Big Green Machine – GE makes $21 billion a year on “clean energy”

GE — A clean energy revenue machine

GE is so large that its annual revenue ($150 billion) is greater than New Zealand’s gross domestic product ($140.43 billion). But GE stands to profit in solving man-man global warming, whereas New Zealand will just pay.

In 2011 GE generated $21 billion in “clean energy revenue”. (GE Annual Report 2011, p 3).

GE boast that their “technology helps deliver a quarter of the world’s electricity”. “We are one of the largest clean energy companies in the world” (page 18) “GE wind turbines, among the most widely used in the world, will soon power the largest wind farm in the U.S ”

In other words, they are one of the largest companies in the world which makes profits that depend on a climate of fear. How much would their wind turbines be worth if western governments pulled the pins on all the subsidies?

Here’s how much:

“Manufacturers of turbines and other components will shed an estimated 10,000 workers in the U.S. this year in anticipation of a slowdown in orders, says the AWEA. If Congress doesn’t extend the production tax credit, that figure will hit 37,000 next year—about half the industry’s workforce. The incentive, first offered in 1992, grants owners of wind farms a credit equal to 2.2¢ per kilowatt-hour for electricity produced over a 10-year period. Extending the break for just one more year would cost $4.1 billion in forgone tax revenue over a decade,…” [Businessweek, June 7th 2012]

GE explain that they are concerned about the environment.

“The US industrial and financial conglomerate said it had long seen climate change as a valid concern after an internal evaluation of the scientific case in 2005.” The Financial Times

Notably, GE entered the industry through the acquisition of Enron Wind in 2002. Did it buy into the market before it “bought” into the science? Who knows?

“We found enough data there to have a company like GE respond and we have responded,” said Mark Vachon, head of the “ecomagination” sustainable business initiative GE launched in that year. He said revenues generated by operations in his portfolio now totalled $100bn and were growing at more than twice the rate of those in the rest of the company. The Financial Times

For GE the green revenue stream is growing twice as fast as the rest of the company’s income. No wonder GE is so enthusiastic about the alarming threat of carbon dioxide. It’s a problem that they are being paid handsomely to solve.

Otherwise, it’s been a tough five years for GE: Yahoo finance. No wonder they are promoting the sector that is growing, when so many of their other product lines are shrinking.

GE stock price would suffer if governments stopped their anti-carbon policies:

Trefis estimates a quarter of the GE stock price is provided by it’s “energy infrastructure” — which is mostly wind turbines, but also some solar panels. GE has a high growth opportunity, apparently, “in the growing European wind energy industry, which has had an average annual growth rate of 15.6% over the last 17 years.”

Other parts of GE are being steered towards green income. “We redeployed capital from NBCU to support $11 billion of Energy acquisitions, which should provide an earnings boost in 2012.” (2011 Annual Report page 4).

GE sponsors and lobbies for Climate and Green projects:

How much of this sponsorship to help the planet, and how much is to help the bottom line?

GE helping to spend your tax, but are not so keen to pay it themselves

While GE appears happy to lobby for the US government to spend more tax dollars on subsidies and schemes it will benefit from, it’s very creative at reducing its own tax bills. In 2010, with a $14 billion dollar profit globally, it not only paid no tax in the US, but claimed a $3.2b tax benefit.

More potential conflicts of interest

Here’s a wildcard: GE is so big it influences other companies in very direct ways. GE Capital Sponsor Finance acts like a bank, in a sense a financing source to private equity firms for buyouts, mergers, takeovers and such like. Who knows whether the “green” philosophy of GE influences the choices of groups that get finance?

Then there is GE’s ownership of many media outlets. It’s the vested interest that may not need to pay for advertising, it owns the station.

Not everything GE does is necessarily bad

“GE’s global fight against cancer is backed by a five year, $1 billion commitment to improve screening and diagnosis to help doctors fight cancer more effectively”.

I’ve no doubt they profit from selling the screening technology, but it serves a real market, and solves a real problem. Quite possibly GE got into the “clean” energy game with only the best of intentions. But none of that changes the fact that they now make billions supplying a market that would not exist if there was no climate scare. GE are making a bet that that scare will continue, and it would only be good business on their part to donate to groups and politicians that keep the scare alive.

That’s why the lesson for libertarians, conservatives and skeptics is that the carbon dioxide scare should never have been allowed to gain so much momentum. The next big scare (and it’s inevitable) must be assessed and critiqued, and if it fails the empirical data test, must be fought with a concerted organized campaign right from the beginning. Once markets have moved the momentum of vested interests makes it 1,000 times harder to slow the gravy-train.

I confess to being one of those asleep at the wheel in the 1990′s.

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