Wintery Knight

…integrating Christian faith and knowledge in the public square

How many jobs have wind and solar power produced in Spain and Denmark?

The problem with the Obama administration is that they keep making policy based on their intentions, instead of known results. They’ve allocated nearly 39 billion for green energy subsidies – that’s as much money as the entire annual Minnesota state budget. That’s a lot of money being taken away from job creators in the private sector.

So what can we learn about “green energy” from other countries? Is it good value for the money?

Well, we know that in Spain, the green jobs programs failed.

Excerpt:

Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain’s experience with windmills and solar farms is any guide.

For every new position that depends on energy price supports, at least 2.2 jobs in other industries will disappear, according to a study from King Juan Carlos University in Madrid.

U.S. President Barack Obama’s 2010 budget proposal contains about $20 billion in tax incentives for clean-energy programs. In Spain, where wind turbines provided 11 percent of power demand last year, generators earn rates as much as 11 times more for renewable energy compared with burning fossil fuels.

The premiums paid for solar, biomass, wave and wind power – – which are charged to consumers in their bills — translated into a $774,000 cost for each Spanish “green job” created since 2000, said Gabriel Calzada, an economics professor at the university and author of the report.

“The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices,” he said in an interview.

The Heritage Foundation cites a study from Denmark, which shows that wind power has also failed.

Excerpt:

But according to a new study from the Danish Centre for Political Studies (CEPOS), commissioned by the Institute for Energy Research, the road to increased wind power is less traveled for a reason. The study refutes the claim that Denmark generates 20 percent of its power from wind stating that its high intermittency not only leads to new challenges to balance the supply and demand of electricity, but also provides less electricity consumption than assumed. The new study says, “wind power has recently (2006) met as little as 5% of Denmark’s annual electricity consumption with an average over the last five years of 9.7%.” Furthermore, the wind energy Denmark exports to its northern neighbors, Sweden and Norway, does little to reduce carbon dioxide emissions because the energy it replaces is carbon neutral.

The study goes on to say that the only reason wind power exists in Denmark is “through substantial subsidies supporting the wind turbine owners. Exactly how the subsidies have been shared between land, wind turbine owners, labor, capital and its shareholders is opaque, but it is fair to assess that no Danish wind industry to speak of would exist if it had to compete on market terms.”

But there’s a cost involved. When government spends more money, it necessarily diverts labor, capital and materials from the private sector. Just like promises are made in the United States about green jobs creation, the heavily subsidized Danish program created 28,400 jobs. But “this does not, however, constitute the net employment effect of the wind mill subsidy. In the long run, creating additional employment in one sector through subsidies will detract labor from other sectors, resulting in no increase in net employment but only in a shift from the non-subsidized sectors to the subsidized sector.”

And because these resources are being diverted away from more productive uses (in terms of value added, the energy technology underperforms compared to industrial average), “Danish GDP is approximately $270 million lower than it would have been if the wind sector work force was employed elsewhere.”

And the libertarian Cato Institute doesn’t think that any renewal energy program will work.

Excerpt:

A multi-billion-dollar government crusade to promote renewable energy for electricity generation, now in its third decade, has resulted in major economic costs and unintended environmental consequences. Even improved new generation renewable capacity is, on average, twice as expensive as new capacity from the most economical fossil-fuel alternative and triple the cost of surplus electricity. Solar power for bulk generation is substantially more uneconomic than the average; biomass, hydroelectric power, and geothermal projects are less uneconomic. Wind power is the closest to the double-triple rule.

The uncompetitiveness of renewable generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on quota requirements, as well as continued or expanded subsidies. Yet every major renewable energy source has drawn criticism from leading environmental groups: hydro for river habitat destruction, wind for avian mortality, solar for desert overdevelopment, biomass for air emissions, and geothermal for depletion and toxic discharges.

Current state and federal efforts to restructure the electricity industry are being politicized to foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored renewables, particularly wind and solar. Yet new government subsidies for favored renewable technologies are likely to create few environmental benefits; increase electricity-generation overcapacity in most regions of the United States; raise electricity rates; and create new “environmental pressures,” given the extra land and materials (compared with those needed for traditional technologies) it would take to significantly increase the capacity of wind and solar generation.

