No matter how one fudges the numbers or rationalizes about environmental benefits, green jobs require enormous government subsidies.
The President's smug assertion that the "science" of global warming is settled turns out to be anther example of liberal-progressive dogmatic closed-mindedness. His continuing devotion to "green" jobs can only be described as willful stupidity.
Tom Emerson forwarded the Wall Street Journal's European editorial opinion, which recounts the readily available information regarding the wasteful and feckless efforts of the Spanish and German governments to create green jobs.
No matter how one fudges the numbers or rationalizes about environmental benefits, green jobs require enormous government subsidies. The extra money for those subsidies is forcibly taken via taxes from businesses that would have been able to to use the money for more productive purposes. Thereby is an economy diminished. Green jobs, for example, in production of ethanol have raised food prices for the world's poor and used more petroleum energy in production of ethanol than would have been used without ethanol.
The Journal's editorial commences:
As he did for health care, President Obama has turned to Europe for inspiration on the environment. Countries such as Spain and Germany are "making real investments in renewable energy" and are "surging ahead of us," he has warned. In last week's State of the Union speech, Mr. Obama proposed to reverse the trend: "The nation that leads the clean energy economy will be the nation that leads the global economy," he said. "America must be that nation."
To say, "The nation that leads the clean energy economy will be the nation that leads the global economy," is equivalent to saying that those who waste the most money will become the richest. To suggest that green jobs will increase the productivity of our economy is nonsense.
Productivity increases come from discovering more efficient ways to produce existing goods and services, or to create new goods and services that people find useful. Green jobs reverse the process by making production less efficient and more costly and by producing goods and services that few people, given free choice, will want.
The President's views make sense only under the rubric of Keynesian macroeconomics. Keynes, during the 1930s Depression, proclaimed that the only way to revive a depressed economy was application of large amounts of government spending. What the money was spent for was immaterial. Digging holes one day, filling them the next day, then endlessly repeating the cycle, would work nicely, Keynes thought.
"Green" jobs conform to that senseless paradigm. Green jobs add little if anything to the goods and services that people outside the rarified enclaves of the Northeast and Beverly Hills will pay for if given the opportunity to choose. Moreover, the product of green jobs is worth less than the cost to produce it, hence the necessity for government subsidies to producers and to buyers.
Economics is the study of allocating most efficiently and productively the limited amounts of resources available at any one time to a political society. Green jobs, CO2 regulation, and the whole clap-trap of smarter-than-you collectivist control favored by liberal-progressives is assuredly not economics. It is a wasteful sacrifice on the altar of the secular religion of socialism.
The essay contains the following statement; “The nation that leads the clean energy economy will be the nation that leads the global economy, is equivalent to saying that those who waste the most money will become the richest.”
It also surmises that; “His [Obama's] continuing devotion to “green” jobs can only be described as willful stupidity.”
I disagree. Let’s look first at health care: The President addressed the nation on this issue thirty times. It was almost as if each poll that showed greater discontent throughout the public on this issue causes Obama to return to the microphone one more time. It’s as if he was saying to the American people; “OK. This time I’ll speak more slowly so you will all finally understand.” Then another poll would come out showing more unhappiness among the people and here he would come again. Telling us the same things all over again as if we were all suffering from ADHD.
He’s doing the same thing on the cap & trade legislation. Telling us that other countries are going to beat us to the ‘green’ jobs punch if we don’t literally spend the blood of our children to catch up.
All this legislation does is drive up the cost of energy, which in turn drives up the cost of all consumer goods. This causes more Americans to become dependent on government subsidies. This is where he wants us. He wants to drive those already in government dependency further into the situation. Those on the edge he’ll push over. Those that are wealthy enough to maintain their independence; well he’ll tax them into dependency.
I am the best example of this. I’ve been working for the last decade because I need health insurance for my family. Everything we own is paid for. We have sufficient deposits in the bank that we could live well right now on the interest of our investments if it wasn’t for health care. That’s why I don’t retire.
