Jean-Doris Muhuza - Ethics of Energy

THE ETHICS OF RENEWABLE ENERGY REGULATIONS 1

THE ETHICS OF RENEWABLE

ENERGY REGULATIONS

An Honors Business Thesis

BY

JEAN-DORIS MUHUZA

Dr. Shyam Sharma

WRT 301: Writing in the Discipline

Stony Brook University

Stony Brook, NY


Table of Contents

Abstract ........................................................................................................................................... 3

Chapter 1: Introduction ................................................................................................................... 4

Chapter 2: Theoretical discussion ................................................................................................... 7

Justice in the Free Market ........................................................................................................... 8

The Political War ........................................................................................................................ 9

Economic and Environmental Rights ........................................................................................ 11

Chapter 3: Ethics of regulating energy - consumption behaviors in three different cases ........... 15

Case One - The Government ..................................................................................................... 15

Case two - Peabody Energy ...................................................................................................... 19

Case three - Tenaska Energy ..................................................................................................... 20

Media and the public ................................................................................................................. 21

Chapter 4: Solving the problem .................................................................................................... 24

From Global to Local ................................................................................................................ 25

Economic Justice ....................................................................................................................... 26

Chapter 5: Conclusion................................................................................................................... 30

References ..................................................................................................................................... 32


Abstract

Signs of global warming have become so evident that climate change is no longer a myth, and a

push towards renewable energy has created an imbalance in the private and public sectors of

“green” energy business. This thesis will explore whether government intervention of the energy

industry is justifiable. By discussing the perspectives of both sectors, alongside a consideration

of how the media has not served the public in informing or representing their voices, this thesis

examines the government’s reasoning in interfering in the free market, using case studies to

show the cost and benefits of government intervention. The thesis begins with an introduction of

the issue and stakeholders, followed by a theoretical discussion of bad business practices and

unfairness of government interference, along with an application of theory in three current cases.

It concludes by arguing that while the government has the responsibility towards the public to

protect the environment and to envision and create a sustainable energy regime, it must also

avoid unfair favoritism to one type of business against others. In addition to making this

argument, solutions will be made in an attempt to avoid this and maintain a fair economy.


Chapter 1: Introduction

In a free-market economy like ours, business transactions tend to be operated without

always considering conditions and perspective of ethics. As a form of applied or professional

ethics, however, business ethics needs to be considered wherever issues of justice, fairness, and

responsibility come up. Generally, in the context of renewable energy, the current public

discourse focuses greatly on a shift towards a future that no longer relies on nonrenewable

sources such as coal, a shift that is related to the survival of our species. A carbon free

environment is most conducive to the survival of mankind. Though educating the uninformed

public on the pros and cons of having renewable alternatives, solutions are drawn within the

discourse.

This thesis will explore whether government intervention of the energy industry is

justifiable in the private sector firms. From looking at the discourse from both the public and

private sector, this discourse is open to full interpretation without bias. The issue of global

warming has been present in the 21st century, but it has been one sided. Portrayal of the global

warming crisis ignores private sector firms and paints them in a negative light. With a social

awareness of climate change and depletion of fossil fuel, how can the United States transition

society’s purchase behavior from gas and oil to renewable energy sources such as solar, hydro

thermal, and wind energy ethically; in particular, how can it do so without excessively hurting its

businesses? In order to address the dilemma that society and the government are facing today,

this thesis will explore a number of ethical issues in the contexts and perspectives of a political

discourse, financial dynamics, popular opinion, and in the role of media. Exploring ethical issues

from different perspectives, as I will argue and demonstrate in later chapters, can only help us

formulate feasible solutions in the long run, such as, what are possible solutions to this global

crisis?


The best way to answer this question is by gaining a full grasp of whether businesses

should be ethically responsible or whether we should have a laissez-faire system. A laissez-faire

system is based on laissez-faire capitalism, which is “an economic doctrine that opposes

governmental regulation of or interference in commerce beyond the minimum necessary for a

free-enterprise system to operate according to its own economic law” (Farlex, 2015; p. 630). The

conceptual definition is an economy in which the government does not constrict private

corporations from performing all acts to conduct business, while still holding a basic set of rules

to ensure a free market. In essence the government is required to regulate the market in order to

maintain order. Without it, much of the business conducted will involve theft, deceit, and upright

corruption. That is not to say that theft, deceit, and corruption is not already present in the

economy, but a lack of order would make these things more obvious within the business market.

Ultimately, an economy without order is not an economy, but a Darwinist environment without

trust both within and outside the companies conducting business.

The basis of this thesis helps provide the perspectives in the discourse of renewable

energy to best resolve the issue on whether the purchasing behavior of renewable energy can be

regulated, and if so, how that can be done. Chapter two will flesh out this theoretical discussion

on the free market and how one perspective believes it should be restructured to maintain public

safety both in a global and local environment. From a business-oriented view of the market, it is

prosperous to have a free market because it will prevent the government from incentivizing green

companies, and regulating the operations of nonrenewable companies. As a rebuttal, it will be

advantageous to evaluate how the free market in a political aspect does more harm than good.

