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And I will invest $15 billion a year in renewable sources of energy to create five million new energy jobs over the next decade – jobs that pay well and can’t be outsourced; jobs building solar panels and wind turbines and a new electricity grid; jobs building the fuel-efficient cars of tomorrow, not in Japan or South Korea but here in the United States of America; jobs that will help us eliminate the oil we import from the Middle East in ten years and help save the planet in the bargain. That’s how America can lead again.

By subsidizing the wind and solar industry to the tune of $15 billion taxpayer dollars a year, such a plan would indeed create some jobs, but what is not highlighted in this speech is the fact that jobs created by government intervention, and not market forces, usually end up destroying more American jobs than proponents would seek to create.

This plan destroys jobs in two ways—first, by increasing taxes, this plan leaves less for citizens to spend on their own, and second, by increasing the costs of energy and automobiles. The $15 billion in additional government spending and subsidies comes from taxpayers (the Federal government already provides $16.6 billion in energy subsidies, tax breaks and loan guarantees). If taxpayers kept this money, they would spend it in ways they see fit. People might use it to buy books, organic foods, a new bicycle, or anything else they need or want. But because taxes will be increased to pay for the green jobs, the taxpayers will have less money to spend on things that other job holders produce, like the books, organic foods, and bicycles. Thus taking more money away from taxpayers means fewer goods are purchased and consequently fewer jobs in the private sector.

Senator Obama’s green jobs plans will also increase the costs of energy. Wind and solar power are more expensive to produce and utilities will simply pass those costs on to consumers in the form of higher utility bills. Electricity transmission lines are very expensive. Recently, Texas regulators approved a $5 billion transmission line to transport electricity from wind power in west Texas to east Texas (when all is said and done, the costs might actually reach $9 billion). That is between $5 billion and $9 billion in one state alone to move power from where the wind is to where the people live. Consumers will have to pay for this transmission line with increased electricity costs, which – again – means less money for books, organic food, and bicycles. In other words, higher energy prices will mean fewer American jobs in non-energy sectors.

Green jobs initiatives are a repackaging of Depression-era make-work programs, which reduce the number of American jobs because they transfer money from private citizens to spend on what they please and into the hands of government bureaucrats to spend in politically preferable ways. For example, the government can always “create jobs” simply by paying 500,000 people to dig ditches, and another 500,000 people to fill them back up. Yet to spend tax dollars on such “job creation” would obviously be a waste of labor power, because the ditch-digging-and-filling wouldn’t actually be helping consumers.

Senator Obama’s proposal is not as outlandish as the ditch-digging example, but the difference is merely one of degree. Proponents of markets are not “against” fuel efficient cars, solar panels, geothermal energy, and the like. If and when consumers voluntarily spend their money to support the expansion of “green” sectors, then this will occur without government prodding. It didn’t take a “granite tax” to end the Stone Age, just like it won’t take a carbon tax to eventually move away from fossil fuels. But when government uses its power to try to force the transition, consumers get hurt because they are forced to buy products that are more expensive than the markets alternative.

The government can certainly use its tax and spend powers to foster job growth in industries that are currently fashionable. But make no mistake about the fact that governments do not create wealth, they merely redistribute it. For every green job created by government fiat, there would be one (or even more) jobs destroyed by the financing of such a plan.

FOR IMMEDIATE RELEASE
October 22, 2008
CONTACT:
Elizabeth Ray (703) 683-5004 Ext. 130

IER Analyzes the Obama and McCain Energy Plans

Washington, D.C. – The Institute for Energy Research (IER) today issued a comprehensive analysis of the energy proposals outlined by presidential candidates Barack Obama and John McCain. Drawn from information from the candidates themselves, IER’s analysis is both objective and fact-based. Thomas Pyle, president of the Institute for Energy Research (IER), issued the following statement today:

“We know that energy is the lifeblood of the American economy, and yet the policies emanating from Washington have simply not kept pace with the need for abundant, affordable and reliable domestic energy from all commercially available sources. Looking closely at the energy plans from each of the presidential candidates, a common theme has emerged – both Barack Obama and John McCain lack substance and specificity in addressing one of the biggest challenges facing the United States. However, the positions they do take tell an important story about the priorities we could expect from an Obama or McCain administration on this important subject.

Do either Barack Obama or John McCain chart a new course for a bold national energy strategy or will our domestic energy resources remain under lock and key through new regulations, taxes, subsidies and mandates? IER puts those questions to the test.”

The IER analysis of the candidates’ energy platforms covers sources such as coal, oil, alternative energy, natural gas and nuclear power, as well as regulations, taxes, and restrictions to taxpayer-owned resources.
To view IER’s analysis, click here.

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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Google calls for replacing all of our coal-fired electricity generation with natural gas and renewables by 2030. Below is a chart from the Energy Information Administration which shows the source of the energy we use in the United States:

Coal accounts for 22% of all energy use and 49% of electricity generation, as shown below. The renewables that Google prefers, wind and solar, only produce 6% of the renewable energy we produce in America and renewables only produce 7% of the total energy use.

Google’s energy scheme is, remarkably, anti-energy. There is no shortage of energy resources in the United States. We have large amounts of oil, coal, natural gas, and oil shale resources. But contrary to the will of 70% of Americans who favor increased offshore drilling and exploration, Google would like to use expensive and intermittent technologies like wind and solar power.

