Russ Choma, Stimulus - Covering the Green Economy

Covering the Green Stimulus
The Challenges and Rewards of Covering the Biggest Pro-Green Legislation

Russ Choma
Email: russ.choma@gmail.com
Web: russchoma.com
Twitter: russchoma

http://investigativereportingworkshop.org
Founded in Spring 2008 by Charles Lewis and Wendell Cochran
Bartlett & Steele: “America What Went Wrong”
Broadband
Frontline: “Flying Cheap”
iLab

Gamesa
Iberdrola
Vestas
Siemens
Suzlon

Restarting the American Economy

Findings (briefly)
Section 1603 Grant Program
$3.2 billion thus far, mostly to the developers of utility-scale wind projects.
Most of these developers are actually subsidiaries of foreign companies.
This matters because:
The money is a reward for work already done – not incentivizing new work.
There are no strings attached to the money – no obligation to reinvest.
Most economic activity from wind is in the manufacturing of the turbines:
But most of the turbines installed under this project were not built by American manufacturers. In fact, there are only two American manufacturers.
Because of past mistakes, we’re in a critical spot in terms of a “clean energy race” and the state of American manufacturing. This program is one of the most direct ways the stimulus supports green energy, but it doesn’t have a clear direction, and hasn’t shown clear results.

The Takeaway
Toss out your conceptions of what the “green economy” is – at least when it comes to stimulus, it’s a big business, just like any other.
There are some really amazing & interesting things, but regardless of your angle, you should treat it with the skepticism you apply to other kinds of business reporting.
Must not assume there is an altruistic or environmentalist motivation behind every action.

Meet the StimulusThe Biggest Piece of Green Legislation

American Recovery and Reinvestment Act of 2009
$787 billion
$580 billion in spending, $212 billion in tax cuts
Size of spending is enormous, but the money does far more than stimulate economy, it creates policy changes.

Biggest Piece of “Green” Law Ever(except for China)
$72 billion in direct investments and $22 billion in tax incentives for renewable energy, smart grid/transmission, energy efficiency, green vehicles, and green job training.
Good starting point: http://www.energy.gov/recovery/funding.htm
Designed for applicants, but provide the most comprehensive list of funding programs, including names and titles that can be used to search on.

Common Editor Misconceptions
There’s nothing left to write about it, it’s been covered to death…
Hardly… as of April only 47 percent of the package has entered the economy.
It’s not a local story…
It was and will continue to be a huge national story, but each bit of funding lands locally.
Unprecedented (though imperfect) emphasis on transparency means (theoretically) unprecedented access to those local stories.

Resources
Recovery.gov
Or better yet, Recovery.org
ProPublica’s “Eye On The Stimulus”: http://www.propublica.org/ion/stimulus
USASpending.gov
Renewable funding: http://www.energy.gov/recovery/renewablefunding.htm
State and local programs: http://www.energy.gov/recovery/statefunding.htm
“Show Me The Money; The Law of the Stimulus”: One of many primers to help fill in the background on all the funding opportunities and who can go for them. http://www.stoel.com/ShowMeTheMoney

The (Dark) Green Side The Challenges and How to Avoid Them

Unprecedented Greenwashing
“The unjustified appropriation of environmental virtue.”
$787 billion reasons to manipulate, almost every one of them there because of a special interest.
It’s a Cash Cow
It’s a Sacred Cow

Failure of the Press
“Blown Away” was a story in plain sight.
DOE & Treasury very publicly announced the first $1 billion and our most prestigious publications covered it. But mostly with out much context or analysis and an over-reliance on administration and industry sources.
NYT on Sept. 1:
“Iberdrola, the Spanish energy giant, emerged on Tuesday as the early winner … Roughly $295 million of the $502 million in grants on Tuesday went to five wind-power projects run by a unit of Iberdrola.”
Steven Chu, from the press release: “These grants will help America’s businesses launch clean energy projects, putting Americans back to work in good construction and manufacturing jobs.”
Rob Gramlich, AWEA’s senior VP of public policy (and registered lobbyist): “…said he had seen ‘business activity picking up and turbine and parts orders being sent all the way up the value chain.”

Green Energy Story In General
Casual use of “green” – there are many who count nuclear as green energy because it has a low carbon footprint… is it?
Near automatic acceptance of a narrative of a “green” economic revolution and the miracles it can bring.
Not to say it isn’t possible, but we are very far behind and on a very slow pace.
Over-promising:
“To tell someone who has been making auto transmissions that they can make a gearbox for a wind turbine … is foolish. (The idea that) every automotive stamper can enter the industry – it just isn’t going to happen… it's not for everybody.” – John Colm, president GLWN

Why?
Hope Swallowed By Hype
The inherent bias is that we all really want to believe in this…
http://www.youtube.com/watch?v=Q6XF-gc-4VE
Sheer size/technical aspects
Dealing with the federal bureaucracy can be intimidating or overwhelming.
Inclination to accept official or authoritative sounding word.
Editors don’t want to deal with it
Inaccurate Data
Jobs created… saved… or supported.
“David” in Wisconsin

Deliberate Obscuring
Enormous political stakes + lots of questions = ANGER
Followed by deliberate obfuscation:
“It’s not a grant.”
Chu 9/1/2009: “These grants will help American businesses…”

More Deliberate Obscuring
Matt Rogers, senior advisor to the secretary:
Jan. 2010 to ABC: “Every dollar – every dollar is going to create jobs for American workers here in the United States.”
March 4, 2010 to a Senate committee: “100 percent of those funds go to U.S. projects, so the reporting has been more than a little misleading.”

