President Barack Obama routinely touts job creation as a benefit of transforming our energy economy away from fossil fuels. After all, if we are going to power the country with wind and solar energy, we will need a lot of people to build, install and maintain wind turbines and solar panels.
It's hard to argue with that logic. Ramping up industries to levels of production many times what they presently produce undoubtedly will lead to employment gains in those fields. But scratch the surface and examine the costs involved — both in what they mean for renewable energy technologies as well as for the economy at large — and one quickly gets the sense that job promises are a smokescreen to deflect attention from the ugly economics of green energy.
As a candidate, Obama said his administration would spend $150 billion over the course of a decade to create 5 million new green jobs. Most commentators have highlighted the impressive-sounding 5 million figure. My attention was drawn to the other number, which means Obama calculates it will cost taxpayers $30,000 to create each new job.
Obama's guess is modest compared to what other advocates claim it will cost to "create" jobs. The Center for American Progress estimated last year that federal outlays of $100 billion over a two-year period would create 2 million green jobs, or roughly one new position for every $50,000 spent by taxpayers. The Apollo Alliance, whose board has long featured Van Jones,the new White House green jobs coordinator, estimates it would take $500 billion (roughly 20 times the annual budget of the entire U.S. Department of Energy) to create 5 million jobs, a cost of $100,000 per job.
If new green employment makes sense for the economy, as advocates suggest, then why should there be a high public price tag on creating these jobs? And can anyone really trust these numbers? An Apollo Alliance official all but admitted to the Wall Street Journal that its figures were plucked out of the air. Asked to explain the vast discrepancy between Obama's expensive jobs figure with the Apollo Alliance's three-times-more expensive figure, the official replied, "Honestly, it's just to inspire people."
Worse, these estimates don't factor in the costs to the economy of trying to force a wholesale switch to renewable energy technologies that are considerably more expensive than the oil, natural gas, coal and uranium we rely upon today to meet about 95 percent of our energy needs.
Wind, solar, biomass and other so-called green sources of energy operate on the fringes of our energy economy precisely because they are more expensive and less reliable. And this comes despite decades of generous subsidies.
The U.S. Energy Information Administration calculates that taxpayers subsidize solar and wind energy at more than $23 per megawatt-hour of electricity produced. Yet they are still too costly to be competitive: Combined, they produce less than 1 percent of the nation's power.
Compare the green subsidies to the energy sources reviled by environmentalists, such as natural gas (25 cents per megawatt-hour in subsidies), coal (44 cents), hydroelectricity (67 cents) and nuclear power ($1.59).
Even with massive new infusions of government cash, there's only so far renewables can come down the cost curve. Why? Because the energy sources they seek to harness are diffuse and diluted, requiring huge amounts of space to offer what coal or gasoline or especially uranium offer in relatively small packages. Forcing Americans to get their energy from more expensive sources will — no surprise — drive up costs all across the board. And higher energy costs usually mean job losses, particularly in energy-intensive industries like heavy manufacturing.
In Washington's blinkered calculus, perhaps each unemployed factory worker can transition to a job installing solar panels. But that would only replace efficient sources and uses of energy with inefficient ones. It wouldn't create wealth.
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