Having said that; my wife and I had a series of conversations last summer during the health care debate. We decided that if the dems passed health care legislation then I should retire immediately. That way we’d reduce our income to the point where the government would have to subsidize 100% of our health care. That would be the life! Retire at 55 and let Uncle Sugar pay my health expenses.
If the dems are stupid enough to pass this; I’d be crazy not to take full advantage of it. This is what the progressives fail to understand. Sooner or later they’ll make it more advantageous for the ‘producers’ to stop producing. Then where will the ‘moochers’ and the ‘looters’ be when there’s nothing left to loot?
Obama wants to reinvent the USA. In order to do that he must destroy the existing system. Everything he does; financially, environmentaly, and entitlement wise is all straight out of Alinsky’s Rules for Radicals.
In Italy, at one time, the Mafia controlled government officials toward ends the Mafia leadership believed would serve their purpose. And not all of these purposes were those the Church would immediately condemn as immoral, some folks were helped as other folks were injured, either figuratively or literally. Americans entertained with Mafia myths by Hollywood fail to see the connection between the “protection” racket and the long term “corruption” that undermines the publics’ self-interest – we simply don’t believe a Mafia style government is operating out of Washington, our state capitols and the judiciary.
But those in the business world, after a couple of decades of observation, know better – the protection racket in America is much more complicated than Hollywood’s Godfather and a severed horse’s head under your sheets – but it is real just the same and as American as apple pie and baseball. The dynamics of the racket seldom change; the patterns are boringly familiar like a corn field with row after row of freshly ploughed earth. The game’s tactics shape up as follows:
Americans are frightened or outraged into “demanding action” – anything from Enron and the resulting Sarbanes-Oxley legislation to Global Warming and the Cap and Trade shakedowns.
Politicians lovingly cultivate these “opportunities” into legislation that helps their re-election. Steering large amounts of taxpayer money to friends, family and supporters is an ancillary benefit.
Some businesses find opportunities in the latest scam. The large CPA firms generate hundreds of millions in additional billings “helping” their clients to comply with the new laws while further reducing their liability to stockholders as a result of their own auditing incompetence. The outcome is very seldom what the public envisaged – Sarbanes-Oxley didn’t do a thing to prevent the current economic mess – its actual purpose was to restore public confidence in the stock market after the Enron panic and for the sole purpose of keeping millions in commissions flowing to Wall St. firms which, in turn, kept the pipeline from Wall St. to the major political parties gorged with money.
Global Warming, like the Enron crisis, is simply the latest excuse to manufacture another shakedown, Sarbanes-Oxley style and for identical purposes. Some businesses will clearly benefit supplying all manner of products in response to new opportunities generated by the legislation. Other businesses will find it necessary to hire advocates and consultants to help them cope with the new reality.
Those Americans managing businesses are neither heroes nor victims when it comes to playing the game – some businesses offer up protection money, while others manufacture the symbolic machine guns needed by the Mafia type thugs within our government. The “business” of America is no longer business, it’s become Government, a pervasive system which generates wealth to feed the protection racket, a system we’ve learned to accept like an old addiction and can’t do without the nicotine of Big Government shakedowns longer than a few hours – it’s everywhere, it’s physically painful to kick the habit and the eventual result is massive lung cancer.
At times, Americans experience a vague unease over their future like a heavy smoker out of breath after climbing a short flight of stairs – the problem is forcibly brought to their consciousness, but the fear soon passes as the addiction reasserts itself. We may be Americans with all our pride and self-confident arrogance but the patterns of corruption are as old as ancient Rome. The question is how long can we keep it up and will it lead to the grave or to a difficult and painful withdrawal.
What makes this article so useless is that it contains nothing but blind assertions with no facts to back them up. It would be nice to know what about the experiences of Spain and Germany were so negative – but clearly the author lacks a subscription to the WSJ (as do I), so he quotes only the abstracted passage, which tells us nothing specific.