March 10, 2009, Vancouver, Was.
By flickr user Nate Sandel

June 1, 2009

June 19, 2009

Meadow Lake Wind Farm
$113 million in stimulus

More (Personal) Anger
AWEA:
“pseudo-investigative team”
“Apparently no one at ABC or American University, which sponsored the bogus reporting directly to ABC, understands the way the global economy works…”
Rich Glick, chief lobbyist for Iberdrola, May 5
“Not to denigrate them, but they weren’t exactly Pulitzer Prize winners, they had a couple students do a report. They said, ‘Well, it’s going to companies that are primarily U.S. subsidiaries of foreign companies. Therefore,’ they figured, ‘We’re having U.S. stimulus money going overseas. Completely not true, but it got picked up by ABC News, and I think the students probably got an ‘A’ for the workshop…”

The Sacred Cow and the Cash Cow
Constructive criticism?
To those whose political fortunes are attached, or whose primary concern is expanding green energy capacity, this is a very sacred cow.
To those who stand to reap the benefit (for instance, Iberdrola is predicting they will collect $2 billion by the end), it’s a huge cash cow.

Tip: Read the Fine Print
Washington is all about the fine print, but it’s not that complicated to figure out.
Example #1: “Buy American.”
Full of exceptions.
No American product of appropriate specifications.
It would cost 25% more.
It’s “inconsistent with public interest.”
If it would violate existing trade agreements.
Schumer’s bill.
Changes “shall” to “may.”
Treasury/Energy has to disclose to Congress how many American jobs would be created or saved.
If an exception to “Buy American” is invoked, have to explain to Congress why.

Tip: Doesn’t Hurt To Ask
Surprising how often people will answer.
Congressional committee staff
Don’t be afraid to FOIA
DOE actually lets you do it on the Web site – you have nothing to lose.
http://management.energy.gov/FOIA/foia_request_form.htm

Tip: Look for Experts
Lawyers: government money = paperwork = lawyers.
Analysts:
For publicly traded, use Yahoo! And Google to find analysts who follow:
For example: AES: http://finance.yahoo.com/q?d=t&s=AES
Industry analysts:
IHS Cambridge Energy Research Associates (also Emerging Energy Associates): http://press.ihs.com/ihs+media+contacts/
RAND: http://www.rand.org/media/experts/policy_areas/energy_and_the_environment/index.html

Tip: Look for Experts
Labor Unions/Environmental Groups:
Apollo Alliance: http://apolloalliance.org/
Blue-Green Alliance: http://www.bluegreenalliance.org/
NRDC: http://www.nrdc.org/
Sierra Club: http://www.sierraclub.org/pressroom/contact/
Issue Specific: Clean Water Action, etc.
Think-tanks/Advocacy groups
Be very careful, most are selling something… keep context.

Tip: Don’t Skip the Background Check
Lots of money attracts people with checkered pasts and no experience.
Atlantic City Press 1/2/2010: “Financial incentives bring renewable energy business- but not experience.”
Secretary of State Websites, corporation look-ups
Brief history of business, key executives, ownership, subsidiaries, linked companies, etc.
ProPublica: “How to run a background check on companies awarded stimulus contracts”
Criminal/Tax issues
Bans on contracting
Workplace safety records
Environmental record
Lobbying records
http://www.propublica.org/feature/how-to-run-a-background-check-on-companies-awarded-stimulus-contracts-520

The Light(Green) Side of the Stimulus
The many, many, many good (and easy) stories

Section 1603 (in brief)
Investment tax credit – 30 percent of your investment. Stimulus changes it to cash.
Requirements:
Own a renewable energy facility in the U.S.
Fill out application correctly.
Within 60 days, the DOE reviews application to establish you have a renewable energy facility – sends to Treasury.
Within seven days of notification, money is direct deposited in your account.
As of May 27: $3.2 billion has been awarded to 558 projects in 43 states.

Projects by State(Top 18)

Awards By State

Projects By Type
* Includes: Biomass, Landfill, Open Loop Biomass, Fuel Cell, Combined Heat & Power, Hydropower, Geothermal Heat Pump

Look Beyond Big Wind
497 non-wind farms to write about
Each grant is a story itself –
Local person/business, getting sizable chunk of taxpayer dollars (540 are more than $5,000, representing an investment of at least $16,670)
558 projects in a nation of 309 million people.
The more local you can get, the more relevant
Unlike 100,000 square acre wind farm … these are short-term projects that use local workers, create local technical knowledge and are much more likely to have been conceived recently (ie, actual product of the stimulus)
A chance to get a sense of what sort of green activity there actually is.