The harm that the free market commits will be seen in an evaluation of a nonrenewable

company, Talisman Oil, and how its involvement in the foreign sector affects the global market.


In addition to introducing the discourse from two perspectives, chapter two will look at foreign

policies establishing guidelines to this growing green market. It is through these guidelines that

the discourse will be fully fleshed out in explaining if and how there is an unfair advantage to

being a renewable company in this newly established economy.

The discourse will continue in chapter three with a specific look into two companies and

comparing them through the lenses of the government and media. The two companies that will

be compared are Tenaska Energy and Peabody Energy. Tenaska will be used to provide an

example of a newly developed green company that the government incentivizes for its provisions

in social welfare. The government will use Tenaska as a model to push for more green

companies. In contrast, Peabody will be an example of a long standing company, much like

Talisman, that is dying out in the energy market because of these incentives. The difference

between Talisman and Peabody will be noted in discovering whether there is ethical misconduct

practices within Peabody. Lastly, the media will provide a voice for the public to address its

concerns in the discourse of renewable energy. Ultimately, this analysis provides answers as to

whether social welfare is as important, if not more so, than economic justice.

After looking at the theoretical discussion from multiple perspectives, chapter four will

provide solutions as to what can be done to solve the issue of whether there is a need for

purchase behavior regulations in renewable energy. Regulations discussed in previous chapters

will be used to compare the fair and unfair advantageous to each policy. This chapter will

continue to from a more legal perspective in predicting the outcome of the free market and how

it will affect society in the survival of the human species.


Chapter 2: Theoretical discussion

The issue of ethical buying behavior versus a laissez-faire system can be understood

through a theoretical discussion of business ethics from the perspectives of politics,

sustainability, and profit. All three sides are necessary in this discussion to make an unbiased

opinion on how this issue can be solved, and whether there is a side to choose. This discussion

has been the recent topic of debate because of instances such as the case of a Canadian company,

Talisman Oil, which based its operations in Sudan. The company attested to making a

contribution to social welfare when in actuality it contributed to social harm. A look into the

Canadian company through Idahosa’s (2002) Business Ethics and Development in Conflict

(Zones) provides insight as to why companies choose to free themselves of the burden of social

welfare and why the government insists that they don’t. As the largest oil distributor, it is

sensible to justify operations in an oil rich country such as Sudan when profitability is at stake.

But is it justifiable to put profits ahead of morality? Many companies say it is while the

government thinks otherwise.

The argument can be made that Talisman Oil was putting profits as a main priority.

Money gained by shareholders who are not in the Sudan environment is not justifiable when

increased violence is the direct result of oil production. Because shareholders do not witness the

day to day effects of oil production, they are left without worry or woe to the safety of the oil

workers and community. Since the rise of oil worldwide in the summer of 2000, shareholders

received enormous cash flow and earnings (Idahosa, 2002; p. 234). From what I learned on

Maslow’s Hierarchy of Needs in the observational behavior class I am taking this semester, my

observation is that shareholders and companies are categorized in the esteem level of needs while

the people of Sudan are in the safety level. Shareholders and companies are in the esteem level

because money in the business industry signifies success; with success comes confidence and the


rise of self-esteem. However, the environment in which businesses operate is to profit, causing

inhabitants of that environment to fear for their safety.

Justice in the Free Market

In a free market economy businesses can do as they please, which they have been for the

majority of the time capitalism was introduced in colonial America. In Kierulff (2009) and

Learned’s (2009) Limiting Laissez Faire Profits: The Financial Implications, Adam Smith, the

father of capitalism, foreshadowed a future where society would struggle to balance “competing

interest of social welfare and economic justice” (Kierulff, 2009; p. 426). Social welfare includes

multiple things such as, but not limited to, social security, retirement, and free health care. For

the purpose of this study, we shall focus on one aspect of social welfare that requires businesses

to operate while maintaining a safe and sustainable living environment in and around areas of

operations. This is crucial because of the accelerated decay of the earth caused by hazardous

chemicals and deforestation from major factories, power plants, and businesses associated with

them.

The government often holds businesses responsible because of deceitful ploys they use to

attract investors within the social marketing concept. Three principles make up this concept:

society, companies, and consumers. The idea that marketing decisions are made by considering

consumers’ satisfaction, societal responsibilities, and company profit goals is too good to be true.

In Ethical issues as a potential factor of brand’s (un)success, Melovic, Nesic, Njegovan, and

Jocovic (2014) conclude that “companies...often state claims for their brands that are obviously

misleading” (Melovic, 2014; p. 36). The case often holds true in business operations, where

companies focus mainly on two of the three sides to the social marketing concept: the company

and consumers. Justly, neglecting society is why the government feels responsible in protecting

the people through a regulated economy.