Similarly, the term “green jobs” is thrown around without ever being defined. Example: “Green jobs reverse the process by making production less efficient and more costly and by producing goods and services that few people, given free choice, will want.” Really? How so? What if the “green job” is hiring a contractor to make efficiency repairs to your business? If a given business owner determines that doing ‘x’ and ‘y’ will increase energy efficiency and pay for itself in 5 years, then he hires a ‘green’ contractor to perform ‘x’ and ‘y,’ resulting in lower costs and higher profits, doesn’t that refute your point?
Similarly, if GE is to be believed, using federal dollars to upgrade our electrical network to ‘smart’ status will smooth out the daily demand curve, meaning fewer new generating plants will be needed to meet demand, LOWERING electricity costs across the board.
And Bill, for every story like yours, there are ten like mine: people with good ideas who’d like to start a business, but can’t afford to lose his insurance.
Chasm,
Not that you actually care about the information or would actually take the time to read it, but you can find the Spanish study referenced by the Wall Street Journal article here
You can read a bit about Germany’s “green jobs” program here
If a good or service provides value, be it through decreased costs, increased efficiency, lower TCO, better ROI, people and businesses will choose it in a free market over the competition based on a rational cost-benefit analysis. When they are forced to choose it by the government under threat of force, or if the good or service can only be price competitive if it is subsidized by public largess, it is valueless. For every story ever written, there is a government program that propagates inefficiency using this formula.
A quick search on the internet and I found this site http://www.raeng.org.uk/news/publications/list/reports/Cost_Generation_Commentary.pdf
It offers a comparative study of the six popular methods of generating electric power in quantity.
• Coal – is shown to cost anywhere from 2.7 cents to 3.2 cents per kilowatt/hour generated
• Gas – is shown to cost anywhere from 2.2 cents to 3.1 cents per kilowatt/hour generated
• Nuclear – is shown to cost 2.2 cents per kilowatt/hour generated
• Biomass – is shown to cost 6.8 cents per kilowatt/hour generated
• On-shore wind – is shown to cost 4.7 cents per kilowatt/hour generated with an additional 1.9 cents in standby generating costs for a total of 6.6 cents per kilowatt/hour
• Off-shore wind – is shown to cost 5.6 cents per kilowatt/hour generated with an additional 1.9 cents in standby generating costs for a total of 7.7 cents per kilowatt/hour
So; under the best of conditions, coal, gas, and nuclear range from 2.2 to 3.2 cents per kilowatt/hour. ‘Green’ energy generation ranges from 6.6 to 7.7 cents per kilowatt/hour.
This is a difference of 71%. Not to mention that if wind power is used you’ll still have to fight the environmentalist wackos to build that stand by power plant to pick up the slack in the wind generating system. (The wind don’t blow every day, ya’ know.)
No businessman in his right mind would select any ‘green’ energy power source over nuclear, coal, or gas. Not if the most efficient comparison yields power generation costs that are 51% higher and at worst 71% higher. It’s unaffordable.
Yet our Commander-in-Chief; “…promised to bankrupt anyone foolish enough to build [a] coal-burning power plant, he also made an interesting admission about his entire energy plan. Obama told the editors that his policies would make energy prices “skyrocket” as the energy industry passed along the exorbitant costs of his cap-and-trade policy.” http://hotair.com/archives/2008/11/02/obama-ill-make-energy-prices-skyrocket So his intention is to make conventional power so expensive to generate through cap & trade, that the cost of ‘green’ power becomes competitive?
Just as all politics are local, so are all taxes. If the EPA and President Obama ‘force’ alternative energy generation on this country; it will not only increase consumer energy costs by the amounts discussed above; it will add significantly to the cost of all goods and services consumers must purchase as the increased energy cost is added into each product and/or service. Another point is that this is a ‘regressive’ cost addition; hitting the lower classes much harder as they have less discretionary income to begin with.
Digging holes one day, filling them the next day, then endlessly repeating the cycle, would work nicely, Keynes thought.
I guess that was before the movie “Cool Hand Luke”, so Keyes has an excuse. But, Obama should know about “What we have here is a failure to communicate!”
