GE’s Dangerous Gimmick
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Environmental activists are cheering General Electric’s new “Ecomagination” initiative. That’s a hint that the rest of us should beware of the gimmicky-sounding program.
“Ecomagination is GE’s commitment to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions and abundant sources of clean water,” CEO Jeffrey Immelt said. “And we plan to make money doing it. Increasingly for business, ‘green’ is green.”
The rationale for Ecomagination largely relies on the claim that man-made emissions of greenhouse gases are adversely impacting the climate, raising global temperatures. To avert this, Mr. Immelt plans to double GE’s budget for research into cleaner energy technologies to $1.5 billion, double revenue from products tapping renewable energy sources such as wind and the sun, and reduce greenhouse gas emissions from its factories 1% by 2012.
Increasing R&D sounds good, but rarely pans out as a practical path to invention. As Financial Times columnist Amity Shlaes points out, inventions typically flow from creativity in labs, not from top-down orders issued in executive suites.
The folly of blindly throwing money at R&D with fingers crossed is reminiscent of the 1980s federal Synfuels program ($88 billion in research down the drain) and the ongoing “war on cancer” (more than $50 billion spent in federal research over 30-plus years with amazingly few resultant therapies).
GE’s media release seductively states, “If just 7 percent of the land area of Arizona were covered with GE’s PV-165 photovoltaic modules, the amount of energy that could be generated on a sunny day would equal the average daily demand of the entire U.S.”
Certainly, the nearly $16 trillion price tag for the solar panels would help GE’s bottom line. But with such a price tag – not including land acquisition and development costs – shareholders shouldn’t be holding their breath in anticipation of GE “bringing to life” its solar panel fantasy.
GE’s greenhouse gas reduction goal (1% by 2012) is as trifling as the solar panel idea is ludicrous.
About 160 billion metric tons of carbon dioxide from natural and manmade sources is emitted every year. One percent of GE’s annual emissions amounts to 100,000 metric tons – about six-millionths of a percent of the world total – a drop in the bucket in what may be an entirely imaginary problem.
Certainly GE may profit some from selling windmills and solar panels – but probably only while such technologies are subsidized by governments. That could be why Mr. Immelt announced Ecomagination with eco-activist and World Resources Institute chief Jonathan Lash, who promptly called for government policies to address global warming.
Mr. Lash, whose WRI receives funding from the GE Foundation, wryly noted at the press conference that “climate change cannot be solved without business” – and he’s right.
The political rejection of global warming hysteria by the Senate and President Bush has forced the left to pressure wobbly-kneed businesses to carry the global warming torch.
After the announcement of Ecomagination, the head of Environmental Defense sent an e-mail announcement stating, “Corporate America and other American leaders are moving on global warming – now it’s time for Congress to do the same. In recent weeks, the CEOs of General Electric, Exelon, Duke Energy and Xerox have announced their support for limits to carbon dioxide emissions. We need to use this momentum to send a clear message to Congress: The time to act is now.”
In addition to GE’s taxpayer-financed business plan to sell consumers over-priced energy, GE also may be hoping that Ecomagination has a big short-term payoff.
In 2002, Mr. Immelt reversed course on predecessor Jack Welch’s fight against EPA over dredging the Hudson River to remove PCBs discharged from company facilities. Though Mr. Immelt agreed in 2002 to a $460 million cleanup, with the start of dredging in 2006 looming, GE lobbied Congress last week to have the National Academy of Sciences study whether dredging makes sense.
Since the Hudson River cleanup is a major cause for environmentalists, such a bill will likely only pass with their support – something that Ecomagination may help produce.
Such backroom dealing may help the company out of its mess, but may also force the rest of us in another much bigger one – eco-activist control of our national energy policy.
Mr. Milloy publishes CSRwatch.com and is an adjunct scholar at the Competitive Enterprise Institute.