This study will open the discussion between the Tenaska Energy Corporation, a fairly

new energy company on the rise, and the Peabody Energy Corporation, the largest private-sector

coal company in the world, to see how the government's involvement, through the Department of

Energy, regulates and incentivizes the behavior of one company over another. Ultimately,

recommendations will be drawn as to how the government can interfere less in the energy

industry or how social welfare can be better incorporated into businesses.

The Political War

Laissez-faire capitalism was built on the principle that the government shall not intrude

on any means of business operations. Business and politics are meant to be separate under this

economy. However, we often find business and politics intertwined in society. For example,

lobbyists exist for the purpose of funding political campaigns to get bills passed that are

favorable to the business of that company. In the case of Talisman Oil, the company attempts to

distance itself from social responsibility by force of government regulations as so explained by

Idahosa (2002).

This (contestable) claim reflects the third tactic that Talisman employs, an appeal to

a moral division of labor between politics and business that rests upon a “realist”

approach to international relations. Talisman has stated that they do not get involved

in politics, that they are “a business and [do] not have the role of a sovereign

government” (TI, 1999; OGD, 1999; OGJ, 2000). What they are arguing, in effect,

is not only that it is not their role to deal with political conflict but, that they have a

right to do business as long as existing governments do not prohibit them. (Idahosa,

2002; p.235)

Idahosa (2002) makes an interesting analysis as to why in some cases companies are exonerated

of the responsibility of social welfare. As the Director of the Office of Management and Budget


in Jimmy Carter's 1977 administration, Thomas Bertram, said, “If it ain’t broke, don’t fix it.” In

the context of business, this means that if you don’t have to restrict companies from dealing with

political conflict, don’t. Talisman is not considered a sovereign government. Therefore, they are

not responsible for political wrongdoings by third party members caused as a result of their

actions.

Talisman Oil is a prime example for the discourse of business ethics in the private

industry because of its practice in bad business ethics. Business ethics, as explained on

wiseGEEK, consists of a range of corporate behaviors that violate the law, damage the

confidence of customers, or both. Such behaviors include dishonesty, negligence in

manufacturing, customer service failings, and financial scandals.

Talisman Oil is dishonest in their involvement with non-governmental organizations

(NGOs). By claiming that the company’s cooperation with NGOs improves living conditions of

local communities, Talisman Oil was seen as an ethical company. However, their image soon

changed when six NGOs affirmed that “there is no relationship between these NGOs and any of

the companies involved in the oil industry in Sudan” (Idahosa, 2002; p. 237). With a tarnished

image, shareholders stopped investing in the company, the Federal Energy Regulations

Commission (FERC) fined them for fraud, and the company entered a quick decline in its life

cycle. Companies often practice bad ethics because some dishonest practices are not punishable

by law, which attracts its continuation and company sales increase as a result.

Dishonesty and negligence in manufacturing are sometimes indistinguishable because a

company can market and produce products that put customers in danger and not disclose that

information. In this case, omission is equivalent to lying because the same outcome occurs from

either action. An example of customer service failings can be found in the failure to replace or


refund damaged products. Energy companies are not caught doing this quite often because their

business is based on customer satisfaction of how effective their products are or how low costs

are without losing profit. Low customer satisfaction results in low sales. In cases where

companies make excessive amounts of sales, it is not uncommon to find scandals of tax evasion

or falsification of financial statements.

Economic and Environmental Rights

Canada continues to be a leading provider of energy in the world. To better understand

the politics of the country, we need to look at its legislation. It is in legislation that solutions can

be found as well as improvement. Ontario’s 2009 Green Energy and Green Economy Act

(GEGEA) was meant as a means to “promote the large-scale deployment of low-impact

renewable energy technologies such as wind, solar, photovoltaic (PV), small scale hydro-

electricity and biogas-based generation” (Winfield, 2014; p. 423). With GEGEA enacted, there is

a means of regulating the transition from nonrenewable energy to energy from renewable

resources. Despite this great benefit, it is argued that the act won’t create jobs or improve

economic growth and only improve production costs while diminishing competitiveness.

In looking into GEGEA, it is necessary to compare both public policy and public

discourse analysis approaches in determining the need for a push towards renewable energy.

There are three perspectives on the economic effects of renewable energy as Winfield (2014)

discusses in Energy, economic and environmental discourses and their policy impact: The case

of Ontario’s Green Energy and Green Economy Act: market fundamentalists, economic

rationalists, and ecological modernists. Among these three perspectives, the most judgmental

views come from market fundamentalists because of their opposition of all governmental

imposition in the market. This is especially true for renewable energy. In their view, renewable

energy is “objectionable.” In comparison, economic rationalists are interested in the end result:


an efficiently functioning market. Despite their personal views, ideas are subject to change based

upon market mechanisms used to reach such ends. They disapprove of renewable energy because

it is seen as an ineffective way to get environmental and economic policies changed.