A recession is not the time to be making policies based on what sounds nice. We need to do what works in a recession.

An all-of-the-above, drill-here-drill-now policy would increase supply at a time when demand for oil is growing in India and China. Increasing domestic supply would create jobs and lower energy prices – an excellent thing to do in a recession. But Obama is busy putting in drilling moratoriums and subsidizing green energy, instead. We elected someone who thought that “climate change” was a justification for raising electricity rates would necessarily skyrocket. He is fine with electricity prices skyrocketing. And that’s what we’ve gotten from him.

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7 Responses

  1. jerry says:

    I think you touched on at least one point that I question how deeply you understand and that is, the rapidly growing demand for oil in india and china. They’re also siphoning off a good deal of natural gas productions too. Natural gas is a major source of power production in the U.S. Coal is probably our largest and we’re getting to the point were we have to start removing entire mountains in W. Virginia to get at new veins – not a good sign – we’re having to spend more to get the same energy we got fairly easily 25 year ago. The same goes for oil – we have to drill off-shore for deep, hard to get oil reserves – again, we’re spending more to get the same energy we got easily 25 years ago. Those countries that do have large reserves (Canada aside) are generally not too warm to us and they lack transparency in their total reserves while 33 of the 48 oil producing nations have already passed peak oil. Nuclear is a great option if we continue to push research which requires large amounts of public sector spending; add to that, uranium has problems – http://en.wikipedia.org/wiki/List_of_countries_by_uranium_reserves. Luckily one of the countries with the highest known reserves is friendly to us, but there are only certain isotopes we can use and uranium itself is starting to suffer from the problem of cost in terms of mining and we still haven’t figured out what to do with the waste. I did just read a new article about possibly moving to thorium…

    Anyways, what I’m trying to get at is that our standard energy sources are not going to last forever – if we’re lucky and we pay attention to history we have fewer years than we would probably like for our standard energy source – oil (and we use it for more than just energy, it’s powered the green revolution and since our poor land management has resulted in large loses of our most fertile topsoil, we really rely on dumping petroleum products on our crop fields to get them to grow in the yeilds we expect).

    Now that being said, I agree that wind and solar have issues, but the energy crisis of America’s west coast in the late 90’s and early 2000’s showed that this is not an area that works with private investment – If you don’t want a third world power grid, you need public investement in power research

  2. Mariangela says:

    @ Jerry You have to leave innovation to the private sector, they do it better, more efficiently and stimulate the economy instead of draining it. My dad’s working on a wind turbine right now. They can be made available inexpensively as long as the government intervention is kept to a minimum. Obviously when people are in a time of recession it matters very little who’s creating the innovation. Having an economic recovery is first and foremost, later it can be discussed how much government money can be poured into what area. WK is so right. Drilling would sure be a bigger stimulus than all of these crazy democrat ideas on green energy investment.

    • Jerry says:

      I’m not saying we remove the innovation from the private sector but it has to be supplemented. No private company in the world will undertake a venture whose short term gains are nil and long term gains are unknown – it’s just not something suited for the private sector. The above is what leads in to what I said up above – our cost-benefit ratio is significantly decreasing within our current energy sectors.

      I’m definitely not against more drilling – I understand our global economy depends on it almost 100%, but when you have start drilling hundreds of miles offshore in water that is one mile deep or more just to get what you got 25 years ago by ramming a pipe in the ground in some desert (I simplify a bit), the dollar spent per BTU returned is significantly reduced…how far down this ratio scale do you go before you realize you’ve traveled to far and invested too much in a diminishing returns scheme that will devastate an economy? Offshore drilling aside, where else do we drill? ANWR is not that rich a deposit. The oil sands of canada are promising but they require huge amounts of natural gas to extract the oil from the sand, so it’s neither cheap nor easy and you end up fighting (not literally) for access to natural gas that is widely used to heat homes and power power plants while having huge supplies diverted to china and india.

      So overall I disagree – private ventures will not undertake such risky ventures when the payouts are questionable at best until the base technology is established.

  3. Mike Singer says:

    Here is a pretty interesting article on how a 13 year kid came up with a way to increase the efficiency of solar panels.

