Over my almost three years at Cascade Policy Institute, I have noticed that there are many misconceptions, myths and other assertions about renewable energy that need to be cleared up. This blog post is the first of many I hope to release that debunk some of the current issues surrounding government involvement in advancing, promoting and subsidizing renewable energy.
Often when I discuss subsidies, someone chimes in with a response that fossil fuels receive subsidies. This is true. I believe that fossil fuels should not receive subsidies either. Two wrongs never make a right. Let’s pull back layers of government without trying to use government to “solve” a government-created problem. That being said, subsidies need to be understood better. They need to be standardized to understand the true level of subsidies for different energy forms. For an energy source that barely exceeds one percent of electricity output in the U.S., wind subsidies are $23 per megawatt hour (solar is on the same level). This is around 60 times that of the $0.44 per megawatt hour that go to the foundation of U.S. electrical power output, coal. It is 100 times the $0.25 per megawatt hour that go to natural gas. Coal and natural gas account for over 70 percent of U.S. electrical power supply.
Second, some have stated that polls show that a majority support renewable energy. Well, if people truly support wind and solar power, then why do we need a mandate at all? If people truly value wind and solar power, then they will be willing to pay the real price, not just the subsidized price.
Even if you assume that the majority of Americans truly value renewable energy, it does not justify forcing a minority of the population (who do not value these forms of power) to pay for it. It is no more moral to force this minority to subsidize renewable energy than it is to force environmentalists to subsidize coal and fossil fuels. Our Republic was set up to protect personal freedoms of all, including the minority. So the majority should not attempt to force its views and values on everyone else, otherwise we will have another tyranny of the majority.
Third, I always hear from politicians and citizens that advancing, promoting and ultimately forcing the expansion of solar and wind energy will reduce our dependence on foreign oil. Petroleum products constitute less than 1% of our electricity supply. They are used primarily for transportation fuel, not for generating electricity. Having policymakers force citizens to purchase solar or wind energy does virtually nothing to reduce the amount of petroleum we import.
Fourth, many assert that renewable energy should be promoted and supported because it creates jobs. It is a fallacy to promote a certain sector of the economy because of its job creation potential. Rational economic ventures should produce the highest output with the least amount of inputs, including labor. If one truly wanted to create jobs through renewable energy, the government could mandate that wind turbines break down every month or that laborers be paid to turn the turbines when the wind stops blowing!
The claim for creating significant numbers of green jobs through subsidizing and promoting renewable energy is misguided anyway. A 2009 Spanish economic study assessed the impact of government spending on green job creation. Using two different economic methods, the authors found that for every green job that the government manages to finance, 2.2 jobs will be destroyed elsewhere in the economy. Thus, pursuing green job creation very well may be counterproductive.
Fifth, many proclaim that Oregon and the U.S. can use wind and solar energy to meet future energy demand. This claim shows a lack of understanding of how the electricity grid operates.
Electricity supply and demand must be in equilibrium, or there will be surges or brownouts. Wind and solar energy are inconsistent and unpredictable energy sources and cannot serve as base-load power generation. Base-load generation means energy sources that run 24 hours a day, seven days a week. Base-load generation serves that majority of ratepayer electricity demand.
Since wind and solar cannot be dispatchable (able to be turned on and off when needed) and are not base-load generation, these sources won’t be able to serve as a major part of our electricity supply in the near future.
And finally, some assert that Cascade’s and my views on the environment or renewable energy indicate that we do not care about environmental pollution and that everyone should be able to pollute without government intervention. Just because we at Cascade believe in choice and personal freedoms does not mean we believe in violating property rights. This is a common fallacy. The government and our Republic exist to protect property rights. This includes environmental injustices. Protection of property rights and voluntary markets are what can address almost any conceivable environmental problem. Additionally, we believe that an increase in personal freedom and deregulation will also increase the ingenuity and entrepreneurship that have brought about other amazing inventions that solve many pollution and environmental problems.