Recent Solar Plant Construction

North Carolina. Western North Carolina is home to a new 555-kilowatt solar array that has been placed atop a landfill.[i] This small solar farm—built in response to bids for projects that would meet North Carolina’s Renewable Electricity Standard—is the fourth to begin operating in the state, with four more under contract. [ii] FLS Energy owns and operates the solar farm and will sell its power to Progress Energy Inc. The solar plant consists of 2,340 photovoltaic panels and is expected to generate about 730,000 kilowatt-hours of electricity annually, only a 15-percent capacity factor.  It is reported to have created five new jobs. Unfortunately, to provide counterweight against high winds and support on the ground, FLS Energy had to construct concrete pads on top of the landfill as a base for the solar panels, creating carbon dioxide emissions and partially negating some of the environmental benefit from the solar generated electricity.

Across 500 acres north of West Palm Beach, the FPL Group utility is grafting what will be the world’s second-largest solar plant onto the back of the largest fossil-fuel power plant in the United States. (NYT)

Florida. The N.C. plants are smaller than the solar plant that came on line last fall in southern Florida. That plant consisting of over 90,500 photovoltaic panels is a 25,000 kilowatt plant, built by Florida Power and Light.[iii] The plant costs more than $6,000 per kilowatt to construct, about 6 times what a natural gas combined cycle plant would cost, according to the Energy Information Administration (EIA), an independent agency within the U.S. Department of Energy.[iv]

Florida Power and Light is building another solar plant in Indiantown, Florida, which is an experiment of marrying a solar plant with a gas-fired plant to reduce cost.[v] Florida Power and Light expects to cut cost by about 20 percent compared with a stand-alone solar facility since it does not have to build a new steam turbine or new high-power transmission lines. Once totally completed, the solar plant will be able to generate 75,000 kilowatts of power using 190,000 mirrors, tripling the size of the Florida plant described above. But it is dwarfed by the adjacent gas plant, which can produce about 3,800 megawatts of power. As you can see by the picture below, the more efficient natural gas plant also requires far less land mass than the solar plant. At a cost of $476 million, it will cost $6, 347 per kilowatt to construct.

These solar plants and other renewable generating plants are being constructed in response to subsidies and grants from the federal and state governments and because of state mandates called Renewable Electricity Standards or Renewable Portfolio Standards.  Over half of the states and the District of Columbia have enacted Renewable Electricity Standards that require a specified percentage of future generation to be from renewable power.

What are the Costs of Competing Technologies?

Construction Costs

The EIA provides the construction costs for a slate of generating technologies and their expected annual generating costs for 2016, the first year that they can be compared owing to the different construction times for each plant type. The construction costs, without finance charges,[vi] are depicted in the following graph. The capital costs (in 2008 dollars) range from $648 per kilowatt for a gas-fired turbine to $6,171 per kilowatt for a photovoltaic solar plant, the highest cost of all of the future generating technologies that EIA considers in its forecasts.  Coal and gas-fired plants generally dominate a forecast where current laws and regulations are assumed to continue in the future. A conventional coal plant with equipment for removing sulfur dioxide and nitrogen oxide emissions runs $2,223 per kilowatt and a coal-fired integrated gasification combined cycle plant runs $2,569 per kilowatt. Gas-fired combined cycle plants are of even lower cost at $968 per kilowatt. These technologies can be used as base-load plants that operate at high capacity factors when electricity demand is at its highest.

Annualized Generating Costs of New Plants

Many advocates of renewable technologies indicate that while the capital cost of so called “green technologies” may be higher than conventional fossil-fueled technologies, the benefit is zero fuel cost for their preferred technologies–solar and wind. While that is true, wind and solar technologies cannot provide base-load power because the sun is not always visible and the wind does not always blow, meaning the electricity may not be available when you need it. Taking into account these factors as well as operation and maintenance costs and fuel costs, EIA  puts their slate of future generating technologies on a comparable basis by calculating levelized cost, that is, the annual cost of generating power including capital, fuel, operation and maintenance, and finance charges.[vii] And, in the case of coal, they include the equivalent of a $15 per ton carbon dioxide emission fee to represent the current financial and regulatory environment for coal-fired plants. Many coal-fired plants are finding difficulty in getting financing and/or are facing regulatory or legal delays in obtaining permits.

The levelized costs among the various technologies (expressed in 2008 dollars) range from $79.3 per megawatt-hour for a gas-fired combined cycle plant to $396.1 per megawatt-hour for a photovoltaic solar plant. Coal plants run from $100.4 to $110.5 per megawatt-hour for conventional coal and integrated combined cycle, respectively. Although wind has a lower cost than solar, it is still higher on an annualized basis than gas and coal-fired plants because of its lower capacity factor. Wind turbines built on-shore are estimated to cost $149.3 per megawatt-hour, and wind built off-shore has estimated annual costs of $191.1 per megawatt-hour. Again, the costs are for a plant beginning operation in 2016, the first year that can be compared for a new plant because of the difference in construction times among the various technologies.

Why Are Electric Utilities Building Wind and Solar Plants?

Subsidies and Mandates for Renewable Technologies

Electric utilities are building wind and solar plants because of incentives offered and mandates laid down by state and federal officials. These include subsidies in the form of investment tax credits, production tax credits, accelerated depreciation of the asset for tax purposes, and Renewable Electricity Standards (RES), which require electric utilities either to build a required amount of renewable power or to purchase credits from other electric utilities who more than meet the targeted requirements. Currently, twenty-eight states and the District of Columbia have renewable electricity standards.[viii] The RES specifications differ by state. North Carolina is the only state in the southeast with an RES. Many southern states are against a federal RES because they will have to purchase renewable credits from other areas of the country since they have very little “green” resources. Purchasing electricity credits will increase their electricity rates, possibly driving out industry from their states. While more than half the states have an RES, many are not monitoring its compliance, and, with the exception of Texas, are not meeting their renewable targets.[ix]

Solar power has had a 10-percent investment tax credit since 1978, which was made permanent by the Energy Policy Act of 1992. The Energy Policy Act of 2005 established a 30-percent personal tax credit, not to exceed $2,000, for the purchase of solar electric and solar water heating property. The Emergency Economic Stabilization Act of 2008 extended the 30-percent tax credit to 2016 and lifted the   cap. It also allowed electric utilities to qualify, paving the way for electric utilities to begin constructing solar thermal and solar photovoltaic facilities.

Wind received a federal production tax credit (PTC) as part of the Energy Policy Act of 1992, defined as a 1.5-cents-per-kilowatt-hour payment (adjusted annually for inflation), available for 10 years to investors for facilities placed in service between 1994 and June 30, 1999. The PTC for wind has expired and been reinstated several times since its origination. The Emergency Economic Stabilization Act of 2008   extended the PTC to 2.1-cents-per-kilowatt-hour through 2012. The $787 billion economic stimulus that President Obama signed into law in February 2009 makes a 30 percent investment tax credit available in lieu of the production credit.