Sustainability is a secondary concern amongst economic rationalists. Ecological

modernists are the global crusaders of the three groups. They believe that the economy must be

restructured to meet more environmentally friendly and sustainable goals which develop “green”

skills. These crusaders strive for legislation that push towards a sustainable earth, legislation like

GEGEA.

The GEGEA was adopted in May 2009. The centerpiece of the initiative was a Feed-

In Tariff (FIT) program established under the legislation, which provided stable

prices under long-term contracts for energy generated from renewable sources –

specifically solar, wind, biomass, biogas and waterpower. The Ontario Power

Authority (OPA), the province's electricity system planning agency, was given

responsibility for implementing the FIT program, and entering into contracts with

eligible applicants. The program was divided into two categories, FIT and MicroFIT,

with the FIT program intended for projects over 10 kW and the MicroFIT program

for projects less than 10 kW. (Winfield, 2014; p. 425)

As a result of the GEGEA, the renewable energy industry created an estimated 2,000 direct

manufacturing jobs. With positive outcomes in renewable energy, the government invested $47.1

billion into green energy. An investment of this magnitude is enough incentive for any company

to go green. With an increase in companies going green, non-green companies won’t be able to

compete in an increasingly renewable resource demanding market. In looking at the way the


economy should be operated, a market fundamentalist believes that having renewable resources

defeats the purpose of a functioning economy.

Companies that serve the “green” market are inefficient because there are more risks than

rewards to their operations. One of these risks is that renewable companies generate little to no

financial return because of the costs of manufacturing technology that can sustain the amount of

energy these companies attempt to extract, mining sources that are suitable in providing such

energy, and maintaining resources in forests for biomass needs. The second risk is that renewable

business affects stakeholders as well as shareholders. Due to the excessive cost of maintenance,

companies will need to compensate for their losses by increasing prices to their customers.

Ultimately, this will increase electricity prices by 13%. These multiple outcomes can be

explained in a table derived from Energy, economic and environmental discourses and their

policy impact: The case of Ontario’s Green Energy and Green Economy Act. Energy Policy.


(Winfield, 2014; p.427)


Chapter 3: Ethics of regulating energy - consumption behaviors in three different cases

This chapter will further explore the complex ethical issues in the arguments that

different parties make in the debate about renewable energy regulations by implementing the

ethical framework developed in the previous chapters to three different cases. The discussion in

chapter two evaluated public opinion about government intervention in favor of renewable

energy in the global economy and how that support affects certain businesses in the private

sector. Opposing arguments showed that the same incentives pushing for a renewable industry is

unfair and unjust to long-standing companies such as Talisman Oil that must, from a purely

business perspective, be given the same rights. This chapter illustrates these ethical tensions by

discussing three specific cases where government regulation affects different kinds of businesses.

In doing so, the chapter also sheds light on how the media plays a role in shaping public

perception on the subject. The first case is of the Department of Energy and the argument from

the government’s perspective, focusing on the idea of influencing the future of the energy

economy. The second case is of Peabody Energy, showing the perspectives of traditional

nonrenewable companies. And the last case is of Tenaska Energy, representing the perspectives

of many of the newly developed energy companies. The discussion among these three

organizations will put this debate in the context of the big picture: what can we do? Showing the

advantages and disadvantages of switching to renewable resources by considering the issue of

justice and fairness for different parties involved helps society make the most ethical as well as

effective decisions.

Case One - The Government

The logic behind government incentives is based on the idea of social justice and moving

society forward. In doing so, the government shows preferential treatment towards certain

companies in order to increase public opinion, control the economy, and shift towards a carbon


free world. But just because the government thinks that this is a good direction to go in does not

mean that there is no harm in getting there. The harm is present in the economic state of

unfavored companies.

With the risk of depleting resources, it is crucial for there to be incentives that establish

means of preserving what little resources are available. However, businesses need free autonomy

to function. Without it, the public will fear the government for its overpowered control on all

business operations. In trying to avoid such opinion from the public, the government steers

organizations into doing the right thing by establishing incentives. In Going “Green”: State Tax

Incentives and Alternative Energy-An Update, the government does so through state tax

incentives intended to increase the use of alternative means of energy. Among these incentives

corporate, personal, property, and sales tax incentives are used to influence business operations.

Corporations that “purchase or install eligible renewable energy or energy-efficient equipment”

qualify for tax deductions, tax credits, and tax exemptions. Personal tax incentives simply reduce

the cost of buying and installing renewable energy and energy efficient systems/equipment.

Likewise, property tax incentives do not apply to people who purchased these systems but favor

real estate instead. All of these purchases are applicable to sales tax exemptions as well

(Garrison, 2013; p.28). Reason for these incentives, aside from improving life on earth, is largely

due to increased prices in gasoline, diesel fuel, and heating oil caused by the recession of 2000.

