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Updated on May 9, 2010

The Great Green Scam

There is a curious notion gaining acceptance in this country that by emphasizing green energy we can create thousands of jobs. But, where is the proof of this? And, why do we hear so much about this from Slick, our Secretary of the Interior, Ken Salazar? When he was in Boston on April 29 to announce his approval of the Cape Wind project he and Massachusetts governor Deval Patrick again claimed that Cape Wind will create lots of good paying construction jobs. The number 1000 reared its ugly and deceptive head. That made a lot of people wonder who is doing the math for this project.

The only thing green about the economics of the green revolution is the money to be made by green energy developers as they garner huge government subsidies and charge higher rates for energy. There is a basic rule in mathematics that the value of an equation remains unchanged as long as the same thing is done to both sides. There is a similar if unwritten rule in the world of economics: what one takes from one place will appear in another. In other words, by creating new jobs in the developing alternative and renewable energy industry we are almost certain to be taking jobs from industries involved in the production of energy using fossil fuels. Since most people would agree that a healthy national economy is balanced so as to avoid disaster if one or two key sectors fail it is logical to view a new industry, green technology and equipment as a compliment to existing industries.

However, since it is the stated goal of the United States to produce 20% of its energy from renewables, green technologies, it follows that somewhere else in the mix of energy producers jobs will be lost and growth will become shrinkage. So be it. The famous example of efforts to save the buggy whip industry when it was threatened by the newly developed automobile in the early twentieth century is a classic example of economic competition in the extreme. The buggy whip industry floundered while the mighty U.S. auto industry grew to point that it dominated national and world economics in some sectors of industry.

When claims of thousands of new jobs being created within the wind industry, for example, are made, they are probably true. However, to say that Cape Wind's 130 turbine project will create one thousand construction jobs seems a bit of a stretch, if not an outright fairy tale. There will be a good number of highly paid jobs in operations and maintenance (O&M) to be sure. Cape Wind's turbines, if erected, will be battered by some of this country's harshest weather. And of course, the need for expensive O&M translates into higher energy costs for retail customers, some of them the very workers who service the wind farm. They will need good jobs to pay their electric bills.

In fact, no one among supporters of green energy seems to be asking how to contain its undeniable costs, how to make it affordable for the retail customer. The philosopher Santayana said that we can learn much about people by what they do not talk about. Green energy advocates who do not simply lie by claiming that offshore wind power will 'exert a downward pressure' on electric rates are at least ignorant of the very real issue of the cost of their green energy. Who will pay these higher costs? How will these higher costs actually affect us as a nation? Let us not forget, if the U.S. actually produces the claimed 1,000 gigawatts of energy available offshore it will pay out well over $1 trillion direct subsidies to wind energy developers.

While the green energy sector will create jobs, it will simultaneously stifle economic growth by causing higher retail energy rates. These higher rates will cost industry and commerce enormous sums in additional utility costs. They will increase operating costs for health care by raising the electric bills for hospitals and clinics. Schools, government facilities and public transportation will see stiff cost increases and these increases will result in higher taxes and fees.

The most dramatic effect will be on the residential electric customer. If Massachusetts reaches its goal of using 20% of its energy from renewables and if that energy is three times as expensive as conventional energy, here is the impact: for every hundred dollars on the energy side of an electric bill, 20% 0r $20 will cost $60.00. 80% 0r $80.00 will remain the same. So, by adding $60 to $80 we see a total new amount due just for energy of $140.00. And, just because many energy companies have difficulty being truthful in their billing, there will be other costs hidden on the transmission side of the bill, costs coming only from the new renewables. These hidden costs will be the true impact of grid upgrades, grid congestion, fluctuation of power supply and a host of other little nasties caused by wind.

How can we say that renewable energy is an economic boon when the only forms of it about which we see any serious action are the two most expensive methods of generating electricity, wind and solar, and a good percentage of the solar panels we are seeing being installed in the U.S. are made in Asia? There is not one U.S. manufacturer of commercial scale wind turbines for offshore use. Where are the thousands of permanent, high paying jobs we keep hearing about? How can we claim that renewables will revitalize our economy when they will enrich foreign manufacturers who pay miserable wages while escalating costs for our remaining U.S. industries? Cape Wind is but one example of the terrible economics of our current ill conceived rush into renewable energy. Its true cost of energy will almost certainly be more than double the present electric rates paid on Cape Cod.

Even if we reach the stated goal of 20% renewables we will still have a lot of old and dirty power plants. We are lagging seriously behind such nations as China in retrofitting our coal and gas plants for carbon capture. We are not converting our oil fired plants to burn cleaner natural gas, of which the U.S. has enormous untapped reserves. And, by continuing to use oil for a substantial portion of our energy production we remain at the mercy of foreign powers whose interests are not always the same as ours. There is huge economic potential in the technology of making our existing power plants cleaner, not to mention substantial environmental gains.

Commercial scale wind energy development will still require fossil fuel plants to provide back-up power for reliability in the grid. The rosy forecasts of the Cape Winds of this world are just that, rosy forecasts, not realistic projections. What good is the clean energy we cannot afford?

Copyright 2010 By Peter A. Kenney


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