capitalist, or just a kitchen table trader, maybe you thought that investing in a high-profile electric bus manufacturer might be a good bet.

And a pioneer and leader in the electric bus business, Proterra, might have been an excellent choice.  Proterra has been around for nearly twenty years, and it is so well-connected that the Biden Administration in February appointed Proterra’s CEO to serve on the White House Export Council, the principal national advisory board on international trade.  Energy Secretary Jennifer Granholm served on Proterra’s Board of Directors and owned shares of the company even after being confirmed to head the US Department of Energy.  In numerous speeches, the President has praised Proterra as a success story in the green energy movement; to wit, both the Vice President and the Transportation Secretary toured their facility.  Moreover, $5.5 billion was provided by the bipartisan infrastructure law and billions more through other federal grant programs to convert diesel-powered fleets to electric buses.

But hopefully you didn’t buy stock in Proterra because you certainly would have lost your investment.  In August, Proterra filed for Chapter 11 bankruptcy protection.  Its stock, which was selling at $7.30 a share in November of last year, is now worth $0.03 a share just a year later — much less than 1% of its peak value.  It had federal funding, it had administration backing, it had state and local legislation on its side.  So, what went horribly wrong?

Proterra noted that “contracts signed in 2021 proved to be priced below where the manufacturing costs were ultimately realized in 2022”. They also argued that transit companies want specialized buses, not simply ones available “off the shelf.” This requires tailoring each order specifically to the consumer which inflates costs.

But the real reason is that their buses have been plagued with problems.  Buses caught on fire or frequently broke down, batteries froze in the cold weather, and the drivetrains had issues pulling a bus load of children up hills.  But the most prevalent issue associated with Proterra’s buses is that when they break down, replacement parts are so difficult to get that the buses sit idle for months at a time.  Not very helpful—and potentially dangerous—when your children are forced to ride in electric buses to get to school.

State Representative Gray noted that two electric buses are required to replace a single diesel bus because it is impossible to recharge the bus from its morning run before the afternoon return run begins.  This would cost Delaware taxpayers an additional $2.6 million during just the first two years of HB10’s implementation.

Delaware’s legislature and the Governor’s Office has pushed electric vehicles as a way to make Delaware’s environment clean and green.  Although touted as being “clean and green,” electric vehicles aren’t. The process to mine the rare earth elements that are needed for the batteries creates copious amounts of toxic waste, destroys land and ecosystems through surface mining where vast amounts of rock and soil are removed, and utilizes child and slave labor in poor areas such as the Democratic Republic of the Congo and southeast Asia.

Proterra joins Solyndra, A123, Pink Energy (Power Home Solar), and Lordstown Motors (an EV truck manufacturer) on the ever-growing list of high-profile, federally backed companies that have wasted taxpayer money and gone the way of the dinosaur.  Our Delaware state legislature must learn that the free market is better at selecting true winners than a legislator or bureaucrat throwing away our hard-earned tax money by investing in these fly-by-night schemes.

David Legates is a retired tenured professor of climatology, geography, and spatial sciences in the Department of Geography at the University of Delaware and a retired adjunct professor in the Department of Applied Economics and Statistics. Currently Legates serves on the Advisory Board for A Better Delaware.

 

 

 

 

 

 

Consequences of Banning Greenhouse Gases

 By David R. Legates        

You have often heard: “As greenhouse gas emissions from human activities increase, they build up in the atmosphere and warm the climate, leading to many other changes around the world.”  We are told these consequences always will be devastating and, of course, they will become worse if we don’t take draconian efforts to stop the emission of greenhouse gases now.

This last session, the Delaware legislature passed, and Governor Carney signed into law House Bill 99.  Known as the Delaware Climate Change Solutions Act of 2023, the law implements Delaware’s Climate Action Plan to reduce net greenhouse gas emissions to 50% by 2030 and to 0% by 2050.  State agencies must “consider climate change in decision-making, rulemaking, and procurement,” which puts the decisions into the hands of state bureaucrats.

Greenhouse gases are called “trace gases” for a reason—they make up very little of the dry atmosphere by volume.  The three gases targeted by House Bill 99 are carbon dioxide (0.04%), methane (0.00019%), and nitrous oxide (0.00000015%).  Together, these three molecules comprise so little of our atmosphere that in a stadium of 100,000 people, the composition of these three molecules in the atmosphere would be the equivalent of just 40 people.

Moreover, these gases are not pollutants; in fact, an increase in carbon dioxide has been a huge benefit to the entire planet.  Over the last forty years, the majority of the planet has greened significantly.  Simply put, carbon dioxide is plant food—commercial greenhouses increase carbon dioxide concentrations by a factor of about four to enhance plant growth as plants grow faster under higher carbon dioxide concentrations.  In addition, plants use water more efficiently when carbon dioxide concentrations are higher.