    Maybe they should consider hiring him as a consultant:)

    http://gizmodo.com/5832557/genius-13+year+old-has-a-solar-power-breakthrough

  4. Mariangela says:

    @ Jerry
    Oh my goodness Jerry! What are you talking about?!!

    “No private company in the world will undertake a venture whose short term gains are nil and long term gains are unknown – it’s just not something suited for the private sector.”

    As someone who has been in business since 15 years of age and who was raised by an inventor I can tell you unequivocally that this is exactly suited for the private sector. Inventions are all about testing and developing that which has not yet been tried and proven. Risk is a constant in business and the private sector. It is rather government that has no business taking risks, because they are doing so with other people’s money. The Wintery Knight wrote at least 2 blogs in the last week about Solyndra (Tuesday, to be exact) and the bankruptcy that ensued with government taking risks with tax payers money. This is an unacceptable use of taxpayer funds. Government hasn’t the means to properly calculate the risks involved and take the correct decisions, because government doesn’t function based on what is right and wrong, but rather based on what is popular (as much as Obama wants to run it as though he’s a dictator). Even if the risk of energy policies and the risk of cap and trade is argued, decisions are left to people who are not experts in the field, in either the field of science, or economics.

    Business people rather are taking calculated risks (that they personally calculate), and have much higher risk tolerance and specifically bi-pass short term gains for long term ones. Most businesses are in debt for their first 5 years at least, and many of them don’t even make it past that time, but that is the nature of business. A person who is risk averse will not obviously build a windmill or develop hydrogen fuel cell technology and will not start a business but rather take a more secure job in the private sector, but that doesn’t mean that the private sector is not still willing and able to take on this project without having to depend on government subsidies.

    What is it that allows companies to produce, well businesses 101 says supply and demand. As a business person who owns a technology and energy business, I can say that while energy was regulated the energy market was closed to the private sector, but as soon as energy became deregulated the private sector was able to capitalize on it. The green cars and green solutions that the government works on cost billions of dollars and don’t suffer from competition and thus the end price to the consumer is quite high. A windmill project put on by the government would cost billions of dollars and at the end of the day would not produce something that could pay for itself and thus would have a huge price tag which would be out of reach for the public. I say public instead of general consumer, because the cost would be astronomical and not even the Warren Buffets would purchase them, they will be then used by the public sector alone and then result in a complete loss of taxpayer funds and have virtually no affect in actually aiding the environment. A ‘windmill’ instead like the one my father’s creating, that can withstand hurricane force 4 winds and being struck multiple times by lightning, and isn’t a risk to birds, will cost around $20,000 and can be put close to a house. This means that right off the bat the private sector can bring the wind energy solution to the consumer at a reasonable price without any subsidies.

    • jerry says:

      I still stand by what I said – new, cutting edge technologies in this sector will not come from the private sector due to the lack of payoff unless there is government subsidies. Fusion, should it ever prove viable will have to government, the same with fission (current nuclear tech). All of the advancements in nuclear are not coming from the private sector – it’s just too much cost for too little reward.

      I think you brought up a great point while overlooking another. A large number of businesses fail – imagine if governments operated like the majority of businesses. So to claim that governments don’t know how to handle risk is to ignore the world around you. Miliary is all about managing risk. The fed does the same thing too. In the example of Solyendra – I think there was some chicago style business going on there and it will probably ending being Obama’s Haliburton. I read on one of the news sites that there were memos saying it was too risky – his administration just ignored the risks – the government was more than capable of spotting the risks and notifying the leaders (failure of leadership here trying to get the green jobs initiative started while ignoring the risks and the backlash that would result)

      As for business people taking calculated risks – it’s why so many fail – they don’t know how to properly calculate risk – whether that’s a good or bad thing is for another discussion (I’m mixed – I would hope that even in failure, there is some work product that another company can use but I have nothing to back that up).

      As for developing windmill technology – it’s one of the simplest and it’s been around for a long time – my dad’s farm had a small windmill that had a generator attached to it long before he bought it – it’s an old, mature technology that has only recently had a revival in interest.

      One of the points I was trying to make was that some areas are too vital to leave to a group that has a 50+% failure rate if you want to maintain an advanced, stable society. How can any other company that relies on steady power create and maintain jobs if it can’t rely on power being there when it tries to turn it’s machinery on?

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