Thank you Patrick, those are indeed interesting and enlightening reports which add quite a bit of context to this post. And Bill, also very interesting although I’m a bit dubious about the nuclear number (I did read the report) as a recent analysis I read done here in the US put the final cost of electricity coming out of a ‘new’ reactor would be 10x that amount.
I wonder what the final numbers are after calculating the cost to society of not slowing climate change. Cities not used to snow having to fork over for sno-removal equipment because ‘freak’ storms are now the norm, for instance, or spending huge for a Winter Olympics and then having no snow.
But those reports DO backup your article, I’ll give you that. Boy, the future is going to be expensive.
Chasm,
I found a report on US nuclear power generation here; http://nuclearinfo.net/Nuclearpower/WebHomeCostOfNuclearPower
The pertinent portion is copied for easy access.
Operating Costs
These costs are much easier to quantify and are independently verified as they relate directly to the profitability of the Utilities which operate them. Any discrepancies are soon discovered through accounting audits. Company’s that operate the USA’s nuclear power reactors have made excellent profits over the last five years. The US Nuclear Power industry has at last lived up to its promise made in 1970′s to produce electricity reliably and cheaply. Since 1987 the cost of producing electricity from has decreased from 3.63 cents per KWHr to 1.68 cents per KWHr in 2004 and plant availability has increased from 67% to over 90%. The operating cost includes a charge of 0.2 cents per KW-Hr to fund the eventual disposal of waste from the reactor and for decommissioning the reactor. The price of Uranium Ore contributes approximately 0.05 cents per KWHr.
But you are correct. The future IS going to be expensive. I would be interested in seeing your reference that pegs nuclear power generation from a ‘new’ reactor at 10x the amounts quoted. I’m wondering where the extra cost comes from? Either my reference is missing something substantial or yours has a cost not considered by other sites.
Well, from the front page of your link is this: “The cost of the first AP1000 is expected to be over $3500 per KW.” Just a randomly googled solar panel (http://www.solarpanelstore.com/solar-power.large-solar-panels.solarworld_sw.sw_230.info.1.html – for instance) costs that much per KW, so that shows current equity between solar an nuks. And that’s without pointing out that big money thinks nuks are a bad investment and wants the US (tax money) to guarantee the loans (the ol’ privatize the profits, but socialize the losses trick.)
But the article/report that I was referring to was this: http://www.americanprogress.org/issues/2009/01/nuclear_power.html
The article opens with, “A new study puts the generation costs for power from new nuclear plants at 25 to 30 cents per kilowatt-hour—triple current U.S. electricity rates!
This staggering price is far higher than the cost of a variety of carbon-free renewable power sources available today—and 10 times the cost of energy efficiency”
So I correct myself: the 10x was in the article, but refereed to the cost vs. efficiency.
Looking back at your post, if 25 cents per KWh is a true figure for nuks, that IS indeed 10x+ the 2.2 cents you mentioned.
Chasm,
That’s $3,500 per KwH construction cost. That’s what the power company pays to construct the facility. So a one mewga-watt nuclear reactor would cost the power company $3.5 billion to construct.
The cost of generating power once the facility comes on-line is quoted in the article as 2.2 cents per KwH. Apples and oranges.
I read your reference. There’s no doubt that a disparity exists between the two articles. But I cannot find the reason.
However; Occam’s Razor would say if nuclear power generating costs are essentially equal to solar power generating costs, why is any power company considering a nuclear plant? Especially when the Obama administration stands ready to provide subsidies for solar power construction.
No business is in business to waste money. If that’s the actual price they would have to charge customers to get a proper return on investment a utility company would have to be staffed with idiots to build a nuclear plant.
It’s not $3500 per KWh, but per KW in production capacity. But you then have to divide that cost by producing hours over the lifespan of the project to determine how much that adds to the end line price (but remember, due to demand fall-off, most of the electricity produced during off-peak hours is not used, and not stored and thus wasted even though you have to keep the plant running – so you don’t get credit for a full 24hr day).
