From Guest Blogger Alex Nicolson: Alternative Energy Technologies Are Held Back by Outdated Accounting Practices

Here’s a post by 2GreenEnergy friend and supporter Alex Nicolson that I think you’ll find interesting:

I would like to point out that the green revolution and in particular, renewable and clean energy products such as solar power, wind turbines, geothermal and algae-based fuels are not waiting for viable technology; it already exists in many forms. What they are waiting for is a massive sea change in our antiquated financial accounting systems.

We keep hearing that green technology has too long a Payback or too low an Internal Rate of Return and just can’t compete with non-renewable coal, oil and natural gas, etc, etc. We complain about $4+ a gallon gasoline, BUT how many people realize that we are actually, in my opinion, paying over $10-15 a gallon, IF we add on all the currently ignored direct social and economic costs of oil! These are called “externalities” by economists, who recognize the existence of these external costs of doing business, but other than that recognition, these costs are still not assigned to their correct source.

As just one example, if we look at our enormous military budget, (currently about $700billion) and the 800+ military stations maintained around the world, kept in place to protect sea lanes for oil tankers and oil pipelines and the social costs of young soldiers being trained, deployed and killed, severely injured or made incapable for the rest of their lives and the enormous stress this imposes on their families and friends, both economically and emotionally. That is another direct cost of oil.

Or of we look at the enormous costs of the recent oil spill in the Gulf, to the ocean and beach environments, to people’s health and livelihood and the stress they are under with hurricane seasons coming and the likelihood that more oil and dispersant sludge will be thrown up on their shores, that is another direct cost of oil.

And as another example, we see poor mountain people in Afghanistan being killed and injured in the name of protection from Al Qaeda by drones operated remotely from an office complex in the Mid West and written off as collateral damage when the truth is, we are in that poor region mainly because of the huge oil and gas fields located in southern Russia, which will eventually need a pipeline to be built to transport the crude oil to a warm water all season coastal port through that region, for the oil tankers to pick up and take to market in the West.

We see a similar example with an unaccounted for externalized cost of coal. Apart from carbon dioxide emissions from coal burning power plants, there is the fact that coal burning power plants ironically emit over 1,000 times the radioactivity of nuclear plants in the form of radon gas, which is emitted directly into the atmosphere. This highly toxic gas was absorbed over millions of years into underground coal formations and is now being directly released into the air when the coal is burned. The inevitable negative health effects of that dangerous radioactive emission into the local atmosphere of a coal plant is simply dumped onto those people living downwind of the plant! Yearly deaths from health problems caused by coal plant emissions, just in the US, are conservatively estimated at about 60,000 people, by various concerned citizen groups.

And if we look at the huge amounts of foreign aid paid to protect US controlled dictatorial regimes against the wishes of the people under their control, (which incidentally we see are starting to fail in the Middle East, due to the younger generation’s frustrations with a static society that is out of step with the modern world) that allow us to keep the oil flowing westwards, these are all direct costs of oil.

And closer to home, looking at a typical oil company’s Income Statement, we also see that they also are granted other enormous tax breaks, which make no economic or social sense, such as depletion allowances from taxes for using up a non-renewable resource!  Shades of George Orwell’s 1984!

And in the US, many states which are under the oil companies economic/political lobbying control charge them minimal amounts for exploitation of these non-renewable resources, which are state-owned assets; the oil companies acquire them virtually for free!

Solar, wind, geothermal and algae technologies do not need these massive hidden support costs, they are based on a worldwide renewable source (sunlight) so cannot be stolen by any super-power and so are unlikely to be the source of dragged out wars and intrigue between nations under the sham of spreading democracy as happens now for oil.

The Sun pays no attention to national boundaries and so we see that in most mid and southern latitude countries, a surprisingly small surface area of solar plants can deliver most of the electrical power a country needs, particularly here in the US.

So taking all these factors into account, let’s get our accounting practices into the 21st Century and apply ALL the direct costs of each energy resource as they are incurred by the entire world. Only then we can efficiently compare and make a correct decision on various energy resource technologies.

This will require a huge change in accounting practices, which currently are still stuck in time at the beginning of the Industrial Revolution where we saw that the horrendous costs to the environment and to workers, including children who were starved, overworked, killed in often avoidable accidents and poisoned by fumes and toxic heavy metals and the city and country air was made unfit to breathe. All these enormous social costs were externalized and thrown onto the back of the society to bear and companies were measured on profitability within incredibly narrow accounting standards, and often the most polluting companies were deemed the most efficient and profitable and given the most support. What a travesty of reality!

We can see that now so clearly on a national level and now we see some progress in that direction and many companies in the US and other developed countries are asked to clean up their emissions and remove toxins from their workplaces, which is a good step forward.

Now we need to further expand our accounting horizons to a world-view and take that same approach to a global scale, especially when comparing energy technologies based on their real costs.

If we can achieve that vision, then the correct decisions for support of green renewable energy will become abundantly clear!