Two things may be said about current environmental policies across the developed world: they have never been so heavily subsidized, and they have never been so untethered from reality. Case in point is President Obama's "Green Jobs" policy. The argument behind his proposals, including "cap and trade," is that green policies will provide environmental benefits while also promoting economic growth and jobs. A good test of whether this is plausible is to look at the 'renewable energy' component of his proposals, in particular, wind power.
Wind power is a good test because it has already been extensively promoted in Europe and elsewhere, and indeed the President has appealed to Spain, Germany, and Japan as examples. He isn't alone. Google 'Spain' & 'wind power' and you will get more articles praising Spain's success than there are wind towers in those three nations combined. But when you look at the articles, you will discover that what they mean by "success" is that Spain has a flippin' lot of wind towers. What you won't get is evidence that Spain has achieved either economic or environmental benefits from all these turbines. That is because there aren't any.
Consider this from the London Telegraph:
E.On [the German company building the towers] is coy about profit margins. The European operations are flirting with break-even cost, but the company's huge 10-mile wind farms in the Texas outback have reached the magical level of €50 per megawatt hour (with US government subsidies), far below natural gas at the current market price.
To unpack that, E.On's showcase windfarm produces power at a reasonable price with government subsides. How much does the U.S. kick in? E.On isn't saying. It's always instructive to find out what the money doesn't want to hear. Well, we now have some idea about Spain, which produces about 40% of its power from wind. From Fox News:
A new report out of Spain says if that country is any indication, Americans shouldn't be depending on green jobs to help the U.S. economy.
Gabriel Calzada Alvarez, a professor [at King Juan Carlos University in Madrid], has released a study with startling claims about what's happened in Spain and what he predicts will play out in America. Calzada says for every green job that's created with government funding, 2.2 regular jobs are lost and that only one in 10 green jobs wind up being permanent.
Here is the problem: when an industry is heavily subsidized, that means that resources are going to it that would otherwise be invested elsewhere. The subsidized industry might be more productive than alternative investments, but if it were it would not need to be subsidized. Of course, a subsidized industry might become productive after an initial government investment. But you would look for that to happen pretty quickly, if the technology is really viable. It ain't happening in Spain.
Likewise, the case of Denmark leads one to doubt the environmental benefits. From the Financial Post:
Denmark, the world’s most wind-intensive nation, with more than 6,000
turbines generating 19% of its electricity, has yet to close a single
fossil-fuel plant. It requires 50% more coal-generated electricity to
cover wind power’s unpredictability, and pollution and carbon dioxide
emissions have risen (by 36% in 2006 alone).
Flemming Nissen,
the head of development at West Danish generating company ELSAM (one of
Denmark’s largest energy utilities) tells us that “wind turbines do not
reduce carbon dioxide emissions.” The German experience is no
different. Der Spiegel reports that “Germany’s CO2 emissions haven’t
been reduced by even a single gram,” and additional coal- and gas-fired
plants have been constructed to ensure reliable delivery.
Indeed,
recent academic research shows that wind power may actually increase
greenhouse gas emissions in some cases, depending on the
carbon-intensity of back-up generation required because of its
intermittent character. On the negative side of the environmental
ledger are adverse impacts of industrial wind turbines on birdlife and
other forms of wildlife, farm animals, wetlands and viewsheds.
Nor is the case of Denmark encouraging on the economic side.
Its electricity generation costs are the highest in Europe (15¢/kwh
compared to Ontario’s current rate of about 6¢). Niels Gram of the
Danish Federation of Industries says, “windmills are a mistake and
economically make no sense.” Aase Madsen , the Chair of Energy Policy
in the Danish Parliament, calls it “a terribly expensive disaster.”
The
U.S. Energy Information Administration reported in 2008, on a dollar
per MWh basis, the U.S. government subsidizes wind at $23.34 — compared
to reliable energy sources: natural gas at 25¢; coal at 44¢; hydro at
67¢; and nuclear at $1.59, leading to what some U.S. commentators call
“a huge corporate welfare feeding frenzy.”
This is not rocket science. Wind power is frighteningly expensive. It sucks up dollars and jobs. And because of the unreliability of wind, it has to be backed up by other, carbon-emitting, power sources. But those sources are less efficient if they have to be frequently powered up and down. There is no reason to believe it reduces greenhouse emissions or dependence on fossel fuels. So why are so many developed nations subsidizing it?
The answer is that everyone likes the idea of wind power, and so far, developed nations have the resources to invest in pretty but unproductive ideas. All this is just good fun if you weren't eating off of one of those 2.2 lost jobs and if good environmental policy isn't really that important. But if we really care about environmental policy we are going to have to start thinking rationally about it. We aren't doing that. All those wind turbines are just devices for turning fancy into federal dollars.
Update: the Calzada Alvarez study can be found here.
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