Federal Subsidies for Renewable Power Compared to Other Generating Technologies

While these are some of the more direct subsidies that wind and solar receive, there are many others at both the federal and state level, such as the accelerated depreciation mentioned above. The EIA did a study comparing the federal subsidies received for electric generation by fuel type for fiscal year 2007.[x] They found that wind and solar received almost 100 times more in subsidies than oil and natural gas plants on an electricity production basis.  Total federal subsidies for electric production from wind power were $23.37 per megawatt hour (in 2007 dollars) and for solar power were $24.34 per megawatt hour, compared to 44 cents for traditional coal, 25 cents for natural gas and petroleum liquids, 67 cents for hydroelectric power, and $1.59 for nuclear. These subsidies include the federal production and investment tax credits, but do not include accelerated depreciation (a five-year tax write-off) and state subsidies. Energy subsidies are paid for by consumers and tax payers; they are not free.

Despite more than 30 years of subsidies, set asides, and favorable treatment, for the first eleven months of 2009, solar power produced only 0.02 percent of our electricity and wind power produced only 1.7 percent of our electricity. [xi]

Conclusion

Government is intended to work for the people. However, governments have expanded their influence to many areas of our lives where the rationale for action is suspect, even nonexistent. Arguments such as “energy independence from OPEC oil” make no sense when evaluating options for the electricity sector because this fuel generates only 1 percent of U.S. electricity, and this small quantity could be easily replaced if it were economical to do so.

Wind and solar are supposedly the answer for reducing carbon dioxide emissions from electrical generation.  But as Texas has found,[xii] wind and solar tend to reduce natural gas-fired generation (the least carbon-intensive fossil fuel) rather than coal-fired generation (the most carbon-intensive fossil fuel), because existing coal-fired generation is less expensive than gas-fired generation. Finding the correct policy to meet one’s goals tends to be difficult in such a complex economic environment. A bad policy can be more damaging than no policy, because it costs the American public money either through taxes or through higher rates for products.

Some people believe that “green energy” will create jobs that will stimulate the economy. But case studies from Spain,[xiii] Germany,[xiv] and Denmark[xv] have shown just the opposite. Early on, Spain embarked on a program of “20-percent renewable by 2010,” to set an example for other countries. However, a Spanish study has found that for every green job the Spanish government created, 2.2 jobs were destroyed elsewhere in the economy, and 9 out of 10 government-created green jobs were temporary. The phrase “20 percent by 2010” turned out to be a close approximation of Spain’s unemployment rate.[xvi]

A German study found that green jobs created by government actions disappear as soon as government support is terminated. A Danish study found that the government’s wind experiment was an expensive way to create jobs or to reduce carbon dioxide emissions.

So why are our politicians continuing to subsidize and mandate inefficient and expensive sources of energy? Doing so only increases taxes (to pay for the subsidies) and increases the price of energy. It’s a lose-lose proposition.

[ii] http://www.progress-energy.com/aboutus/news/article.asp?id=23642

[iii] http://www.fpl.com/environment/solar/desoto.shtml

[iv] Energy Information Administration, Electric Generating Technologies Cost Assumptions, http://www.eia.doe.gov/oiaf/aeo/index.html

[v] The N.Y. Times, The Newest Hybrid Model, March 4, 2010, http://www.nytimes.com/2010/03/05/business/05solar.html

[vi] Energy Information Administration, Annual Energy Outlook 2010 Early Release, Electric Generating Technology Cost Assumptions, http://www.eia.doe.gov/oiaf/aeo/index.html

[vii] Energy Information Administration, Annual Energy Outlook 2010 Early Release, 2016 Levelized Cost of New Generation Resources from the Annual Energy Outlook 2010, http://www.eia.doe.gov/oiaf/aeo/electricity_generation.html

[viii] http://go.ucsusa.org/cgi-bin/RES/state_standards_search.pl?template=main

[ix] “A National Renewable Portfolio Standard: Politically Correct, Economically Suspect,” Robert J. Michaels, April 2008 Electricity Journal.

[x] Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 2007, http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/chap5.pdf, Table 35

[xi] Energy Information Administration, Monthly Energy Review, February 2010, http://www.eia.doe.gov/emeu/mer/pdf/pages/sec7_5.pdf

[xii] The Wall Street Journal, Natural Gas Tilts at Windmills in Power Feud, March 2, 2010, http://online.wsj.com/article/SB10001424052748704188104575083982637451248.html?mod=WSJ_Com modities_LeadStory

[xiii] Study of the effects on employment of public aid to renewable energy sources, Universidad Rey Juan Carlos, March 2009, http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf .

[xiv] Economic impacts from the promotion of renewable energies: The German experience, http://www.instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdf

[xv] Wind Energy-The Case of Denmark, September 2009, http://www.cepos.dk/fileadmin/user_upload/Arkiv/PDF/Wind_energy_-_the_case_of_Denmark.pdf

[xvi] http://dailycaller.com/2010/03/04/what-exactly-is-a-green-job/

In this context, of course, “seizing the energy opportunity” means that the government seizes tax dollars to help private companies invest in inefficient energy projects that could not survive in a free market. As your mother always told you, just because all the cool countries are jumping off an energy-boondoggle cliff, doesn’t mean Americans should too. It’s good to be “left behind” with all the affordable energy provided by fossil fuels.

CAP’s Vision

The Center for American Progress (CAP) study summarizes the apparently dire situation:

By 2020, clean energy will be one of the world’s biggest industries, totaling as much as $2.3 trillion.1 Over the past year, other countries made huge investments to seize the economic opportunity provided by the historic shift from fossil-based energy to renewable, low-waste electricity and fuel. These investments weren’t made out of thin air, but were a result of intentional public policies, which in turn provided a strong stimulus for new public and private investment in new clean-energy markets, infrastructure, and human resources. (p. 1, emphasis added)

We agree on one thing: The investments in inefficient energies didn’t come out of thin air. On the contrary, the type of “clean energy” programs that CAP is pushing would rely on money taken from taxpayers. Even private funding would largely be driven by government mandates that artificially penalize traditional energy sources.

[China, Germany, and Spain] invested in clean energy for short-term benefits and laid a solid foundation for future sustainable economic growth by either setting a price on carbon or implementing strong national energy performance standards or both, thus spurring innovation in new technologies that lower carbon emissions. A 2009 study by the CERNA Research Program on Technology Transfer and Climate Change found clear evidence that developed countries that ratified the Kyoto Protocol—each of which set a legally binding target to reduce its carbon emissions—saw a rise in green-tech innovation patents of more than 33 percent…Developed nations that didn’t initially ratify Kyoto—the United States and Australia—saw no noticeable change in their share of total green tech patents over the same time period. (pp. 1-2, emphasis added)

It is not surprising that when governments pick winners and losers in the energy sector, the winners do better. The CAP study simply takes for granted that the economy should be moving away from fossil fuels and into politically favored technologies, such as wind and solar. But if those are the wrong sectors to expand—at least for now—then the boost in patents in “green-tech” isn’t a blessing, but a curse. By the same token, if the government banned automobiles tomorrow, that would no doubt stimulate a flurry of patents in ten-speed bicycles and Conestoga wagons. This wouldn’t signal US leadership, it would just be silly and wasteful.

The same is true for “green-tech” investments. If the government places artificial penalties on high-carbon energy sources, then the country will be poorer in conventional terms, such as GDP or per capita income. Now, if the scholars at CAP want to argue that this impoverishment is worth it to avoid global warming, then they should go ahead and make that argument.