If Google believes that renewables are the future, Google should lead the way and prove that it can use only wind and solar to power its buildings and datacenters. These facilities use large amounts of energy and unlike wind and solar, they are expected to deliver Google products 24 hours a day, 7 days a week, 365 days a year. At the very best locations, wind turbines only produce energy 40% of the time.

Google is just the latest addition to the next generation of rent seekers (Enron, T. Boone Pickens, etc.) who plan to benefit from political connections. Instead of relying on politicians to achieve its goals, Google should do what it has always done and create products and services that consumers want to use.

There is nothing stopping Google from becoming an electricity provider. Instead of asking the American people for $4.4 trillion to bailout their energy dream, they should go into the electricity business and demonstrate that it is possible to produce wind and solar energy at a price in the same ballpark as energy produced from coal.

Google has spent millions on research on renewables. They should be applauded for that. But instead of soaking the taxpayers to achieve their energy dreams, they should continue to spend their own money.

To illustrate the difficulty of repowering America with 100 percent renewable electricity in ten years, consider the graph below. This chart shows, based on data from the Energy Information Administration, the sources of U.S. electrical generation in 2007.

Only about 3 percent of electricity generation in America is produced by electricity that is considered renewable. And while most people consider hydroelectric power to also be renewable (which would have raised the current total to nearly 10 percent), “Green Jobs Now” proponents do not because the reservoirs behind hydroelectric dams emit carbon dioxide and methane.

IER supports a diverse portfolio of electricity generation and believes it is both unnecessary and impractical to spend billions of taxpayer dollars to help increase renewables—a 3 percent source—by over 3,000 percent in the next 10 years. No amount of wishful thinking will change the fact that the energy harnessed from wind and solar is intermittent—they only produce electricity when the wind is blowing or the sun is shining—and therefore must be balanced by more reliable and affordable sources.

Putting aside the impracticality of this goal, the Green Jobs Now campaign also makes a fundamental economic error: They are counting all of the “green” jobs that will be created by new government spending and regulations, but they are ignoring the jobs that will be lost in the process. Indeed, a recent study commissioned by IER found the proposed repeal of the Section 199 domestic manufacturing tax deductions for oil and gas companies would cause more than 600,000 job losses over ten years.

The real economic objective isn’t just jobs per se; what Americans really desire are high-paying jobs with security. Such quality jobs can only be provided in a free market, where workers produce goods and services valued by customers.

But high-paying, secure jobs cannot be provided by the government, once all the effects of its programs are taken into account. What the government gives with one hand, it takes away with the other. For example, it is true that a tax credit for hybrid cars may spur job growth in specialized areas.

But how does the government pay for this tax expenditure? If it raises taxes elsewhere—perhaps by installing a cap & trade system—then those industries facing the tax hike will lay off workers. And if the government simply borrows the difference, then the budget deficit will rise, pushing up interest rates and reducing business investment. Either way, the hybrid tax credit won’t increase the total number of jobs in the economy. Much worse, workers will now be employed in areas where they are less productive and total output will fall, meaning everyone is materially poorer than before the policy shift.

This last point is easy to illustrate by taking it to extremes: Imagine that the government raised income taxes, and then used the extra money to pay one group of 100,000 workers to dig ditches, while it paid another group of 100,000 workers to fill the ditches back up. These groups could continue day in, day out, so long as the government kept redirecting funds out of taxpayers’ wallets and into the pockets of the ditch diggers (and filler uppers). But clearly the U.S. standard of living would be lower, because those 200,000 workers could have been doing something more productive with their time, rather than doing nothing useful in order to qualify for the government checks.

The pattern holds for “green” jobs fostered by government interventions. If it really made economic sense for thousands of workers to flow into, say, hybrid car production or wind power generation, then market prices and wages would guide the adjustment. Car manufacturers would see big profits on their hybrid models, and would expand output and bid up wages to attract workers.

However, it currently does not make economic sense to devote millions of workers to the favored energy sources of the moment. These alternative technologies still have many hurdles to overcome, before becoming competitive with coal, oil, natural gas and nuclear power. Government interventions can force the workers to shift, but these actions won’t change the underlying economic realities. If workers move from industries that pass the market test, into industries that need to be propped up by government policies, then the overall economy is less productive. Americans will see a drop in their material standard of living.

Our economy runs on natural gas, coal and oil because they are currently the most economical way to deliver affordable and reliable energy to serve Americans. At some point in the future, it may become profitable to make the switch, but in the meantime, government efforts to promote these pet technologies will make Americans poorer.

The “Green Jobs Now” campaign is calling for “a multi-billion dollar national investment from Washington and Wall Street” in order to “build the new green economy and solve the climate crisis” at the same time. But they neglect to add the part about how this grandiose plan would have serious economic consequences. If it really made economic sense to displace workers in the energy fields today for the “green” energy fields of tomorrow, then the laws of supply and demand would already be paving the way.

The 200 systems total will have capability to generate 40 to 45 megawatts per hour of renewable electric power. The geothermal power plants built by the Utah based Raser Technologies will qualify for federal renewable energy tax credits.

(Source: Mass High Tech)