As I said, off the shelf solar panels now cost in the neighborhood of 3500-4000 per KW installed, and getting cheaper – and they are available to go online immediately, not in 5-10 years.
I did an ROI analysis for converting a business plan to solar, and it turns out at this moment (and only with tax subsidies) it is barely feasible to do so on a strictly cost basis UNLESS electricity costs continue to rise faster than inflation (which they might) OR some additional marketing benefit is derived from the business being perceived as ‘green’ (which it might).
Subsidies: Every traditional energy source – gas, coal and oil – receive subsidies from our Gov, and that’s not Obama’s fault. The current tax subsidies for re-newables is roughly on par with those other sectors.
And you are right – no utility company does want to make such an investment – that’s why they are insisting on massive Federal guarantees to make it happen. Like I said, privatizing the profits, socializing the losses.
A big part of the inefficiency in our system is that daily demand curve I mentioned above. Below is a link to a video that not only explains this nicely, but shows how by converting our fleet of cars to plug-in electric over the next 20 years and making our grid smarter, we can power the nation with the capacity already at hand, greatly reducing the need to even build any new generating plants. The key is using the batteries in the cars to store the excess generating capacity until needed. Watch:
http://www.youtube.com/watch?v=pSdnycHfLnQ&feature=player_embedded
I said: “I did an ROI analysis for converting a business plan to solar, and it turns out at this moment (and only with tax subsidies) it is barely feasible to do so on a strictly cost basis UNLESS electricity costs continue to rise faster than inflation (which they might)”
I should have said that traditional electricity costs WILL overtake solar costs soon, probably within the next 5 years. At this point, solar costs aprox 11-13 cents per KWh over 20 years not including capitol costs. That’s a flat rate for 20 years. Depending on location, total use, hours of usage and utility fees, prices NOW are in the 6-10 cent range. I don’t see how inflation alone doesn’t nudge those numbers up in a few years. Plus which, if your business actually uses more electricity at night (as my analysis did) you can sell during the day when prices are high and buy at night when prices are low. A smart grid sure would be cool.
Citing the production cost of solar or any other energy dramatically understates the cost to the customer. A utility needs to make a profit on the investment just as a local business needs the same thing. When you look at alternate energy paying off the spread between the available product and the green product must be wide enough to cover capital costs, maintenance, and production. Without that it is just another welfare project.
Solar is wonderful when you have enough sun and some method of storage. Utilities are not heavy into solar due to the vast size of the collection areas needed to generate meaningful amounts of electric. Once you want to build something this vast the bugs and bunnies people come out to protect the furry coated ant and cause decades of delays.
In the short term natural gas (we are swimming in supply and reserves), coal (lots of supply and reserves), and nuclear are the strongest options but don’t wait for it to happen since we have a government trying to drive us to 4th world status. Welcome to the USA of Hope and Change.
By the way I have over 40 years of alternate energy business in one of my LLCs and 15 years as a utility exec in electric utility. You can make alternate energy happen by baby steps but no one wants to take them. We sold more kevlar as house wrap than solar water heaters last year.
We checked into it for our homestead. we live in a really rural area and are subject to outages on a too regular basis that can last for days. We’ve solved this problem, short term with an propane fired 8KW EPS.
We looked into solar forthe homestead; and your cost per panel is close. The additional cost of battery banks for storage, replacement parts for the rectification circuitry and software to control the power distribution system drive the entire installation cost further.
We were quoted $44,000 for a system that would carry @ 85% of the measured resident load. At @ $130 per month which is the power bill now, it would take over 28 years to pay off. Electricity costs would have to quintuple to pay off the system in 60 months.
Not cost effective. Espically when you consider that if the dryer is running you cannot run the stove; you can never run the air conditioner ever, and in winter your choice is cook food or heat the house, but not both together.
If this is the environmentalists’ idea of altering lifestyle; I don’t think you’d get enough participation without some really draconian regulations.
I really don’t think we can abandon any potential source for generating energy in the short term.
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