Gore knows best

Al Gore, self-appointed father of the climate change movement, astonished his most ardent supporters with a plan to produce 100% of the nation’s electricity from renewable energy and carbon-free sources within 10 years. “The quickest, cheapest, and best way to start using all this renewable energy is in the production of electricity. In fact, we can start right now using solar power, wind power, and geothermal power to make electricity for our homes and businesses.”

Gore, who backs a 90% reduction in greenhouse gases (GHGs) by 2050, quickly moved from preaching to meddling by next announcing the launch of a three-year, $300 million “We Campaign” designed to pressure lawmakers into aggressively pursuing his climate change agenda. The campaign hopes to enroll more than 10 million activists–from the Girl Scouts to the United Steel Workers, according to the group’s web site–to form what his campaign calls the largest public advocacy group in history.

Reactions were predictable, ranging from overenthusiastic cheering from his fans to a more somber Senator Frank Lautenberg (D-N.J.) warning that Americans aren’t eager to hear about the need for more financial sacrifices: “If it looks like it’s just a continuation of an attack on our economy and family budgets, then [Gore’s proposal] starts getting dispiriting.”

Conflict of interest

In my opinion, Gore’s vaporous plan shields his real motives. You may have read that Gore became a partner of Kleiner Perkins Caulfield & Byers’ (KPCB’s) GreenTech Team (www.kpcb.com) about a year ago and is donating his salary to various groups fighting climate change. This may appear to be altruistic, but it’s really just good business: The donations are actually made to groups he founded, such as the Alliance for Climate Protection, and by donating his salary to those groups he not only avoids income taxes but also retains control of how the money is spent.

The hypocrisy doesn’t stop there. KPCB is an international blue chip venture capital firm that has invested heavily in early-stage green technologies and emerging energy markets over the past few years and is positioned to earn oil company-magnitude profits from changes in government carbon or renewable energy policies. Gore, reportedly worth around $100 million, much of it earned since his failed presidential bid, has steadfastly refused to answer questions about stock options and other forms of income that could earn him hundreds of million of dollars if his We Campaign goals are achieved.

Gore also cited President Kennedy’s speech about putting a man on the moon as a historic parallel. My intuition tells me that JFK didn’t own any stock in Boeing or North American at the time of the Apollo 11 launch and certainly didn’t personally benefit from a successful moon landing. Kennedy also donated his presidential salary to charity, but without the strings.

Count the cost

Let’s give what Gore calls his “simple algorithm” a simple sanity check. Assume we are allowed to keep our existing nuclear plants (although he never mentioned nuclear power by name), hydroelectric, and renewable plants but must replace the rest. According to the Energy Information Administration, that amounts to 71% of our country’s electrical generation in 2006. The last utility-scale solar-thermal project announced, a 280-MW plant in Arizona, is estimated to cost about $3,500/kW.

Last month in this column I discussed T. Boone Pickens’ plan (which he freely admits has a personal profit motive) to plant wind turbines from the Texas panhandle to Mt. Rushmore, starting with a 4,000-MW project for $10 billion or $2,500/kW. Let’s average the two numbers and call it an even $3,000/kW for renewable replacement generation. If we assume an average capacity factor of 25%, then the replacement cost, in today’s dollars, is $3.9 trillion for about 1,300 GW of new capacity, or 130 GW per year for 10 years. Next, add in transmission (an additional 20% of plant costs for new wind projects, according to Pickens), the cost of land, stranded costs for “old” generation, material escalation, and so on. My back-of-the-envelope guesstimate ran the total price tag up to nearly $10 trillion, not including the disruption cost to our economy.

Here’s a statistic that places the magnitude of Gore’s proposal into perspective: The market capitalization of the entire investor-owned electric utility industry is about $831 billion, according to Yahoo Finance.

Hidden motives

Let’s hack through the hyperbole and identify the real issues at play in a proposal Gore calls a “generational challenge to re-power America.” For Gore and his fans to advocate sacrificing our economy at the altar of climate change only confirms how far he has strayed from mainstream public opinion. Gore believes saving the planet is the greater good and doesn’t seem to care about the collateral damage. And if he can make a few bucks along the way, so much the better.

Gore warned his followers that “there are those who will tell us this can’t be done.” That’s the only part of his plan we can agree on.