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On Green Energy: A Dutch (Re)Treat

Sunday, April 10, 2011

The Dutch have been enamored of wind power for hundreds of years. But even they may have finally had enough tilting at windmills.

Green is the new black, in both the United States as well as Europe. Virtually everyone on the left has thrown on the green pants, green shirts, and green cloak of what, they assure us, is the future of life on earth as we know it. President Barack Obama, Vice President Joe Biden, House Minority Leader Nancy Pelosi, and other political luminaries such as former California Governor Arnold Schwarzenegger promise us a bright green future, with green energy powering green technologies, creating green houses, buildings, cars, and jobs, jobs, jobs.

I recently studied whether or not the whole “green energy leads to green jobs” paradigm has any merit, by examining how things have worked out in Europe, where it has been tested extensively.

This article is the first in a series that will look at the green jobs experience in Europe. Here, we focus on the Netherlands.

The Netherlands went big for wind power, particularly offshore wind. The Netherlands is the world’s third-largest producer of offshore wind power. And while there are no data available about green jobs in the Netherlands, there is evidence that its green power plants will not produce many, because the new conservative government has radically reversed course and is slashing subsidies to wind and solar power.

In the Netherlands, the new conservative government has radically reversed course, slashing subsidies to wind and solar power.

According to the journal Energy Debate, the new Dutch government has lost its faith in windmills. The government has taken exception to the massive subsidies required to build and operate wind farms, and to the expected export of €4.5 billion in subsidies to a German company (Bard Engineering) that would have built, owned, and operated the wind farms. The new prime minister of the Netherlands, Mark Rutte, is reported to have said that “windmills turn on subsidies.”

On November 30, 2010, the government unveiled its new renewables plan, slashing annual subsidies from €4 billion to €1.5 billion. And not only are the subsidies cut back, what remains will be redirected well away from wind power. As Energy Debate explains,

In the new system (somewhat misleadingly called SDE-plus), which will take effect halfway through 2011, the government will allocate subsidies in an entirely different, and rather complicated way. Subsidies are made available in four “stages” (on the basis of first-come, first-served).

1) In the first stage, a government subsidy of 9 eurocents per kWh (or 79 cents per m3 for gas) is offered, but only to producers of technologies that have “deficits” of less than 9 eurocents. Based on the figures from ECN, these are: biogas (“green gas”), hydropower, power from waste processing installations, and gas from fermentation processes.

2) If there is still money left after this first stage, the second stage will be opened up, in which a subsidy of 11 eurocents per kWh (or 97 cents per m3) will be offered. This stage will be open to producers of onshore wind power and fertiliser-based gas.

3) Again, if there is money left, there will be a third stage with subsidies of 13 cents per kWh or 114 cents per m3. This will be open to producers of hydropower and small-scale biomass.

4) The fourth and last stage (15 cents per kWh or 132 cents per m3) will be open to electricity produced from all-purpose fermentation processes.

Not included in any of the four categories, because they are too expensive, are solar power, large-scale biomass and, indeed, offshore wind power.

Another change in the Dutch attitude toward renewables is how to pay for the subsidies. In the past, subsidies were paid out of the general budget. Moving forward, consumers will see a surcharge on their energy bills.

According to reports, the new government was planning on a nuclear power renaissance to generate electricity, and one could certainly argue that such a plan would generate “green jobs.” In the wake of the tragic Japanese earthquake and tsunami in March 2011, however, one has to assume that such a plan will get a great deal of scrutiny.

The irony here is rich. The Dutch, who have been enamored of wind power for hundreds of years, may have finally had enough tilting at windmills. If even they can’t make it work, one has to wonder if anyone can.

Kenneth P. Green is a resident scholar at the American Enterprise Institute.

FURTHER READING: Green also wrote “Obama’s Energy Blueprint: Same Silliness, Different Day,” “A Punching Bag No More,” and “Cap-and-Trade by Any Other Name.” He recently studied “The Myth of Green Energy Jobs: The European Experience,” explained “Empowering the Free Energy Markets,” and queried “Can the U.S. Compete on Rare Earths?”

Image by Darren Wamboldt/Bergman Group.

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