STORY IDEA: Bad Data, Good Story
http://www.ustreas.gov/recovery/1603.shtml
“David” in Wisconsin, who got $20k for a small wind turbine.
In December list of applicants, in the “name” column: “new” and “not applicable”
People aren’t filing right.
In theory, if you have a renewable energy generator and you fill the application correctly, it’s easy money… but there’s no option in TurboTax, requires filling out a form.
Is there someone local who received a grant – did they get help? Are there local attorneys who specialize?
More than 558 people put a solar panel on their roof or a small wind turbine in their backyard – why haven’t they applied?

STORY IDEA: Notable Locals
Each has its significance – to the community, to green energy.
Pacific Missile Range Facility at Barking Sands, Hawaii - $900k
When the military adopts, it’s a huge institutional endorsement.
Colleges and Universities: Early adopters
ASU received $2.5 million for three projects, including a building you’ll be in, the Global Institute of Sustainability building.
Schools: $3.2 million for 15 schools
School budgets are ALWAYS contentious, maintenance costs are major. Is this a success? A waste?
Oddballs:
Bob’s Big Boy: hamburgers, solar panels

STORY IDEA: Patterns
Department stores:
Kohl’s: 10 projects, $5 million.
Wal-Mart: Five projects, at least $4.1 million
Staples: One project, $3 million
Marshalls: One project, $821k
Sports Authority: One project, $536k
TJ Maxx: One project, $249k
Why?
Not their main business, was the threshold lowered?
Why Kohl’s? Why not Whole Foods?
Cost vs. marketing

Animal Care:
Pet Tender’s Country Cattery, in Mo.
DogBoyDogRanch, Austin, Texas
Firehall 4 Animal Hospital, Ga.
Niceville Animal Clinic, Fla.
Why?
Is there something inherent about the business?
All southern, high cooling costs?
Marketing to clientele – people who splurge on pets, like green?
Dog Boy’s Dog Ranch Expansion

Real estate management:
At least 13 apartment complexes, countless commercial office properties
Attracting tenants? Like offering free cable/internet? Commercial clients do like LEED certified buildings.
Managing utility costs?
Car washes:
At least five – three solar electricity, two solar thermal.
Arizona, Virginia, Maryland, New Jersey and Massachusetts

48c Tax Credits (in brief)
Actual tax credit, announced in January
Competitive selection
$2.3 billion, at least 38 states, 185 projects
Matched by up to $5.4 million
Many got some coverage, but not always good.

STORY IDEA: Fine Print
Ingeteam:
Spanish manufacturing company
Feb. 15 Milwaukee Journal-Sentinel Article: “About 270 manufacturing jobs will be created by the plant, said Greater Milwaukee Committee President Julia Taylor. Building the plant will bring construction jobs as well, said Patrick Curley, chief of staff to Milwaukee Mayor Tom Barrett.”
But when?
Time frame
One year to meet qualifications to be certified
Deadline to open: January 2014

STORY IDEA: Not Done Deals
Vela Gear Systems: Indianapolis, Ind.
$11.6 million
Startup, CEO wants to locate in Indiana, taking advantage of infrastructure and region’s history of making transmissions – auto and otherwise.
No employees, no financing, no location.
Loan guarantee pending.
Lag-time in startup

STORY IDEA: Local Incentives
Many of these projects hinge on getting more help – beyond the stimulus.
Database of State Incentives for Renewables & Efficiency: http://www.dsireusa.org/
Pennsylvania model:
Gamesa (Spanish) only foreign manufacturer able to produce towers, nacelles and blades in the U.S.
State focused on supply chain.
Feb. 19, state gave out $22.8 million in federal stimulus dollars to three wind farms … if they bought Gamesa turbines.
What’s your state/city doing – is it competitive? Balance benefits to company with benefits to residents? Are there guarantees?
Example: Ingeteam
Example: Nordex in Jonesboro, Ark.
TIFs

Transmission
Where there’s the most wind/sun there’s the least need.
Issues
Eminent domain
Anger over local impact for external gain.
Maps of wind resources in each state: http://www.windpoweringamerica.gov/wind_maps.asp

STORY IDEA: Ethics
Wind farms/solar arrays/biofuel/landfills are not universally loved, especially in more populated areas – varying levels of concern, legitimate and not, particularly quality of life issues
How do you win over the local authorities?
The same way it happens with other deals – sometimes fair, sometimes not.
New York State code of ethics
Treat these companies the same way you’d treat Massey if they showed up to open a mine, or BP if they arrived to set up a drilling rig.

Take Home
Web sites
Grant spreadsheets
Partnerships?
Questions?

Russ Choma, Stimulus - Covering the Green Economy

by Reynolds Center for Business Journalism on Jun 24, 2010

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Russ Choma, Stimulus - Covering the Green Economy — Presentation Transcript