But the scholars at CAP know that the American people wouldn’t go for such a sales pitch, especially in the midst of a deep recession and unemployment hovering at 10 percent. That’s why CAP’s spin doctors say we can have our green cake and eat it too. They claim that not only will switching to less efficient energy sources (like solar and wind) save the planet, but it will also spur new job creation.

Ironically, Lindsay Graham himself let the marketing cat out of the bag, as quoted in the New York Times:

“The momentum around this large cap-and-trade bill to save the planet has been replaced by a business model: How do we create jobs and stay ahead of the Chinese and clean up the air?” Graham said earlier this week…”Once you start changing your perspective from ‘Iowa is going to be beachfront property’ to ‘How do you create jobs and clean up the air?’ you have a completely different focus,” he added.

US First Among Lemmings?

It is amazing that the green-energy boosters continue to cite Spain as a success story, despite the fact that their unemployment rate in December was more than 19 percent. The famous Calzada et al. study has chronicled the unsustainable bubble in Spanish renewables, a bubble inflated by government subsidies and mandates that popped once the support was only slightly scaled back.

Germany’s 8.2 percent unemployment is a tad better than the United States’. But this doesn’t surprise us, as the German government has been warning against runaway “stimulus” spending. German Chancellor Merkel’s government has been more fiscally responsible than the Obama Administration; of course their economy is on a better footing at the moment.

As for China, we also note that they are adding one coal-fired power plant a week, a nuclear plant a month, and are in the process of constructing the largest hydroelectric dams known to man. Will CAP put out a study warning that the US will get left behind in the scramble for coal, nuclear and hydropower? (CAP congratulates China for 16% of its power being from hydropower and wind, failing to mention that 95% of that combo is hydropower, principally from the new Three Gorges Dam.)

The CAP study favorably cites the Chinese tariffs on foreign-made turbine components, which are in place to boost job growth in the Chinese wind sector. But, of course, this just places an obstacle in the way of American manufacturers trying to export renewable technology to China. Taken to its logical extreme, the CAP mindset would eliminate the benefits of international trade altogether, so that every country’s workforce had to produce everything internally. That would “create jobs,” no doubt, but in the same way that a household would keep really busy if it had to grow its own food and sew its own clothes.

Conclusion

The CAP study urges the U.S. government to copy the worst economic ideas from around the world. When the government picks winners and losers, it doesn’t create wealth or jobs in the long run. On the contrary, government micromanagement will simply divert resources from efficient energy sources into inefficient ones. This will raise energy prices for consumers and retard job growth.

At some point down the road, it might make economic sense for the country to switch away from fossil fuels towards renewable technologies. But it doesn’t make sense right now. The proof is that private investors aren’t willing to put their own money on the line; they want the government to force taxpayers to foot the bill.

As Ben Lieberman of the Heritage Foundation observed, Americans shouldn’t be worried when other countries are “ahead of us” as they run off a cliff

And at the same time, top Administration officials have worked hand-in-glove to ensure that the same bad actors – who were to be the beneficiaries of billions in tax dollars through the stimulus’ “green jobs” slush fund – secure even more carve-outs, special favors, and sweetheart deals. Why? It’s quite simple. The American Wind Energy Association (AWEA), or “Big Wind,” understands full well that in order to exist, the wind industry must continue to receive massive streams of taxpayer handouts.

Top Energy Dept. Officials, “Big Wind” in Cahoots

Chicago Tribune: “Questions swirl around wind-jobs studies … The [Spanish] study, funded by a free-market think tank with links to the fossil fuel industry, calculated that government subsidies for the wind-power industry killed more jobs than they created, because the subsidies drained money from the (more efficient) private sector. … Climate activists scheduled a conference call to discuss how to refute the Spanish researcher’s claims. The group included officials from the American Wind Energy Association – a wind industry trade group, known as AWEA, which spent millions of dollars lobbying last year in Washington. The call also included researchers from the National Renewable Energy Laboratory, a division of the Energy Department. … “AWEA policy people are quite concerned.” A [Energy Dept.] colleague replied: “We need to come up with an appropriate response to these criticisms soon. I just spoke to a few people at AWEA about this.” … Emails show the Laboratory researchers shared a draft of those findings with officials from the wind industry group before the white paper was published. “ (3/3/10)

Washington Examiner: “Obama administration colluded with ‘windmill welfare queens’ to rebut European ‘green job’ studies … “Windmill welfare queens” — the corporations who stand to benefit from carbon regulation, and who already benefit from massive subsidies — are telling Americans that they can “have their cake and eat it too” when it comes to emissions controls and so-called “green jobs.” A FOIA request now reveals that as the Obama administration scrambled to respond last year to strong evidence that “green jobs” are a massive an economic drain, costing 570,000 Euros apiece, Department of Energy officials relied heavily on Big Wind and its monied backers. …the Left in government and the rent-seeking corporations who make their money not by producing anything, but by putting their hands in the next guy’s pocket.” (3/4/10)

American Thinker: “Obama administration protecting the ‘green’ investments of its friends … Crony capitalism is alive and well in Barack Obama’s Washington. … Green energy promoters are raking in our tax dollars, often for wasteful “investments .” … Now comes word that the Obama administration’s Department of Energy has engaged in some “monkey business” to rebut a study that showed investments in wind energy costs far more jobs than they create. A Spanish university study had calculated that government subsidies for the wind power industry killed more jobs because they diverted money from more efficient private businesses. … The Obama administration’s attack on the Spanish study was written by two non-economist, pro-wind activists from the National Renewable Energy Laboratory. This is a part of the Department of Energy and is overseen by Assistant Secretary of Energy Cathy Zoi , who previously served as the CEO of Al Gore’s Alliance for Climate Protection. Al has a pal to protect his vast investments in renewable energy.” (3/4/10)

The Hill: “Senior Republican seeks info on Energy Department, clean energy group secret talks … Rep. James Sensenbrenner (R-Wis.) wants to know the extent to which Energy Department officials talked to supporters of clean energy subsidies before DoE published an unusual rebuttal to a study critical of green job programs. He fired off a letter to a DoE official on Wednesday asking a series of pointed questions about discussions between government officials and groups like the American Wind Energy Association and the Center for American Progress, a left-leaning think tank run by White House confidant John Podesta. … A recently released batch of emails showing possible collaboration between DoE and a group whose members stand to benefit from clean energy subsidies won’t help. … The controversy seemed largely over until the release this week of emails, obtained by a free-market think tank through public records laws, that suggest some measure of cooperation among DoE officials and representatives from AWEA, CAP, and the Union of Concerned Scientists.” (3/4/10)

CEI’s Chris Horner on Pajamas Media: “‘Anti-Lobbyist’ Obama Administration Recruited Left-Wing Lobbyists to Sell Bogus ‘Green Jobs’ … The Department of Energy – specifically the office headed by Al Gore’s company’s former CEO, Cathy Zoi – turned to George Soros’ Center for American Progress and other wind industry lobbyists to help push Obama’s wind energy proposals. … As candidate and president, on eight separate occasions Barack Obama instructed Americans to “think about what’s happening in countries like Spain [and] Germany” if they wanted to know what successful “green jobs” policies look like, and if they wanted to know what we should expect here in the U.S. from his agenda. … After the Spanish study embarrassed the White House, prompting substantial media attention and even questioning at a press conference, Obama swapped out Denmark for Spain for later references to an enacted “green jobs” program. … The American Wind Energy Association – the lobby for “Big Wind” in Washington, D.C., which includes a few Spanish wind giants – also attacked the publication of the Spanish paper. Soon, the Obama administration published a five-page talking points memo assailing the economic assessment – written by two young, non-economist, pro-wind activists from the National Renewable Energy Laboratory (NREL).” (3/3/10)