But the Delaware General Assembly has labeled these gases as pollutants and has prescribed that we take draconian steps to curb their production. The electric vehicle mandate prescribes that we reduce the number of gasoline and diesel automobiles sent to dealers to zero by 2035.  House Bill 10 requires the phase in of electric school buses, House Bill 11 demands new commercial buildings be able to support rooftop solar panels, and House Bill 12 incentivizes the purchase and lease of electric vehicles through a rebate program.  Senate Substitute 1 for Senate Bill 103 calls for all newly constructed single- and multi-family residences in the State to include electric vehicle charging infrastructure.  All these bills are now the law in Delaware forcing Delawareans to solely rely on wind and solar energy. At the same time, Delaware’s Federal delegation and the Biden administration are pushing for restrictions to the production of NMP, (N-Methyl pyrrolidone) which is an essential processing aid for lithium batteries that are key to energy storage and electrification storage. Without batteries to store this energy, our houses go dark and cold when the wind stops blowing and the sun stops shining.

So, why demonize fuels that have made energy inexpensive and have led nearly seven billion people out of poverty?  As a climatologist, I can tell you that our climate is not becoming more deadly or more extreme because of increases in greenhouse gases in the atmosphere.  For this small fraction of gases, we are proposing to devastate our economy, send billions of people to live below the poverty level, and destroy our way of life. What are we thinking?

David Legates is a retired tenured professor of climatology, geography, and spatial sciences in the Department of Geography at the University of Delaware and a retired adjunct professor in the Department of Applied Economics and Statistics.

 

 

 

Why Hydrogen in Natural Gas Pipelines Makes No Sense, Particularly in Delaware

By: Lindsay Leveen

Okay, you are going to need to recall a little science for this one! Remember electrons? They are the little electrified bits of energy that circle the nucleus (center) of an atom. Atoms make up the elements of gas, liquid, and solids (for real geeks, the Periodic Chart may come to mind!)

Why do we need to revisit science class? Well, there is an effort to retrieve electrons from atoms of Hydrogen gas and add them to natural gas to make a “greener” supply of energy.  Delaware is among the seven states in the US which were awarded federal support to develop a “hydrogen hub”, which Delaware will share with New Jersey and Pennsylvania.  Several companies with ties to Delaware, including Bloom Energy and Air Liquide are involved in the effort.

The project has identified three classifications of hydrogen electrons they will seek to isolate: pink, which will be sourced from the nuclear power plant in New Jersey; green, which will use wind and solar sources from the three states; and orange, which will be retrieved by injecting water into deep hot iron formations in the earth.

There are significant issues that prevent this from making any practical sense at all. First, the plan is to use the existing pipelines for natural gas. The existing metal composition of the steel natural gas pipelines is incompatible with hydrogen, which will permeate the metal and cause the steel to become brittle, and which will, ultimately, cause the pipelines to rupture.  Replacing the pipelines has been deemed to be too expensive and, therefore, to preserve the pipes for use, only a small fraction of hydrogen will be added to the natural gas. That could be as little as only 1%.

And the use of the “clean” electrons is somewhat limited.  Using electrons in water electrolyzers loses half of the energy within the incoming electrons.  While some companies, including Bloom, claim 85% efficiency, they do not account for the energy lost in the steam nor the energy needed to compress and dry the hydrogen to make it useful.  Wet electrolyzers, such as those utilized by Bloom, produce wet hydrogen, at low pressure. This hydrogen is useless in that state. Any value in hydrogen is after it has been dried and compressed.

In this area of the country, the best return is to use these electrons for two things.  The first is for heat pumps.  Electric heat pumps gain energy from the surroundings and multiply the kilowatt hours of useful warming heat delivered.  This area of the country is ideal for heat pumps as the winters are not too severe.

The second, although not ideal, is electric vehicles.  The compressed hydrogen in the proposed hub will be used in part to power buses in Philadelphia.  However, these expensive hydrogen fuel cell buses are only 50% efficient.  Using renewable clean electrons for hydrogen manufacture, and then to fuel buses, yields only 25% of the electrons giving a return on the effort, that is, actually propelling the wheels.  It is less expensive to buy battery powered electric buses, as the return on those yields 90% of the electrons propelling the wheels.

But none of this really makes practical sense. Hydrogen only has a third of the energy per unit volume as natural gas, based on the higher heating value of natural gas.  Clients in the US who use natural gas are already overpaying by some 10%, since the real heating value of natural gas is approximately 90% of the higher heating value used to bill customers.  Hydrogen billing will be even more unfair to gas consumers, as the lower heating value of hydrogen is only 80% of the higher heating value that consumers will be charged.

The cost to provide a minuscule amount of hydrogen into natural gas to, in effect, pretend is it “greener” than simply using natural gas, is not justified.  The increased costs to customers are not providing a better service or product. The federal government’s support of this project will cease, and it will not be cost-effective for private industry to continue to provide hydrogen injected gas.  Consumers should object to these projects now, before we spend more money on a useless effort with no return to the consumer.

