Las Vegas Sun

March 29, 2024

j. patrick coolican:

Nevada rich in natural resources, poor in reaping their rewards

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J. Patrick Coolican

When it comes to the emerging clean energy revolution, Nevadans should fear that once again we’ll play the role of the developing country, plundered for our natural resources without much benefit to ourselves.

Robert Lang, director of Brookings-Mountain West, says we should consider our experience with Nevada's wildly successful gold mining industry. The two companies responsible for 90 percent of our gold production, Newmont Mining and Barrick Gold Corp., are based in Denver and Toronto, respectively. And although both are a good source of jobs in rural Nevada, think of the knowledge and skills and money accrued to those two cities, even though this is where the gold is. Especially given the extraordinarily friendly tax environment for these companies, we’re just not getting much out of this nonrenewable resource.

When it comes to gold, we’re like Angola with its oil, while the thriving city is Houston, where the energy economy is really based.

Similarly, when a quarter of the country’s electric grid is coming from renewable sources in 25 years, will Nevada be a place of research and development, technical expertise, manufacturing and corporate headquarters? Or will it just be the place where out-of-state firms come to pillage for solar, geothermal and wind power?

It’s an open question, and one that Nevadans should ponder as some of the leading thinkers on energy gather at Aria today for the fourth National Clean Energy Summit.

As Jim Murren, CEO of MGM Resorts International, which is hosting the event, told me, “This is an opportunity we haven’t remotely taken advantage of.”

As Murren can attest from his company’s significant water and energy conservation efforts, however, Nevada has made significant strides in the clean energy and sustainability front since former President Bill Clinton challenged us in 2008 to be the center of renewable energy.

MGM is using the expertise it developed building CityCenter — for which it received hefty tax benefits as an environmentally friendly project — and converting know-how into water and energy savings at its other properties. Ripping out grass at Excalibur is saving 1.7 millions of potable water annually, while retrofitting its properties with energy-saving light bulbs and other devices has been the equivalent of taking hundreds of homes off the electricity grid.

The state’s regulated electricity monopoly has also made progress. Michael Yackira, CEO of NV Energy, pointed to three areas:

1. New smart meters that will allow customers to see on the Internet or their smartphone real-time information on their energy use. Given our unusual electricity portfolio — we use twice as much in the summer as in winter — Yackira believes consumers will use the information wisely and conserve. The federal government provided half the capital for these devices, which most customers will have by next year.

2. Spurred on by a state mandate, renewable energy will constitute 15 percent of its portfolio this year, Yackira said. During a peak day statewide, NV Energy demand is 8,000 megawatts; the company has 1,200 of renewable megawatts under contract and ready to go. A north-south transmission line, secured with the help of a federal loan guarantee, will allow the company to bring cheaper geothermal energy found in the north, to Las Vegas where it’s needed.

The price of solar has dropped significantly in recent years.

3. NV Energy has built more efficient gas-powered plants, most recently the Harry Allen plant, which has reduced fuel costs and given Nevada more electricity independence because the company can generate its own instead of going on the market and buy it.

(The renewable portfolio and the new plants haven’t been without controversy, as the company’s critics — conservatives opposed to the renewable mandate and consumer advocates who say the company built too much capacity — say these developments have pushed up Nevada electricity costs, which are the second highest in the West.)

Despite the progress, there’s a sense that we aren’t moving quickly enough, or that this sector hasn’t lived up to its promise. By now it’s not news that building solar projects doesn’t lead to lots of new jobs. (Although from another angle this is actually a sign of efficiency, which ordinarily would be applauded, not mocked.)

Still, it’s worth asking, what needs to be done?

Murren said the first thing is to simply make it a priority. We need companies, regardless of what they do here, to make it important. “We can compete and disagree, but this is one area where we can’t disagree.”

He also wants city fathers to examine other cities that have transformed themselves and changed their economies, such as San Diego and Denver, and copy their successes.

Murren also said we need to invest in education and create an attractive business environment. That means more than just a our friendly tax environment, which, he said, “isn’t cutting it.”

“We could do something epic and profound, and I want to be part of that, and I think I need to be part of that. We’re the largest taxpayer and largest employer in the state, and we care deeply about this state because we’re so invested in it,” Murren said.

Lang said we need to build innovation assets, particularly at the universities. He noted that we spend less per capita on higher education than any state in the West and are the only state of our size without a major research university as defined by the Carnegie Foundation.

Yackira and Lang said we also need regulatory relief from the federal government to fast-track land transfers for both solar generation and transmission lines so we can export energy to California, which will soon require one-third of its electricity to come from renewable sources.

None of this will be easy, as the inevitable backlash against clean energy is under way. In part, it seems like a classic case of hating the hippies — conservatives, who once favored a cap-and-trade plan to curb pollutants, suddenly didn’t when President Barack Obama and Rep. Nancy Pelosi got behind it.

They also argue that the federal government is heavily subsidizing these renewable technologies and thereby “picking winners and losers” when it should allow the free market to do so.

This ignores the massive subsidies given to fossil fuels. As Seth Hanlon of the Center for American Progress has pointed out, oil and gas companies will reap more than $70 billion in tax breaks during the next 10 years, some of which date to 1916.

Or what about the cost of keeping the U.S. Navy’s Fifth Fleet in the Persian Gulf to secure our oil allies?

Perhaps the greatest subsidy of all to both oil and car companies was the building of the Interstate Highway System, a subsidy so large as to be almost impossible to calculate.

Or consider the cheap hydroelectric power that only came about because the government built the dams.

Moreover, as Dan Weiss, a fellow also with the Center for American Progress, points out, we don’t pay the true price of fossil fuels, because the cost of the pollution they create isn’t counted. Economists call these costs “externalities.”

An analogy: Let’s say I start a landfill in my backyard. It drives down the price of my neighbors’ property, but I don’t have to compensate them. Coal producers are especially adept at avoiding the true cost of their product, which generates $60 billion per year in health care costs.

Then of course there’s greenhouse gas emissions. If you agree with 97 or 98 percent of climate scientists that global warming is happening and that we’re contributing to it and that its effects could be catastrophic, then you should agree that we need to move away from fossil fuels.

Either we can take advantage of this opportunity and get rich off it, or we can watch as other people do.

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