The Hill: “Spanish jobs spat revisited … The Competitive Enterprise Institute, used public records laws to obtain emails showing NREL shared its response with groups supporting renewable energy policy, like the American Wind Energy Association, before releasing the rebuttal publicly.” (3/3/10)

Reason: “Restoring Science to Its Rightful Place — Shilling for Green Jobs … Last year, a study released by researchers at Spain’s King Juan Carlos University found that subsidized green jobs were an economic black hole. … The green lobbyists just knew the study must be wrong and breathed huge satisfied sigh of relief when a new study refuting the JCU study was produced by the National Renewable Energy Laboratory. Science had once again triumphed over rightwing anti-science ideology – green jobs forever! But some cynical people were suspicious of the provenance of the NREL study. So they filed a Freedom on Information Act (FOIA) request with the Department of Energy to see how the study came about. It turns out that it was vetted by the renewable energy industry, specifically the lobbyists at the American Wind Energy Association.” (3/3/10)

Washington Post: “Wind industry influenced DOE report … The Chicago Tribune first reported the connection, which came to light after the libertarian Competitive Enterprise Institute gave the paper the results of its Freedom of Information Act request. The controversy centers on the Aug. 1 white paper, “National Renewable Energy Laboratory’s (NREL) Response to the Report ‘Study of the Effects on the Employment of Public Aid to Renewable Energy Sources’ from King Juan Carlos University (Spain).” (3/3/10)

That’s a Great Question: “What, exactly, is a ‘green’ job?”

IER’s Robert Murphy on The Daily Caller: “What, exactly, is a ‘green’ job? … By their very nature, government-created green jobs are unsustainable. If they weren’t, it wouldn’t take government mandates or billions in taxpayer subsidies to create them in the first place – and it certainly wouldn’t take billions more to sustain them. … The Spanish embarked on the world’s most aggressive renewables program – President Obama specifically praised it soon after his inauguration as a model for his own agenda. Yet, as the Spanish government faced budget difficulties, it was forced to rein in its support for renewables. … Apparently, even this monumental handout wasn’t enough to sustain those jobs: The Spanish bubble popped, and today the country is wracked with an unemployment rate on the doorstep of 20 percent. … For every “green” job the government “creates” in one area, it destroys a real job somewhere else. But the whole charade isn’t simply a wash, because government green jobs policies make the economy less productive. They raise prices – especially for energy – across the board and make consumers poorer.” (3/3/10)

Iain Murray on NRO: “Green-Jobs Fantasy … Germany and Spain went down the green-jobs road many years ago, for much the same reasons as the ad­ministration. They saw it as a way to make their countries world leaders in coming technologies, provide good jobs to replace decaying industries, and insulate against energy shocks originating overseas. It didn’t work out that way. … The story is the same in Spain, which set out to be the world leader in solar technology. A study by a team from King Juan Carlos University in Madrid led by Gabriel Calzada Alvarez found that the opportunity costs of public investment in renewable energy were very high, resulting not just in significant numbers of jobs destroyed or never created, but in unsustainable bubbles in the renewables sector. … There are already signs that green jobs created in the U.S. are going to be just as expensive as the German and Spanish ones.” (3/4/10)

Orange County Register, Op-Ed: “We need green money, not green jobs … The love affair on the left with “green jobs” is, of course, about ideology, which is why facts are irrelevant. It is another excuse to grow government and bring European socialism to America. … In a Zogby poll done after the presidential election, 73 percent of blacks said they were opposed to taxing fossil fuels to promote alternative energy. The Carter Administration invested $2.1 billion in the Great Plains Coal Gasification Plant to convert coal to gas. The result? Zero. Federal government spending since 1961 on “advanced energy technologies and basic energy science research” totals $187 billion with hardly anything to show. Poor folks don’t need socialism or green jobs. They need green money. They’ll get more of it being free, going to school, getting married and going to work.” (3/3/10)

#####

FOR IMMEDIATE RELEASE
MARCH 4, 2010
CONTACT:
LAURA HENDERSON, 202.621.2951
PATRICK CREIGHTON, 202.621.2947

BACKGROUND: Last March, Spanish economics professor Gabriel Calzada published an academic analysis that showed for every green job created in Spain, 2.2 jobs were lost as an opportunity cost. This finding contradicted the Obama Administration’s claim that massive subsidies for wind and solar energy would create jobs. Calzada’s study gained national attention from the media and policymakers, making it difficult for the Administration to advance such failed policies. The Administration’s response? Huddle with big wind lobbyists and other special-interest groups to collaborate on a taxpayer-funded “rebuttal” to Calzada’s work. When the media and some in Congress inquired about the highly unusual step the Administration took in analyzing and responding to an analysis of the Spanish experience with renewable energy and green jobs, senior level government officials were not forthright or honest in their response.

Washington, DC – A day after being sworn into office, President Obama issued a memorandum to the heads of executive departments and agencies “reaffirming the commitment to accountability and transparency.” In the memo, the President states “All agencies should adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA [Freedom of Information Act], and to usher in a new era of open Government.” The President has also promised on numerous occasions that lobbyists will have no influence over his Administration.

Despite calls for increased transparency and openness, recent U.S. Energy Department documents obtained through FOIA requests and reported by The Chicago Tribune show significant collusion among Energy Department officials and the American Wind Energy Association (AWEA), as well as other third party special-interest groups, including the left-of-center Center for American Progress.

Assistant secretary of energy Cathy Zoi, who has held top positions at Al Gore’s Alliance for Climate Protection, is charged with crafting renewable energy policy for the Obama Administration. According to FOIA-obtained emails, Zoi and her team worked hand-in-hand with big wind’s lobby – AWEA – and other special-interest groups to rebut and discredit a groundbreaking study published by Dr. Gabriel Calzada, of Madrid’s King Juan Carlos University, that examined Span’s experience with renewable energy mandates and so-called “green jobs.”

Dr. Calzada’s original academic research squarely contradicts the Obama Administration’s position on taxpayer-funded green jobs. Calzada determined that for every “green job” the Spanish government created, 2.2 jobs were destroyed as an opportunity cost. They also found that 9 out of 10 government-created “green jobs” are temporary, highlighted the fact that Spain’s unemployment is at an all-time high, and noted that overall carbon emissions – which are said to decrease under “the greening of the economy” – actually increased.

This research on Spain’s failed attempted to create a government-mandated “green economy” served as a major setback for those who favor top-down federal energy mandates, subsidies and handouts – such as AWEA and the President himself. According to the FOIA-secured emails, high-level Energy Department officials worked with AWEA and other special-interest groups to collaborate on a taxpayer-funded rebuttal.

