Wednesday, November 05, 2008

"It's Not Easy Going Gren"

With wall to wall converage of Barack Obama's historic win including all sorts of speculation about the Fairness Doctrine, we thought it only appropriate to give some bandwidth to the loyal opposition. To wit, the Heritage Foundation's blog post about Obama's green energy agenda:

Commenting on the top priorities of the Obama administration, former Clinton chief of staff Leon Panetta told The Los Angeles Times: “First you’ve got to deal with the economy. If you don’t get that back on track, it undermines every other priority you want to achieve.” And just how does Obama plan to fix the economy? In his closing argument to voters last week Obama promised, “And I will invest $15 billion a year in renewable sources of energy to create 5 million new energy jobs over the next decade — jobs that pay well and can’t be outsourced.”

That $15 billion a year translates into $150 billion over ten years, and as Reason’s Jacob Sullum points out, closely matches the rhetoric of Obama’s enviro-leftist supporters:

The Apollo Alliance, a coalition of environmentalists and labor unions, wants the federal government to spend $500 billion over 10 years to “build America’s 21st century clean energy economy” and thereby “create more than five million high quality green-collar jobs.” Barack Obama says he can accomplish the same goal for only $150 billion, which gives you a sense of how reliable these projections are.

So does it take $500 billion or $150 billion in new government spending to create 5 million new “green-collar” jobs? Listening to some on the left, the answer is neither. It’s zero. A recent University of California study claims that California’s energy efficiency policies have already created over 1.5 million jobs. But as Heritage fellow David Kreutzer points out, this study’s methodology is seriously flawed:

The study notes that per capita electricity use in California is 40 percent less than the national average and attributes this reduction to efficiencies brought on by state policies. But Californians pay 36 percent more for their electricity, have watched manufacturing’s share of state output drop by 15 percent since 1980, need less electricity for heating and cooling than the rest of the nation, live in smaller houses than the national average, and pay billions of dollars to generate electricity using inefficient alternatives.

Obama wants to mandate that 10% of electricity come from renewable sources by 2012 and 25% by 2025. Currently the U.S. gets 8% of its electricity from renewable energy, but that includes 6% from hydroelectric power. Obama’s leftist allies are in the business of tearing down hydropower plants, not generating new capacity. That means biomass, geothermal, wind and solar will have to increase their share of electricity generation from a current 2% to 17% by 2025.

A recent RAND Corporation study found, without “dramatic progress in renewable energy technology,” meeting Obama’s 25% by 2025 goal would cause “significantly increasing consumer costs.” And, as Sullum points out, the study did not even consider “the transition and adjustment costs associated with initiating such a significant shift from fossil fuels to renewable energy technologies.”

Kreutzer concludes:

Energy is a valuable input to the modern economy. Cutting CO2 makes less energy available, and when the impacts are traced through the economy, some jobs are created but more are lost. Counting only the jobs that are created distorts the analysis and invalidates the conclusions.
When all is said and done, restricting CO2 cuts energy, income, and jobs. Pretending that breaking windows creates employment may make choosing among alternatives easier, but it leads to bad policy.