Ultimately, states need to revise budgets in an effort to increase tax revenue. By increasing tax

revenue, companies are taxed heavily for not abiding by new business regulations. Therefore,

this unjustly affects energy companies more than taxpayers by diminishing their chance of

survival.


The government’s vision of a carbon free economy is commendable, but it is also

clouded with a lack of understanding of the tradeoffs towards reaching that vision. With the

government incentivizing renewable energy, it draws questions as to why they would waste

money on green companies when the gap in size of new and old companies continues to

increase. In Utilising renewable resources economically: new challenges and chances for

process development, these tradeoffs are explained.

● Plant operating costs as well as specific investment costs tend to

decrease with plant size (creating the ‘‘economy of scale’’). In terms of

transportation, however, larger plants mean larger raw material trading

area and larger specific raw material transport costs. So, there is a tradeoff

between the lower costs for investment and operation in the plant against

the increase in specific transportation costs for raw materials.

● Another trade-off involves the decision between storage and

campaign mode of operation. As raw materials from agricultures are

produced discontinuously this leads to campaign modes of operation in

which the whole harvest is processed over a relatively short period of time

and the plant is not operated for the remaining time of the year. The trade-

off is now between costs for storage of raw material vs. the greater

investment costs added to the costs for downtime of the plant in the case

of campaign mode operation.

- (Narodoslawsky, 2008; p.168)

Both tradeoffs restate the significance of a market driven economy mentioned by the economic

rationalist of chapter two. The first tradeoff results in an unequal comparison of larger and


smaller companies; larger companies being the new market of green energy and smaller

companies being traditional energy companies. However, they cannot be treated similarly

because it is unfair for smaller companies to compete in an economy where their supply can not

meet society’s demand. Similar unfairness is brought in the second tradeoff when size of storage

is not taken into consideration. The government’s vision of long term advantages hurts other

companies in their mission of business success. Although the argument is made that green

energy advocates consider the long-term effects, it is proven that they ignore factors that affect

the outcome of unfavored companies.

The underlying argument that the government makes for looking beyond cost-benefit

analysis in the short term is that shifting to renewable energy does tremendous justice to

businesses, society, and other stakeholders in the long run. The government sees itself as

responsible for intervening on behalf of society’s long term interest. Based on the logic behind

environmental justice, the government actually sees the short-term “injury” done to some

businesses as necessary and justified for more than one reason. For instance, fossil fuel industries

benefited from similar protection, promotion, and investment by the government while they were

evolving for decades. Many of them are still benefiting from government subsidies. But at one

point, the government as a guardian of society must make tough choices, even though that may

not make everyone happy. The appearance of injustice from some companies’ perspective is

insignificant from a relative perspective of society as a whole in spite of the smaller ethical

dilemma, resulting in the government shifting towards renewable energy as a social policy.

The policy to consider society as a whole presents a need for companies to find

technology that helps their business and society. Such resources are present in the use of biomass

technology to naturally synthesis energy from the earth. Forestry, the science or practice of


planting, managing, and caring for a forest, is one way in which renewable companies provide

natural synthesis. In terms of longevity, forestry might be the most resourceful form of

renewable energy because of energy provisions such as storability, and promising capability of

continuous seasons and climate independent provisions (Narodoslawsky, 2008; p. 167). The

benefits that biomass technology offers are not limited to forestry but stretch out to many energy

technologies that utilize low grade raw materials. However, direct transition into renewable

resources will cause excessive demand that the energy industry might not be able to meet. Global

economists are aware of this dangerous outcome, which perhaps explains the delay over the last

decades to move into a carbon free environment. This creates a slippery slope where despite the

advantages of being socially responsible, the dangers of such an outcome make it nearly

unattainable. With an unattainable goal, it makes the government’s need to regulate the energy

market unreasonable.

Case two - Peabody Energy

So, what can we do? Peabody Energy is able to tackle government intrusion in its affairs

in a manner that has kept their business afloat in this unjust economy. Although oil and natural

gas replaced coal as a leading provider of energy in the early 20th century, Peabody Energy’s use

of large coal fields evened the unbalanced scale in energy competition. Evaluating Peabody

Energy and its business practices determines whether the company practices unethical business

to keep the competitive scale balanced. If Peabody Energy practices unethical business, solutions

to fix this corrupted system can be determined by evaluating what Peabody does wrong. If

Peabody Energy practices good business ethics, this will determine that it is possible to regulate

the purchase behavior of energy without sacrificing economic justice.

With a mission that is centered on improving quality of life, it is surprising to find that

Peabody runs a nonrenewable company that believes in the green initiative without sacrificing


business goals. Peabody Energy’s mission statement is “To create a superior value for

shareholders as the leading global supplier of coal, which enables economic prosperity and a

better quality of life” (Peabody, 2014; p. 2). Their mission of economic prosperity is

accomplished by selling a very lucrative product. Not only does the company prosper

economically, but the government also profits off of taxes from the company’s operations.