“This Administration may publicly pride itself on being open, transparent, and free from lobbyist influence, but these emails and internal documents demonstrate that actions speak much louder than words,” said Thomas J. Pyle, president of the Institute for Energy Research. “Dr. Calzada led and conducted a sound analysis of Spain’s failed experience with renewable energy mandates. For his work to be targeted by top U.S. government officials is disturbing. What’s worse, though, is how closely this Administration’s ties are with far-left special-interests lobbyists.”

According to a FOIA-obtained email, one Energy Department official stated, “This is the first time we’ve been asked to response so directly (right?).” His colleague responded, “That is probably true. But we can let DOE [Head Quarters] tell them why they wanted it, especially if this is the first time.”

Additional information:

Study: Spanish Green Jobs/Renewable Energy Study

Rebuttal: NREL Rebuttal to Spanish Green Jobs/Renewable Energy Study

Blog post: IER Response to DOE/NREL rebuttal

Note: The Competitive Enterprise Institute (CEI) obtained this information through a FOIA request. Christopher Horner, a senior fellow at CEI, posted his thoughts HERE.

FOR IMMEDIATE RELEASE
MARCH 3, 2010
CONTACT:
LAURA HENDERSON, 202.621.2951
PATRICK CREIGHTON, 202.621.2947

####

The Obama Administration’s recently released “Economic Report of the President” devoted an entire chapter to “Transforming the Energy Sector and Addressing Climate Change” [.pdf]. Whenever the government promises to transform an entire sector of the economy, we know to watch out. Upon a simple reading it is obvious that the president’s fancy economic rhetoric doesn’t justify the $60 billion in “stimulus” funds and the proposed new mandates on the private sector. Even the report’s own analysis shows that the likely damages from climate change are comparable to the economic damages of more government regulation.

The Official Economic Argument for Intervention

Frequently when governments want to increase their power, money, and influence they justify their schemes with a scientific appeal. Standard economic theory provides just such a justification in the form of “market failure,” where the Invisible Hand breaks down because of “externalities.” Most people are familiar with the alleged negative externality of greenhouse gas emissions—which then justify either carbon taxes or cap-and-trade—but the president’s report introduces us to a new market failure, this time from a positive externality:

A market-based approach to reducing greenhouse gases [i.e. cap-and-trade] will provide incentives for research and development (R&D) into new clean energy technologies as firms search for ever cheaper ways to address the negative externality associated with their emissions. However…there is a separate externality in the area of R&D. Because it is difficult for the person or firm doing research to capture all of the returns, the private market supplies too little R&D—particularly for more basic forms of R&D…In this case, government R&D policies can complement the use of a market-based approach to reducing greenhouse gas emissions and yield large benefits to society. A policy that broadly incentivizes energy R&D is more likely to maximize social returns than a narrow one targeted at a specific technology because it allows the market, rather than the government, to pick winners. Likewise, funding efforts in support of basic R&D are less likely to crowd out private investment because differences between private and social returns to innovation are largest for basic R&D. (Economic Report, p. 243, bold added)

Rhetoric versus Reality

Given the textbook justification for government spending, we would now expect the Obama Administration to tout its expenditures on, say, math and science Ph.D. students, or a superconducting supercollider. As the report itself stresses, the economic rationale for such investments is that the social returns spill out across many sectors, so that individual companies would not be expected to spend the optimal level when we consider the costs and benefits to society as a whole. Since the report says the stimulus package provided “$60 billion in direct spending and $30 billion in tax credits” to “jump-start” the transition to a “clean energy economy,” there is a whole lot of ‘splainin’ that the administration must do.

Yet look at the programs the president’s report touts as fulfilling the requirements of “basic R&D,” without the government “picking winners”:

In its 2011 proposed budget, the Administration has stated a commitment to fund R&D as part of its comprehensive approach to transform the way we use and produce energy while addressing climate change. The Recovery Act investments begun in 2009 are a first step in this clean energy transformation. They fall into eight categories that are briefly described here.

Energy Efficiency. The Recovery Act promotes energy efficiency through investments that reduce energy consumption in many sectors of the economy. For instance, the Act appropriates $5 billion to the Weatherization Assistance Program to pay up to $6,500 per dwelling unit for energy efficiency retrofits in low-income homes…

Renewable Generation. The Recovery Act investments in renewable energy generation also are leading to the installation of wind turbines, solar panels, and other renewable energy sources…

Traditional Transit and High-Speed Rail. Grants from the Recovery Act also will help upgrade the reliability and service of public transit and conventional intercity railroad systems. For example, $8 billion is going to improve existing, or build new, high-speed rail in 100- to 600-mile intercity corridors…

Clean Energy Equipment Manufacturing. The Recovery Act investments are increasing the Nation’s capacity to manufacture wind turbines, solar panels, electric vehicles, batteries, and other clean energy components domestically. As the United States transitions away from fossil fuels, demand for advanced energy products will grow, and these investments in clean energy will help American manufacturers participate in supplying the needed goods. (pp. 243-245)

In the quotation above, we have omitted some of the items—such as research on batteries—that could plausibly be classified as “basic R&D.” But as the list above shows, much of the spending programs are the furthest things from basic R&D, and are quite obviously examples of the government shoveling money to favored constituencies. Engineers already know how to weatherize homes and build traditional transit systems; there is no “market failure” here from spillover benefits from R&D spending.

The Costs of Inaction?

After sketching some of the major components of the $90 billion in total government assistance for “clean energy” in the stimulus package, the president’s report goes on to describe the administration’s plans to push for a government cap on greenhouse gas emissions, as well as new mandates on energy efficiency and renewable electricity generation.

In order to stifle voter skepticism over the costs of these proposed interventions into the energy sector, proponents will usually say, “Sure the costs are high, but the costs of inaction are much higher. We can’t afford to not act when it comes to global warming.”

In this context, the reader might be surprised to examine the report’s charts which show that the actual scientific literature—even the “consensus” as codified by the Intergovernmental Panel on Climate Change’s latest report—shows that the case for alarmism is dubious:

[T]he projected losses for the most likely range of temperature changes are relatively modest. For example, at the Intergovernmental Panel on Climate Change’s most likely temperature increase of 3˚C for a doubling of CO₂ concentration (concentrations in 2100 are likely to be higher), the projected decline is 1.5 percent of GDP. (Box 9-2, page 242, emphasis added)

That is worth repeating: The Administration’s own report, in a chapter devoted to the need to “transform the energy sector,” admits that doing absolutely nothing would “most likely” lead to a “relatively modest” impact. This is consistent with the CBO’s modeling which showed that a “pessimistic” estimate of the damages from inaction are lower than the high-end estimate of the economic cost of the Waxman-Markey cap-and-trade bill by the year 2050.

Of course, it’s always possible that unchecked greenhouse gas emissions will lead to disaster. After letting the cat out of the bag regarding the “most likely” impacts from letting the market and nature run their course, the president’s report tells us:

The projected relationship between temperature changes and consumption losses is nonlinear—that is, the projected losses grow more rapidly as temperature increases. For example, while the projected loss for the first 3˚C is 1.5 percent, the loss at 6˚C is five times higher. And the estimated loss associated with an increase of 9˚C is about 20 percent [of consumption’s share of GDP]…Overall, it is evident that policy based on the most likely outcomes may not adequately protect society because such estimates fail to reflect the harms at higher temperatures. (ibid, bold added)

Those are scary numbers, it’s true. But how likely is it that human activities will cause the world to increase 9˚C, when the total warming since the start of the Industrial Revolution has been about 0.7˚C? As this graph from the IPCC’s latest report shows—across three different emission scenarios and five different modeling teams—the probability of such a rapid warming is virtually zero. Once the government gets permission to transform entire sectors of the economy because of the dangers posed by extremely unlikely outcomes, the sky’s the limit.

