Clean energy’s junk economics

March 24, 2011 06:32

What we do know — and this is undisputed — is that electricity from wind and solar sources is so expensive that without government subsidies, it would not exist, let alone compete with fossil fuels.

By Steve Milloy

The oxymoron-ish nature of a left-wing “think tank” is on display in the Center for American Progress’ latest pitch for a so-called “clean energy standard” (CES).

In a new white paper, CAP says that clean energy opponents (like us),

“…have built a fear campaign about the impacts of these investments, arguing that the costs are too great and the jobs created are too small.”

If facts constitute a “fear campaign,” so be it. Let’s examine CAP’s arguments.

Cheaper than fossil fuel?

CAP says that so-called “clean energy,” by which it means primarily wind and solar electricity generation, is actually less expensive than fossil fuel generation if you include the costs of fossil fuel’s supposed “externalities” — i.e., air pollution and its alleged health consequences, forest fires, droughts etc. CAP estimates that the externalities of coal-fired electricity cost between $175 billion and $523 billion per year.

But as shown in “EPA’s Clean Air Act: Pretending air pollution is worse than it is” (, March 2011), air pollution is largely a thing of the past in the vast majority of the U.S. In areas where air quality may occasionally be problematical, mainly California, such events are mainly due to vehicle emissions (i.e., not electricity generation) and California’s particular topography and weather. Moreover, there are no coal-fired power plants in California. So the claim that emissions from coal-fired plants cause any health problems and associated health costs whatsoever lies somewhere in the continuum of wrong-to-pretend.

The forest fire and drought arguments hearken back to the famously disproved and disavowed connection between man-made carbon dioxide emissions and weather-related events. But as IPCC and Climategate honcho Kevin Trenberth has admitted and the British judge who trashed Al Gore’s “An Inconvenient truth” ruled, for example, climate change and weather events are entirely independent of each other.

What we do know — and this is undisputed — is that electricity from wind and solar sources is so expensive that without government subsidies, it would not exist, let alone compete with fossil fuels. At a Senate hearing last week, Sen. Joe Manchin (D-WV) asked a “clean energy” venture capitalist:

“If it wasn’t for the credits you’re receiving, would you be in business?”

The answer was no, according to Climatewire. CAP admits as much in its report, citing the success of several “clean energy” welfare programs.

‘Clean energy’ not subject to the ‘broken windows fallacy’?

As described by CAP,

This brings us to the second erroneous criticism of clean energy critics: that clean energy actually costs jobs by destroying productive capital and robbing jobs from other sectors of the economy. Their argument is that clean energy jobs are an example of the famous economic observation known as the “Broken Windows Fallacy.” In the classic telling of this economic lesson, a vandal breaks the window of a shop. The shopkeeper then has to replace the window, and calls the glassmaker, who then has more business. While the new business is good for the glassmaker, economists point out that this has not created a “net new job,” but has simply moved employment around in the economy. After all, if the shopkeeper didn’t have to spend money on the new window, he would have spent it on something else that he’s now foregoing.

CAP dismisses the broken window fallacy argument as follows:

But this criticism applies only if a broken window is replaced with another identical window. But in the transition to a cleaner energy economy, we are talking about replacing that first broken window with a much more efficient one—perhaps one with double-paned glass, or even glass with solar reflectors on it to store heat from the sun. Or maybe we’re talking about replacing a 40-year-old, coal-fired power plant with a geothermal plant, or a new wind or solar farm. The “broken window” analogy simply does not work when the window you start with is flawed. We’re replacing an outdated window with a new, more efficient one that costs less to operate.

But if CAP’s argument was correct and there was significant value to be had in knee-jerk replacement of old windows with new windows, then shopkeepers would break their own windows and become richer. The notion that there’s some sort of automatic economic benefit from replacing a coal-fired power plants with wind farms is disproved by the economic reality that utilities — which provide 45 percent of our electricity by burning coal versus slightly more than one (1) percent through wind, and which have no ideological preference for coal over any other fuel — choose to use coal, even with all its accompanying regulatory costs, because of its affordability and reliability.

Whether rational people are replacing windows or power plants, they will only do so if they are getting some value out of the replacement. That value doesn’t necessarily have to be purely economic (at least in the case of windows); it could be aesthetic. But wind and solar are not being pressed on us because of their aesthetic values; it’s their alleged economic and environmental benefits of which we are regaled. But there is no real world evidence that the latter exist now or will come to pass in the foreseeable future.

Job hypocrisy?

Finally, CAP takes an ironic swipe at the job efficiency. It’s not true, CAP claims, that it takes more workers to produce a given amount of energy from “clean energy” versus fossil fuels. CAP is apparently saying that “clean energy” can be as, or even more “job efficient” than fossil fuels — i.e., “clean energy” requires a comparable number of, or perhaps fewer jobs than fossil fuels to generate the same amount of power.

But CAP has called “green” or “clean energy” a,

“… great engine… for job creation in the coming decades.”


CAP goes on to assert — i.e., without providing any evidence — that,

“… dirty energy opponents argue that green jobs are a myth, and aren’t actually new jobs. This is wrong because building clean energy creates new installation, construction, and manufacturing jobs immediately, and then frees up resources to create jobs and growth in the rest of the economy.

But of course, the U.S. has already “invested” about $80 billion in “clean energy” via the American Recovery and Reinvestment Act of 2009. Where are the jobs?

The failure of “clean energy” is not just an American phenomenon. As pointed out in “The Myth of Green Energy Jobs: The European Experience

Experiments with renewable energy in Europe have led to job loss, higher energy prices, and corruption.

Europe has tried to make “clean energy” work, but it just doesn’t.

What to do?

Last week, Sens. Jeff Bingaman (D-NM) and Lisa Murkowski (R-AK) began seeking answers to questions about “clean energy” with their “WHITE PAPER ON A CLEAN ENERGY STANDARD.”

Given that a “clean energy standard” could easily become a carbon cap (as in the economy-killing cap-and-trade), it important to make sure that policymakers understand the truth about “clean energy” before the carbon cap that we have worked hard to avoid since the 1990s is snuck in place via junk economics.

Editor’s note:   Center for American Progress is partially funded by George Soros and employs many radical leftists including former White House staffer and self avowed communist Van Jones.

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