Lindsay Leveen has more than 40 years of experience in chemical engineering and executive management in high value-added process industries that extract value out of processes that transform chemicals, energy, labor, and capital into products that society needs and consumers will buy. He has consulted and worked in the areas of energy deregulation, alternative energy generation, traditional energy generation, power transmission and distribution, power quality and reliability systems, and on hydrogen and sustainability Lindsay received a B.S. in Chemical Engineering and an MBA from University of Witwatersrand, S. Africa and a M.S. in Chemical Engineering from Iowa State .His book on the hope and hype of hydrogen is translated into Japanese and is used in Japan as a university text for students of energy policy and sustainability. In 2011, the Northern California Chapter of the American Institute of Chemical Engineers (AIChE) gave Mr. Leveen their Professional Development award for his lifetime of work in the field of chemical engineering.

 

More Options Necessary to Meet Electric Demands

By: Kenneth J. Reuter, Jr.

Influential voices who have the ears of policy makers are advocating solar and wind generation to provide electricity supply to meet our country’s demands.  But it is important to respect the fact that technology must drive electric generation supply solutions, not government mandates.  This same notion also applies to the demand side of electricity as well.  For example, mandating EV’s by a certain date is also misguided.  Electric supply and demand must evolve and be driven by available and under-development technology. We also need to understand that our electric grid currently lacks the capability and stability to support a rapid, forced transition. Facts and science must shape our path forward to transition to our electric energy future. This article focuses on how best to address electric generation to support future US demand.

The US generates electricity from four sources distributed approximately as follows: Natural Gas (40%), Renewables (22%), Coal (20%) and Nuclear (18%) with coal as the most polluting.  As solar and wind technology emerge and evolve, we are expanding their deployment.  Both are renewable and neither emit pollution.  As beneficial as these emerging renewable sources have become, they will not solve the growing and massive US demand for a reliable supply. Generation cannot be dependent on daily amounts of sun and wind.  Primary generation must be supplied by predictable, reliable, and cost-effective power plants also known as base-load plants.  We know that coal is the most problematic with respect to pollution.  Clean coal and scrubbing solutions are under refinement.  But there are better solutions that can be further expanded or in development that show great promise.

If we want to meet the very aggressive goal of zero emissions by 2050, coal is not the answer.   It is, however, abundant, and inexpensive.  China’s reliance on coal gives them a huge economic competitive advantage over the US.  As a result, China is also by far the world’s single largest polluter. We are in a global competitive environment and cost is very important to ensure our competitive place in the world economy.

Natural gas, by a wide margin, produces a fraction of pollutants than that of coal by a wide margin does.  And when designed in Combined-Cycle (CC) configuration, meaning using that fuel to spin a generator and then capturing the heat emitted to spin another generator, is very cost-effective producing significantly lower pollutants to the atmosphere.

In highly populated coastal environments, wind has been proposed as a source of electric generation. If you   compare the cost of building a Combined-Cycle (CC) natural gas plant versus an Offshore Wind Farm, (OSW).  A 600 MW CC natural gas plant can be built for approximately $750 Million.  A 600MW Offshore Wind Farm costs in excess of $2 Billion and with much higher maintenance costs.  And remember, all these costs are built into the rate base which drives cents per KW at the meter.  The US has been expanding natural gas CC plants and decommissioning plants that are coal fired.  We have seen greater than a 65% drop in overall emissions from 2005 to 2019 and a 32% drop in CO2 emissions shifting from coal to natural gas. We need to continue the transition from coal to natural gas.

In order to provide consistent base-load electric power to meet future demand we must also revisit nuclear! Nuclear power is clean, emits no pollutants and can run base-load full power for extended periods without the need for refueling.  Most operators elect to refuel every 18-24 months. Nuclear technology is safe, effective and by far the cleanest, most efficient and the most non-polluting answer for us to reach our goal of Zero Carbon Emissions by 2050.

Small modular reactors (SMRs) are advanced nuclear reactors that have a power capacity of up to 300 MW per unit, which is about one-third of the generating capacity of traditional nuclear power reactors. SMRs, which can produce a large amount of low-carbon electricity, are:

  • Small – physically a fraction of the size of a conventional nuclear power reactor.
  • Modular – making it possible for systems and components to be factory-assembled and transported as a unit to a location for installation.
  • Reactors – harnessing nuclear fission to generate heat to produce energy.

Many of the benefits of SMRs are inherently linked to the nature of their design – small and modular. Given their smaller footprint, SMRs can be sited on locations not suitable for larger nuclear power plants. Prefabricated units of SMRs can be manufactured and then shipped and installed on site, making them more affordable to build than large power reactors, which are often custom designed for a particular location, sometimes leading to construction delays. SMRs offer savings in cost and construction time, and they can be deployed incrementally to match increasing energy demand.

No one generation solution is the answer.  The right answer?  All of the above, driven by technology, is the right mix of generation to meet both the growing US demand for electricity and strive to reach a Zero carbon emissions goal by 2050.

Kenneth J Reuter, Jr., has a BS In Economics and Business from the University of Delaware and  an MBA in International Finance from Northeastern University. He has worked for the past 40 years in the electric industry dealing with all methods of generation, transmission, and distribution. He has held positions as an engineer, Director, VP and CEO in global energy companies. He continues to consult globally through his business, Resilience Energy, LLC.