Government prosperity is evident in Peabody’s lowered operational costs. Ultimately, Peabody

Energy increased U.S. productivity by seven percent, Australian productivity by 20%, and

created more than $22 billion in economic benefits globally.

Not only does Peabody Energy succeed as a business, but the advantages it provides

continue through its practice of social welfare. The main reason for pushing a green initiative is

to lower carbon emission. Peabody Energy contributes to this initiative by reducing its

greenhouse gas emissions in global operations for five consecutive years, which is not surprising

since 2010 marked the largest push in the green initiative. Remarkably, 500,000 tons of CO2

emissions were reduced in Australia in the past year because of Peabody’s mission for better

quality of life. In continuing their mission for better quality of life, Peabody Energy restored over

4,000 acres of mined land into natural land that can be used for agriculture, wildlife preservation,

and tree planting (Peabody, 2014; p. 2). This accomplishment shows how the company goes

above and beyond to replenish the grounds in which they work, while other companies would

leave land in bad condition as a result of their operations.

Case three - Tenaska Energy

Within the discourse between the public sector and the private sector on the issue of the

green initiative, Tenaska Energy, formed in 1987, is an example of a favored private sector firm

because of incentives gained from the government. Incentives range from tax exemptions,

funding, and publicity. Tenaska Energy, like many green energy companies, gains these


incentives because of their unique product. Tenaska Energy focuses primarily on renewable

resources such as non-utility power plants, natural gas, electric power, biofuels, agricultural

commodities, and liquefied natural gas. It is in focusing on these green energy resources that

makes Tenaska Energy as appealing in an economy that demands such a product.

As a leading energy provider in North America, what makes Tenaska Energy so

successful? According to the company’s mission statement, in order “to meet the growing

demand for efficient energy production amid evolving market conditions, a company must be

willing to transform itself, creating value for customers, partners and investors” (Tenaska, 2013;

p. 2). In this economy, flexibility is key for survival of a business. That includes flexibility in

restructuring a business’s product, employees, or operation practices to appeal to the needs of the

community and investors. This is often difficult because customer and investor values usually

conflict with one another. Tenaska is flexible because of its willingness to “transform” itself and

create new opportunities. Tenaska’s transformative nature has shown continuous results in its

success as a company. Throughout the company’s history, one can see markers that distinguish it

from other companies. Such markers include its 97.4% peak-hour availability for customers,

earning the company high marks for reliability; the company qualifying for 28 National Safety

Council Awards and earning two Best Practices Awards in 2013; and lowering operating costs

by 30% after taking operations over on all its properties (Tenaska, 2013; p. 2).

Media and the public

Sadly enough, public education on the energy crisis comes mainly from news sources.

This is why it is important to distinguish which sources are untrustworthy and why. Analyzing

the media portrayal of this discourse provides insight as to what the public actually thinks of the

green initiative from a non-governmental perspective. In 2003, Time magazine declared that the

United States was running out of energy. Ten years later, it declared the U.S. an “energy


superpower” (Tenaska, 2013; p. 24). Among these superpowers is the self-proclaimed “global

leader in clean energy solutions,” Peabody Energy. This constant change in the status of energy

in the United States leaves the public confused as to whether there is a crisis.

Revkin (2012) presents the problem with coal companies, one form of nonrenewable

companies, in the clean energy business in his New York Times article A Coal Sales Ticker next

to a ‘Clean Energy’ Claim. After sending a link and video on Peabody Energy’s homepage to

Middlebury and Yale authors who wrote Environmental Accounting for Pollution in the United

States Economy, the conclusion was made that “coal-fired power plants have air pollution

damages larger than their value added.” A spokesman from the Natural Resources Defense

Council went on to add:

Peabody consistently ranks as one of the worst polluters on the planet. If it

put only a fraction of the time and money it spends on fighting

environmental safeguards into actually pursuing clean energy solutions,

we’d all be better off

- Keefe (2012)

Keefe’s expertise in the energy industry along with Revkin’s (2012) journalistic style, sheds light

to the falsehood within nonrenewable firms. Bad business ethics like this is one of the reasons as

to the lack in public trust for these type of firms.

The media does a good job in exposing bad business practices in the energy industry, but

there are cases when even the media can be corrupted by these same business. Such is the case in

Foster’s (2001) editorial Environmental Spinmeisters. It was reported that before the G8 summit

of 2001, the U.S. and Canada tried to repel a G8 task force from enforcing renewable energy in

the developing world. The G8 summit is an annual meeting between leaders from eight of the


most powerful countries in the world, where they try to tackle global problems by discussing big

issues and planning what action to take.

However, media content is often manipulated by those in power because of the amount of

influence in the government. Influence comes with money and the amount of money generated in

nonrenewable energy is enough to corrupt anyone’s morality, even the president of the United

States. George W. Bush was inclined to hang onto G8 systems of subsidies for conventional

fuels to support his Texas allies. The major reason for the US and Canada repelling potential for

renewable energy was to even the playing field.