Conclusion

The proposals to transform the energy sector are so audacious that they can’t even be justified according to the government’s own rhetoric. A simple reading of the president’s own economic report reveals that the billions in handouts violate their own alleged rationale, and the government’s own numbers show that the likely threat of climate change is less damaging than the Waxman-Markey cap-and-trade plan.

So, what is this doing to the U.S. economy, potential future jobs, and energy prices? The National Association of Regulatory Utility Commissioners (NARUC) has just released a study that looks at what these additional oil and natural gas resources would accomplish in those areas.[i] NARUC commissioned Science Applications International Corp. (a consulting and modeling company) and the Gas Technology Institute (a natural gas consulting group) to perform the study.[ii] Although the study was sponsored by electric utilities and oil and natural gas companies,[iii] its reviewers included administration officials in the Department of Energy, the Energy Information Administration, the Federal Energy Regulatory Commission, and the Bureau of Land Management.[iv]

What Did the Study Find?

If the Federal government never allows access to the lands previously under moratoria, the study projects, there will be fewer jobs, lower economic output, higher energy prices, more oil and natural gas imports, and larger outlays to the Organization of Petroleum Exporters (OPEC). Gross Domestic Product (GDP) will be $2.36 trillion less between 2009 and 2030, the study’s time horizon. That amounts to an average decrease of 0.52 percent annually in GDP.[v] Employment in energy intensive industries is projected to be almost 13 million jobs lower,[vi] at a time when we desperately need jobs in the United States to spur economic growth and consumer spending.

Average annual energy prices for our critical fuels are expected to be higher: natural gas by 17 percent, electricity by 5 percent, and motor gasoline by 3 percent.[vii] Owing to lower average crude oil production (by almost 15 percent annually) and average natural gas production (by about 9 percent annually), imports of these fuels would have to be higher. Oil imports from OPEC are projected to be 4.1 billion barrels higher, an average annual increase of nearly 19 percent, resulting in increased cumulative payments to OPEC of $607 billion. Natural gas imports are projected to be 15.7 trillion cubic feet higher, an average annual increase of almost 75 percent.[viii] All these cost increases result in increased cumulative energy costs to consumers of $2.35 trillion ($3,700 per person), an average annual increase of 5 percent.[ix]

How Did the Study Reach Its Conclusions?

If the lands previously under moratoria were allowed to be leased, the offshore oil resource base would increase by 37 billion barrels and the onshore oil resource base would increase by 6 billion barrels, the latter entirely in the Arctic National Wildlife Refuge in Alaska. For natural gas, the resource base would be 132 trillion cubic feet higher for onshore resources and 154 trillion cubic feet higher for offshore resources.[x] These resources were added to the resource base assumed in the 2009 Annual Energy Outlook version[xi] of the National Energy Modeling System[xii] maintained by the Energy Information Administration, an independent agency of the U.S. Department of Energy. As a result of this calculation, the natural gas resource based was increased from 1748 trillion cubic feet to 2034 trillion cubic feet, and the oil resource base was increased from 186 billion barrels of oil to 229 billion barrels of oil.[xiii] The consultants then projected impacts using the difference between the two scenarios modeled—one with the increased resource base numbers and one without them.

How Much Oil and Gas Do These Resource Numbers Represent?

The U.S. consumed 6.8 billion barrels of oil in 2009[xiv] and 23.2 trillion cubic feet of natural gas in 2008[xv] (the last year of complete data). The 43 billion barrels of oil would add over 6 years of consumption, assuming all the oil consumed is produced domestically, and almost 17 additional years of consumption if we continue importing oil at current levels. The 286 trillion cubic feet of natural gas would provide more than 12 additional years of consumption, assuming no imports of natural gas, and almost 15 years if we continue importing at current levels.

What Is the Obama Administration Doing?

The Obama administration is looking to green energy to stimulate our economy and increase jobs. So far, even though the Obama administration—with Congressional approval—has poured millions of stimulus dollars into green energy, we are no closer to solving our unemployment problems. That’s because the largest employment component of green jobs is in the manufacture of the component parts of the green technologies,[xvi] and these jobs are largely going offshore, where labor costs are lower. The American Wind Energy Association reported that the U.S. wind industry had gained about 2,000 installation and maintenance jobs in 2009 by constructing and maintaining a record addition of almost 10,000 megawatts of new capacity.[xvii] But wind power manufacturing lost just as many jobs to offshore developers.[xviii] Further, a recent study by the Investigative Reporting Workshop of American University has found that almost 80 percent of the stimulus funds awarded to renewable energy technologies have gone to foreign firms.[xix]

Also, the Department of Interior, led by Ken Salazar, has slowed the progress made by the Bush administration in accelerating oil leases on lands previously under moratoria. Less than a month after taking office, the Obama administration decided that they needed 6 additional months to hear from the American people on this issue,[xx] even though the Bush administration had already solicited comments.

In December of 2009, newly elected Virginia Gov. Bob McDonnell wrote a letter to Interior Secretary Ken Salazar urging him not to obstruct offshore drilling projects. McDonnell was planning on future income for his state in the form of taxes that it would receive from oil and gas companies drilling off its shore. The Bush administration’s offshore plan called for leasing 3 million acres about 50 miles from the Virginia shoreline in November 2011. But the Minerals Management Survey of the U.S. Interior Department recently announced its plan to wait until at least 2012 to issue any oil and gas drilling leases off the Virginia coast, claiming that more time was needed to evaluate what environmental impact offshore drilling would have.[xxi]

Conclusion

The American public indicated their support for offshore drilling back in 2008 when oil and gasoline prices were very high,[xxii] and recently reconfirmed it.[xxiii] They recognize that energy is important not only to our daily lives, but also to our economic growth. The Obama administration, however, wants to rely on green energy, which studies have shown are not contributing much to employment in the United States. Following through with leasing areas under moratoria could result in nearly 13 million jobs between now and 2030, while keeping our energy costs here in the U.S. lower, and providing OPEC with fewer U.S. dollars. The decision appears to be a “no brainer.”

[i] http://www.naruc.org/Special/GasMoratorium_EXESUMMARY.pdf

[ii] Greenwire, OIL AND GAS: Federal production curbs taking big bite out of economy – study, February 15, 2010, http://www.eenews.net/Greenwire/2010/02/15/archive/8?terms=AND+GAS%3A+Federal+production+curbs+taking+big+bite+out+of+economy+%E2%80%93+study%2C+

[iii]In addition to NARUC, the study was also sponsored by several other large companies, including the American Chemistry Council, the American Gas Association, the American Petroleum Institute, BP America Production, Shell Exploration and Production Co., the Edison Electric Institute, and the National Petrochemical and Refiners Association.

