On Green Energy: Renewable Energy Fails to Green the U.K. Economy
Friday, April 15, 2011
Pursuing a new green energy economy in the United Kingdom has led to lost jobs and higher energy prices.
President Obama, Vice President Joe Biden, Minority Leader Nancy Pelosi, and other political luminaries such as Arnold Schwarzenegger promise us a bright green future, but let’s look at how things have worked out in Europe, where green energy has been tested extensively. Does green energy lead to green jobs? This article is the second in a series that will look at Europe’s experience. This time, we focus on the United Kingdom.
Our Commonwealth cousins across the pond have also embraced the “green power means green jobs” theory. The United Kingdom (Scotland, particularly) has pursued an ambitious wind-power agenda.
Former Prime Minister Gordon Brown told a Labour Party conference that “I am asking the climate change committee to report by October on the case for, by 2050, not a 60 percent reduction in our carbon emissions, but an 80 percent cut, and I want British companies and British workers to seize the opportunity and lead the world in the transformation to a low-carbon economy. And I believe that we can create in modern green manufacturing and service one million new jobs.”
The report’s key finding is that for every job created in the United Kingdom in renewable energy, 3.7 jobs are lost.
Ed Miliband, currently leader of the opposition, is also big on wind, announcing that “with strong government backing, the UK is consolidating its lead in offshore wind energy. We already have more offshore wind energy than any other country, we have the biggest wind farm in the world about to start construction, and now we'll see the biggest turbine blades in the world made here in Britain… Our coastline means the offshore wind industry has the potential to employ tens of thousands of workers by 2020. "
Party does not seem to be a factor in green job-boosting. Prime Minister (and Conservative Party leader) David Cameron, discussing a deal to work on wind turbines with India, said “the innovation and creativity of business won’t just help us save the planet, but is expected to create millions of jobs and billions of revenue in the green goods and services market.” Referring to offshore wind, Cameron is equally bullish: “I want us to be a world leader in offshore wind energy,” he said, announcing the national infrastructure plan. “We are making these investments so that major manufacturers will decide that this is the place they want to come and build their offshore wind turbines. This investment is good for jobs and growth, and good for ensuring we have clean energy.”
Alas, as a recent report by consultancy Verso Economics points out, the United Kingdom and Scotland have not fared well in their pursuit of the new green energy and green jobs economy. The Verso Economics study is particularly interesting because its methodology is touted as superior to the methodology used in similar studies. Rather than simply calculating how much it costs the government to create a green job and then using the average cost of a regular job to determine the ratio of jobs created to jobs destroyed, Verso uses what economists refer to as “input/output” tables to estimate the number of jobs that were foregone in the U.K. general economy in favor of the green jobs that were created through governmental subsidization.
• The report’s key finding is that for every job created in the United Kingdom in renewable energy, 3.7 jobs are lost. In Scotland, there is no net benefit from government support for the sector, and probably a small net loss of jobs.
• The main policy tool used to promote renewable energy generation is the Renewables Obligation, which effectively raises the market price paid for electricity from renewable sources. This scheme cost electricity consumers £1.1billion in the United Kingdom and around £100 million in Scotland in 2009-2010.
• This report uses the Scottish government’s own macroeconomic model for Scotland to assess the impact of identified costs on jobs. A similar model was used by the Scottish government to measure the opportunity cost of the cut in a value-added tax implemented in 2008-2009. Based on this, policy to promote renewable energy in the United Kingdom has an opportunity cost of 10,000 direct jobs in 2009-2010 and 1,200 jobs in Scotland.
• In conclusion, policy to promote the renewable electricity sector in both Scotland and the United Kingdom is economically damaging. Government should not see this as an economic opportunity, therefore, but should focus debate instead on whether these costs, and the damage done to the environment, are worth the candle in terms of climate change mitigation.
While the United Kingdom and Scotland may have avoided the corruption problems that afflicted green energy in Spain and Italy (look for details in the Verso study and the rest of this article series), they learned something that the warmer countries did not: wind turbines, it seems, can freeze over in winter. Not only do they cease to put out power in very cold weather, they actually need to be heated. As reporter Richard Littlejohn points out in UK Daily Mail:
Over the past three weeks, with demand for power at record levels because of the freezing weather, there have been days when the contribution of our forests of wind turbines has been precisely nothing. It gets better. As the temperature has plummeted, the turbines have had to be heated to prevent them seizing up. Consequently, they have been consuming more electricity than they generate. Even on a good day they rarely work above a quarter of their theoretical capacity. And in high winds they have to be switched off altogether to prevent damage.
The frozen turbine problem has also been seen in Canada. As Greg Weston of the Telegraph-Journal points out in an article from February 2011:
A $200-million wind farm in northern New Brunswick is frozen solid, cutting off a supply of renewable energy for NB Power. The 25-kilometre stretch of wind turbines, 70 kilometres northwest of Bathurst, has been shut down for several weeks due to heavy ice covering the blades. GDF Suez Energy, the company that owns and operates the site, is working to return the windmills to working order, a spokeswoman says.
Will the green-energy crowd ever acknowledge such flaws? Probably not, because when it comes to the downsides of “green energy” or “clean energy,” their feet are wet and they can see the pyramids. Yes, they are in de Nile.
Kenneth P. Green is a resident scholar at the American Enterprise Institute.
FURTHER READING: Previously in this series, Green wrote “On Green Energy: A Dutch (Re)Treat.” 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.