Overall, we found with few exceptions, federal government support today

for energy investments, including support through the tax system, does

not particularly favor the non-renewable sector over the renewable sector

(Foster, 2001).

The manipulation of media content and news represents the lack of speech that the public

has in the discourse of renewable energy. Ultimately, if the government does not

manipulate the news with threats of prison sentences or political influence, big businesses

will often influence the media with bribes or ownership of news companies. This is to say

that there is no real voice for the people when it comes to voicing concerns. Therefore, the

discourse on the purchase behavior of renewable resources will forever remain between the

government and the private business sector.


Chapter 4: Solving the problem

In the previous chapters we introduced the discourse of renewable energy and whether

societal purchasing behavior is pushing for more green companies. We also theorized the

discussion by using companies in the energy market to give perspectives from two sides of this

argument. As we saw, the public sector, being solely the government, is in favor of renewable

energy and social welfare while pushing its personal vision onto the private sector to unbalance

the competitive economy. The other side, being private sector businesses focusing on

nonrenewable energy, is in favor of a free market because government policies on energy

provisions restrict their business and cause extinction of their businesses. These businesses

overcome this unjust market by trying to balance this competitive market. However, can there be

a win-win situation?

In this chapter, recommendations will be made as to how government regulations can be

applied in the energy market without significantly restricting the operations of nonrenewable

businesses while still providing social welfare, or if this is even possible. In finding these

solutions, an unforeseen loser might be necessary in order to benefit the mass instead of the few

by assessing good and bad options.

Some of the government’s options that are often seen as helpful and necessary resources

are not resourceful because stronger options are available and the logical solutions often times

have blind spots. Much of the resilience to move towards a fully renewable environment is

because of the sustainability penalty. The sustainability penalty is described in Consumer

Behavior Towards Alternative Energy Products: A Study, as the skepticism of whether products

that are sustainable can also be functionally strong. This skepticism is centered on an uneducated

premise of what the advantages and disadvantages of renewable energy are, making it difficult to

understand energy-related consumer behavior. From the analysis in this thesis, it was determined


that energy-efficient products, despite lowering carbon emission, provide less energy and

compromise the functions of vehicles that run these alternative fuels. Therefore, it is crucial to

find green substitutes that perform identically as standard solutions (Paliwal, 2012; p. 238).

From Global to Local

The government should be more cautious and thoughtful about its approaches. These

approaches are developed from the perspective of an ideological debate that brings up many

issues when the debate should be pragmatic in order to form realistic solutions. After looking at

Canadian legislation and its effect on the green initiative, questions arise as to why this is of

significance. How does it affect us in the United States? Which renewable resource matters the

most?

In understanding questions like this, the discussion is focused on a personal incentive for

favoring or disfavoring the green initiative. Legislation set in the United States, the leading

energy provider of the world, affects everyone in the world, and affects how businesses in the

United States practice good business ethics. To answer the second question, power can be

generated from multiple resources, such is the case for hydrothermal, solar, and wind energy.

Hydrothermal energy requires the construction of dams in large bodies of water. However, the

construction of dams directly affects biological, chemical and physical properties of rivers and

riparian (or "streamside") environments (Environmental Impacts of Dams). In comparison, solar

panels can be costly to the average household in both installation and maintenance. One benefit

of having solar panels is making enough energy to resell to electric companies. The only issue

with that is solar contracts that make it increasingly difficult to sell your home after installing

solar panels. Future homeowners would need to qualify on credit to take over the solar lease

payments of the previous homeowner for the next 15 to 17 years (Harney, 2015).


With two of the three sources of renewable energy having more disadvantages than

advantages, we look at wind energy and evaluate the advantages in contrast to its disadvantages.

Based on Feldpausch-Parker’s analysis of the state context for renewable energy, the three states

with the most wind gusts are Nebraska, North Dakota, and South Dakota. Yet, they fail to

produce enough energy because of insufficient resources to transfer that energy into power. The

amount of wind power needed to reach the goal of lowering carbon emissions is so large that the

energy generated from wind mills barely make a dent. With this in mind, it is not surprising to

find that media coverage of wind energy is largely negative; much of the content being that it

causes more harm than good (Feldpausch-Parker, 2015; p.10).

Through the process of elimination wind energy is the least effective renewable resource.

It neither offers economic benefits, nor environmental benefits. Dams cause more environmental

harm than good despite its purpose of decreasing carbon emissions. Lastly, solar energy seems to

be the most beneficial economically and environmentally. The major disadvantage of solar

energy is decreased return in home selling, but considering the massive return on electricity, this

is well worth the cost.