[iv] The Wall Street Journal, Regulators' Report Warns Of Econ Harm From US Oil Ban, February15, 2010, http://online.wsj.com/article/BT-CO-20100215-706458.html?mod=WSJ_latestheadlines

[v] http://www.naruc.org/Special/GasMoratorium_EXESUMMARY.pdf

[vi] Consumer Energy Alliance, NEW STUDY REVEALS ECONOMIC CONSEQUENCES OF PRESERVING STATUS QUO ON ENERGY, February 15, 2010, http://consumerenergyalliance.org/2010/02/cea-new-study-reveals-economic-consequences-of-continued-inaction-on-american-energy-exploration/

[vii]http://www.naruc.org/Special/GasMoratorium_EXESUMMARY.pdf

[viii] Ibid

[ix] Ibid

[x] Ibid

[xi] Energy Information Administration, Assumptions to the Annual Energy Outlook 2009, http://www.eia.doe.gov/oiaf/aeo/assumption/oil_gas.html

[xii] Energy Information Administration, National Energy Modeling System: An Overview 2009, http://www.eia.doe.gov/oiaf/aeo/overview/index.html

[xiii] Ibid

[xiv] Energy Information Administration, Monthly Energy Review, http://www.eia.doe.gov/emeu/mer/pdf/pages/sec3_3.pdf

[xv] Energy Information Administration, Monthly Energy Review, http://www.eia.doe.gov/emeu/mer/pdf/pages/sec4_3.pdf

[xvi] Renewable Energy Policy Project, Wind Turbine Development: Location of Manufacturing Activity, Page 4, http://repp.org/wind_turbine_dev.htm

[xvii] American Wind Energy Association, http://www.awea.org/newsroom/releases/01-26-10_AWEA_Q4_and_Year-End_Report_Release.html

[xviii] Los Angeles Times, Wind energy job growth isn’t blowing anyone away, February 2, 2010, http://www.latimes.com/business/la-fi-green-jobs2-2010feb02,0,6156904.story

[xix] http://investigativereportingworkshop.org/investigations/wind-energy-funds-going-overseas/story/renewable-energy-money-still-going-abroad/

[xx] The Washington Times, Obama Blocks Offshore Drilling, February 11, 2009, http://www.washingtontimes.com/news/2009/feb/11/drilling-ban-revisited/

[xxi] Greenwire, OFFSHORE DRILLING: Leases off Va. coast delayed until at least 2012, January 27, 2010 http://www.eenews.net/Greenwire/2010/01/27/archive/8?terms=OFFSHORE+DRILLING%3A+Leases+off+Va.+coast+delayed+until+at+least+2012

[xxii] http://www.instituteforenergyresearch.org/2008/09/24/national-offshore-energy-poll/

[xxiii] http://www.instituteforenergyresearch.org/2010/02/12/drill-gate-obama-administration-ignores-american-people-enacts-de-facto-offshore-energy-exploration-and-production/

• IER President: “Americans need jobs and America needs fuel to drive economic growth and prosperity. Increasing domestic energy production is a common sense solution embraced by a clear majority of Americans”

Washington, DC – Today, one in 10 Americans are out of work. However, the Obama Administration has the opportunity to help create hundreds of thousands of jobs, increase America’s long-term energy security and reduce our dependence on imported energy by allowing responsible, environmentally-sound offshore energy production.

“The President has directed an enormous amount of hard-earned tax dollars to prop up ‘green jobs’ that would otherwise not exist without heavy and ongoing government support. At the same time, this Administration has discouraged common sense job creation efforts, especially responsible offshore oil and gas development,” said Thomas J. Pyle, president of the market-oriented Institute for Energy Research (IER). “And despite widespread public support for increasing all forms of domestic energy – especially offshore – the President and his Administration continue to add layers of red tape and bureaucratic hurdles on access to homegrown energy.”

Pyle is referring to the job-creating energy resources along the outer continental shelf (OCS), an energy-rich area located between 3 and 200 miles off our coast. Developing oil and gas reserves along the OCS has the potential to create 1.2 million jobs and provide an additional $70 billion in annual wages.

“This Administration continues to embrace Washington-dominated, command-and-control national energy policies focused on mandates, subsidies and political favors – not market forces,” continued Pyle. “Subsidizing one form of energy, while restricting the exploration of another, will lead to several measurable outcomes: increased energy prices across the board, fewer jobs and a weaker footing in the global economy.”

According to the Interior Department, this Administration has leased less taxpayer-owned land than any other year on record during its first year in office, while realizing one-tenth the amount of revenue from leasing taxpayer-owned land than it did in 2008.

Pyle notes that free enterprise continues to create tens of thousands of energy-related jobs right here at home.

“Without a government handout or a Washington mandate, natural gas production created nearly 48,000 jobs last year in Pennsylvania alone,” said Pyle. “Now more than ever, Americans need jobs and America needs fuel to drive economic growth and prosperity. Increasing domestic energy production is a common sense solution embraced by a clear majority of Americans. If the President was serious about redirecting our economy and helping to put struggling Americans back to work, he’d move forward aggressively to expand domestic energy production.”

More from IER:

• OCS Economic Impact Study
• Actions Speak Louder Than Words on Domestic Energy Production
• IER sets the record straight on Obama Admin energy leasing program

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

#####

WASHINGTON – Following President Obama’s remarks on “green” jobs and “clean energy technology,” Thomas J. Pyle, president of the market based Institute for Energy Research (IER), issued the following statement on the President’s commitment of $2.3 billion additional taxpayer dollars to further subsidize the wind and solar energy industry:

“Show me one other industry that requests and receives a nearly 30 percent taxpayer subsidy. That’s what the wind and solar industries require – at a minimum – to exist. All the President did today is throw more money at an unproven technology that is not economically viable in the marketplace.  Unfortunately, the only winners in this latest taxpayer giveaway will be Wall Street money managers and corporate interests in the wind and solar industry.

“If the President really wants to create an environment that will foster economic growth and job creation, he need not look any further than the domestic oil, gas and coal industries. These three industries and energy sources built this nation. For the Administration to continue to ignore this fact and to keep the vast resources that taxpayers own under lock and key at the Department of Interior is irresponsible and a disservice to the American people.

“The outer continental shelf (OCS), if opened for business, would create over 1 million high-wage jobs. It would reduce our dangerous dependence on hostile nations for their energy resources and spur economic growth across all fifty states. Development of these energy resources will create sustainable employment, not taxpayer dependent make-work jobs.

“Unfortunately, today’s announcement only continues the expensive, failed energy policy this Administration brought to town one year ago.  The American people deserve better than this.”

Studies: IER Green Jobs Resources

IER Press Release: 1.2 Million Energy Jobs Available, Will Obama Admin. Open OCS for Business?

Wall Street Journal: Clean Energy Sources: Sun, Wind and Subsidies

Fact Sheet: Facts on Wind Energy

Fact Sheet: Facts on Solar Energy

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

#####

Washington, DC – As part of the ongoing efforts in the US Senate to enact sweeping, energy-rationing legislation, the Senate Finance Committee held a hearing today entitled “Climate Change Legislation: Considerations for Future Jobs.” Following the hearing, Thomas J. Pyle, president of the non-partisan, market-oriented Institute for Energy Research (IER), issued this statement:

“There is perhaps nothing more misleading surrounding the ongoing global warming debate than claims that cap-and-trade legislation will be a jobs boon and will spur economic activity. Look no further than the DeSoto Solar Center in Florida – a Florida Power and Light installation. On his recent visit, President Obama touted the center as the ‘largest solar field in the United States.’ However, the president failed to mention that the panels and other items were all manufactured abroad. The solar cells came from the Philippines; the steel mountings from Canada; the electric boxes from Germany. And how many ‘green jobs’ have been created there? Two full-time employees, six part-time groundskeepers that will work one week a month during the rainy season.