Economic Justice

In order to find solutions, we need to move past the political debate and vilification of

traditional energy regimes and develop solutions based on a strong sense of economic justice for

all. This ultimately means there is a need for all players in the market to be treated fairly in an

economic sense. Much of the discourse from the previous chapters suggest that the private

industry wants to exclude the government from business operations and that the government

feels inclined to interfere in the private sector. Cause for this mentality is attributed to a decrease

in safety nets for businesses in the energy market. With the issue of renewable energy situated in

the context where companies producing nonrenewable resources are evil, those companies are


seen in a negative light. While there might be truth in that kind of discourse, a counter argument

can be made by the same businesses that the government is unfairly dumping resources and

benefits to small businesses, thus resulting in an uncompetitive market because of an undue

advantage.

Why would businesses want a free market? The implication behind a free market is that

there are no regulations on what they can or cannot do to other businesses, the economy,

environment, or the people. Basically, there are no responsibilities because companies are not

liable and therefore do not need to pay taxes. Naturally, investors choose companies with the

least amount of risk. For this reason a free market would result in maximum profit, thus

attracting shareholders.

With limitations on companies that provide commonly used goods or services,

profitability is restricted and the same companies are put at a disadvantage in a competitive

industry. These limitations are justified because of few or expensive substitutes. Having a debt

financed economy with company tax deductibles would solve the issue facing both the

government and the energy market. Yet, an argument can be made that businesses do not require

special treatment if they were properly incentivized for corporate social responsibility (Kierulff,

2009; p. 434).

We looked at how both the political sector and the business sector attempt to cut each

other out of the energy market, but there is a third alternative in which the private sector can help

the government maintain a profitable economy and sustainable environment. Polzin (2015)

discusses this in Public policy influence on renewable energy investments—A panel data study

across OECD countries, by making the case that renewable energy is not most profitable to

investors because of the amount of time it takes to get paid back from the investment made. If


this is not attractive to investors, this will surely not attract renewable companies to continue

their operations. Companies like Tenaska would die out because of lack of funding. With little

investors in the renewable sector, nonrenewable companies are at an advantage because they are

more attractive to investors.

However, companies like Tenaska have not died out because of their survival nature that

allows them to transform themselves. By leveraging its diverse resources, Tenaska remains an

innovative leader by creating new opportunities. To solve the issue on purchase behavior

regulations in renewable energy, these opportunities should transform their employees to include

laid off workers from closed nonrenewable companies. These workers would be an asset because

of the experience they can provide in efficiently running a power plant, mining, and constructing

new energy containment units. Ultimately, restructuring a company this way would increase

productivity in private sector firms through increased labor and keep the public happy because of

decreased unemployment.

In a competitive economy, it is necessary to even the playing field. Government

incentives provide renewable companies with the resources to save on expenses despite the lack

of investors. However, nonrenewable companies have no incentives but have an increased

amount of investors. It would be wise for the government to provide certain incentives towards

nonrenewable companies in order for executives to negotiate terms with renewable companies.

The terms of the negotiations could include clauses allowing renewable companies to

manufacture their plants using funding from nonrenewable companies, as long as the

government incentivizes renewable companies for their involvement in the green initiative. With

provisions such as these, the private sector benefits by having a truly fair economy and the public

sector benefits by advancing the use of renewable energy and lowering carbon emissions.



Chapter 5: Conclusion

From looking into the public discourse on the ethics of purchase behavior regulation in

renewable energy and theorizing it with key players in the energy sector, along with opinions

from the government and media, it has been determined that the collaboration between all sectors

and perspectives will provide a forum of progression. Transition into renewable resources will

cause excessive demand that the industry might not be able to meet. Global economists are aware

of this dangerous outcome, which perhaps explains the delay over the last decades to move into a

carbon free environment.

In addition to the delay in transition towards a more carbon free future, the move for

green alternative instruments are more of a trend than a necessity. Consumer behavior has shown

that much of the purchases for solar panels, smart cars, and energy efficiency were altruistic

decisions. An individual with these items is perceived to have a higher status because green

products often cost more. However, it was established that the same products may be “of lower

quality than their conventional counterparts. But when weighing the cost and benefits, the benefit

of improving the environment outweigh the price of green goods.

Financial support from big businesses will help governments sustain the global economy

in providing a more renewable market. The ultimate goal of the human species is to create a

future where there is as little to no carbon emission. However, this can be done without hindering

major business operations in the private sector. It was shown in this thesis that there is a win-win

situation where each sector can come out on top. Having nonrenewable companies practice good

ethics by fully disclosing all operations and information on carbon emissions will allow the

government to best allocate funding and restructuring of these firms without harming

stakeholders.


It is possible for all members in this discourse to work together in the issue of renewable

energy reform. As previously stated, green companies have low returns on investments, non-

green companies are painted in a negative light by the media, and the government is known to

manipulate the media and influence the purchasing behavior of the public. Hiring employees

from non-green companies will provide labor necessary to produce enough energy to increase

return on investment. Incentives to get non-green companies to disclose all information can help

these companies strive in a competitive industry. Unfortunately, the media will stay biased and

influenced in one way or another. However, it is crucial that the public educates itself in issues

from all perspectives and not just one.


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Jean-Doris Muhuza - Ethics of Energy