“Cap and trade backers often cite European countries, like Spain and Germany, as a model for the US follow. Yet both of these nations have failed miserably at delivering affordable and reliable energy and creating jobs. Spain’s government has committed more than $753,000 per ‘green job’ over the past 9 years. And in Germany, per worker annual taxpayer subsidies have reached $240,000. Beware of the politician promising you a green job in one hand because he is pick-pocketing you with the other.

“Washington must craft comprehensive energy policies that do not empower Congress or bureaucrats to determine which energy forms win or lose in the market. Cap and trade aims to increase the cost of our most affordable, abundant and reliable energy forms, including coal, oil and natural gas. With unemployment now at a 26-year high, raising energy costs across the board and making it more difficult for us to compete in the global economy is not the right solution to help put Americans back to work.”

READ MORE: Key experts from a recent Washington Post article entitled “Painting a street green hasn’t stimulated one new job”:

In Baltimore, the 300 block of East 23 1/2 Street is getting patched up in time for winter. One economic stimulus program is paying to insulate 11 rental rowhouses, another is paying for furnaces and a third is covering the cost for reflective roofs to be installed by prison inmates in a job-training program.

The block is part of one of the biggest initiatives ever undertaken by the federal government, a nationwide push to improve the energy efficiency of buildings. But as the national unemployment rate crosses into the double digits and Republicans question the stimulus program’s impact, the work on East 23 1/2 — even with all of its activity — has so far not produced a single job.

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

#####

Green Stimulus Money Going Overseas

Since September 1, 84 percent of the $1.05 billion in clean energy grants has gone to foreign wind companies. Foreign countries benefiting from stimulus funds for wind technology are Spain (57%), Germany (12.6%), Japan (9.5%), and Portugal (5%).[i] Companies began applying for grants at the end of July and awards were announced by the two joint administrators of the program, the Energy and Treasury Departments, beginning on Sept. 1. In the first round of the grants, 77% went to foreign wind developers, followed by 84% in the second round. Of the 11 wind farms that received grants, 695 of the 982 installed turbines were manufactured by a foreign company.[ii]

Further, there are few restrictions on how the grants can be used. According to the Investigative Reporting Workshop at American University, over $800 million were provided to wind farms that were already producing electricity. As required by law, all 11 wind farms started operating after January 1, 2009, but before the grants were awarded.[iii]

Turbine Manufacturing Dominated by Foreign Competitors

The U.S. currently has the most installed wind capacity in the world, but it is not a leader in the manufacture of turbines. The Investigative Reporting Workshop reported that of the turbines currently under construction in the U.S., 67 percent are slated to be purchased from foreign-owned turbine manufacturers.[iv] According to U.S. customs data for 2008, and the U.S. Trade Commission, the U.S. imported $2.5 billion worth of wind turbines last year—up from $365 million in 2003.

In the future, wind turbines and/or their component parts may be coming from China where lower labor costs have allowed Chinese-made products to dominate many manufactured goods in the U.S. GE, a major U.S. wind turbine producer, already owns three facilities in China that produce turbine components. GE is also planning a factory in Vietnam that will employ 500 local workers and export 10,000 tons of components to GE Energy assembly plants around the world.[v]

China is already beginning to develop its own strong hold for wind power in the U.S. A joint venture between China’s Shenyang Power Group, the U.S. Renewable Energy Group, and Cielo Wind Power LP to develop a 600 megawatt wind farm on 36,000 acres in West Texas, costing $1.5 billion, was announced on October 29, 2009.[vi] A-Power Energy Generation Systems Ltd., a provider of distributed generation systems in China and a fast-growing manufacturer of wind turbines, will supply the turbines. A-Power Energy entered the wind power industry last year.[vii] Delivery of wind turbines for the West Texas wind farm is scheduled for March 2010.[viii]

Graphic courtesy Investigative Reporting Workshop

Solar Cells Manufactured Overseas

Not only are wind turbines mostly manufactured in countries overseas, but so are photovoltaic (PV) cells. Florida Power & Light (FPL) started operating its 25 megawatt photovoltaic solar plant in southwest Florida in conjunction with a visit to the plant by President Obama on October 27. [ix] The DeSoto plant in southwest Florida is the first of a total of 110 megawatts of solar capacity that FPL will install at 3 different sites by the end of 2010. Although Obama praised FPL’s work in the solar arena, he did not tell the American public that the components of the DeSoto plant are from foreign countries. While the PV cells were provided by a firm from California, they were made in the Phillipines. The steel PV frame holding the cells was produced in Canada, and the electrical parts and boxes were made in Germany, where solar power has been given heavy subsidies by the German Government. While German manufacturers have been producing PV technology for their country’s solar expansion, they are now concerned that China will take over their market due to costs that are 30% lower.[x]

Conclusion

The Obama Administration has told the American public that it will produce jobs and stimulate the U.S. economy through green energy technology. He has also touted that stimulus funds will be used for goods made in America. Yet, the the Investigative Reporting Workshop at American University finds that this is not the case. And, more examination of green energy development in the U.S., shows Asian and European countries well established here in providing the component parts for green energy technology.

The problem is not with international trade per se. In a genuinely free market, where politicians do not pick winners or losers, the most efficient firms would capture market share, be they American or foreign. The result would be the best products at the lowest prices for American consumers.

The real problems are a government “stimulus” plan and efforts to centrally plan a “green economy.” The government can only “stimulate” by spending money that it has first taxed or borrowed from the private sector. It would be bad enough for the government to destroy jobs in American fossil fuel industry while spending money on domestic producers of “green energy.” But it is particularly absurd for the U.S. government to cripple American industry while shoveling the lion’s share of the pork into the hands of foreign beneficiaries.

[ii] Ibid.

[iii] Ibid.

[iv] Ibid

[v] “Vietnam’s first turbine component plant underway”, May 13, 2009, http://www.vietnewsonline.vn/News/Business/Companies-Finance/6072/Vietnams-first-turbine-component-plant-underway.htm

[vi] www.reuters.com/article/pressRelease/idUS200008+29-Oct-2009+BW20091029

[vii] “Lone Star, Meet Red Star: China’s $1.5 Billion Wind-Power Deal in Texas”, October 30, 2009, http://blogs.wsj.com/chinarealtime/2009/10/30/lone-star-meet-red-starchina%e2%80%99s-15-billiob-wind-power-deal-in-texas/

[viii] www.reuters.com/article/pressRelease/idUS195122+29-Oct-2009+PRN20091029

[ix] http://www.instituteforenergyresearch.org/2009/10/26/highest-cost-generating-plant-comes-on-line-in-florida-to-obama-fanfare/

[x] “Solar-Power Incentives in Germany Draw Fire,” Vanessa Fuhrmans, Wall Street Journal, September 28, 2009, http://online.wsj.com/article/SB125383541153239329.html