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 # 582  

September 2009

 

Renewable Energy: Truth and Consequences


by Dana Joel Gattuso

 

As the U.S. Senate takes up climate change legislation, following the House’s narrow passage of the Waxman-Markey “cap and trade” bill to curb, regulate, and tax fossil fuel production, renewable energy will take center stage while abundant and affordable oil and gas will be pushed to the wings. If the legislation passes, utilities will be required to provide at least 20 percent of their power from renewable sources by 2020.

Renewable energy is a scarce resource, extremely costly, and will impose a heavy tax burden on consumers and the economy. The following debunks just some of the myths over renewable energy sources.

Myth: Increasing the production of wind, solar, and other renewable energy sources will make it possible for everyone to have cheaper clean energy.

Fact: Wind and sunshine may seem like free and plentiful sources of energy. Yet there is nothing cheap about renewable energy. The costs of producing and transmitting alternative sources are astronomical. Even after the federal government has provided billions of tax dollars in support over the past three decades to bring the price down on renewables, their costs soar high above fossil fuel energy sources.

Most estimates put the cost of wind energy at more than 50 percent over the cost of energy from coal. According to a recent study by Black & Veatch, a Kansas-based company that builds coal, gas, and wind plants, wind power costs more than 12 cents per kilowatt-hour—the cost of getting a kilowatt of power for an hour—while energy from coal plants costs about 7.8 cents per kilowatt-hour.1

One of the reasons wind is so costly is that it is unreliable. Even the windiest areas of the nation cannot rely on a continuous supply of wind and need backup plants generated by natural gas to take over when continues wind fails. That adds significantly to the cost.

Even with President Obama’s stimulus package providing over $10 billion to jurisdictions that “go green,” local governments are finding the costs of renewable power are simply too high. The city of Durango, Colorado has powered its government buildings for two years by purchasing electricity from nearby wind farms. It now finds it can no longer afford producing wind power and will save the city $45,000 by reverting back to coal-fired electricity. According to the city manager, “It’s very hard for us to lay off an employee to justify green power. Those are the trade-offs you have to face.”2

Wind power companies say their customers will have to get used to paying higher utility bills to support their industry, according to Greenwire. As the chief officer of the company First Wind said at an investors meeting, “The key is the regulators and customers need to be willing to pay the higher prices. What you’re betting on is the increasing demand for renewable energy.”3

Solar power is even more expensive, costing 20 to 40 cents per kilowatt-hour,4 compared to about 8 cents from coal.

Promoters of renewables argue the costs of renewables are coming down. But experts predict that by 2015, wind will still cost a third more than coal and about 14 percent more than natural gas.5 Solar is expected to cost three times that of coal by 2015.6

As the New York Times reports, “Organizations that profess to be neutral about what new technology gets built suggest that renewable energy has a steep hill to climb.”7 Others argue government mandates are going to drive rates up further. Says Dorothy Rothrock of the California Manufacturing and Technology Association: “Moving to a 33 percent of renewables [as required under California law]…is going to be much more expensive than the alternative. If you have a strict mandate, then you’ll have utilities going for renewables at whatever cost.”8

The rockiest part of the climb will fall on low-income families who will have to spend a much larger share of their income to power their homes. According to Mark Toney, executive director of the California consumers’ group the Utility Reform Network, “There’s only a limited amount of renewable energy that’s been built in the state. What’s going to happen is that these renewable energy generators are going to be able to charge a higher and higher price to all the utilities that are required to buy from them.”9

Myth: Federal investments and subsidies in renewable energy have been declining over the years, leaving renewables “woefully underfunded.”

Fact: Federal support for renewable energy has escalated rapidly. Over the past decade, federal subsidies, including R&D, tax credit programs, and direct federal spending on renewable energy programs, more than quadrupled. Renewables receive a greater share of federal dollars than any other source of energy.10

Spending for research and development for renewables almost doubled over the past decade, rising from $412 million in fiscal 1999 to $727 million by 2007, in inflation-adjusted dollars.11Also, renewables received a growing share of R&D dollars over the decade. In 1999, 16 percent of federal funding for energy R&D went toward renewables; by 2007, aid had risen to 25 percent.

Furthermore, claims that renewables are underfunded consider only R&D spending and fail to include direct federal spending programs and tax credits for renewable projects.

Counting all subsidies, funding for renewable energy ballooned from $1.4 billion in fiscal 1999 to $4.9 billion in 2007, more than funding for other forms of energy. As a portion of total spending on energy subsidies, renewables support rose from 17 percent to 29 percent, the largest share of total energy subsidies.12

Tax credits and other tax expenditures, in particular, account for two-thirds of all energy subsidies. The largest of all energy tax subsidies is the Volumetric Ethanol Excise Tax Credit (VEETC), which provides a credit of 51 cents a gallon to blenders and retailers of ethanol. The subsidy has skyrocketed in inflation-adjusted dollars from a government expenditure of  $177 million in 1981, when it was first introduced to $3 billion in 2007.13

Subsidy levels in terms of their “bang for the buck” is also telling. Wind and solar receive far more subsidies for the amount of electricity they produce than other forms of energy. Where subsidies for all forms of electricity amount to $1.65 per megawatthour, subsidies for wind amount to an astounding $23.37 per megawatthour and solar $24.34 per megawatthour.14

Myth: Switching to 100 percent renewable energy generation within ten years is achievable.15

Fact: Even after accounting for President Obama’s ambitious and costly stimulus plan to ratchet up federal spending for alternative energy by $100 billion, renewables will still comprise a small amount of all energy use.16

Although the federal government has supported and subsidized renewable energy for a quarter century, renewables still remain a small portion—8 percent—of the total energy that Americans consume. Corn-based ethanol makes up most of the share of renewable energy. Wind and solar generation are miniscule, only a fraction of a percent of all energy use. Although demand for wind power has been on the rise the past few years, the U.S.’s electricity still overwhelmingly comes from hydrocarbons—primarily coal (49 percent) and natural gas (21 percent).17

So what is likely to change to replace the efficient and relatively affordable use of hydrocarbons with renewables in just a few decades? Certainly not a possible sharp rise in the price of oil. Even when oil prices were at an all-time high in 2008, usage of renewables did not change significantly.

Nor will President Obama’s goal to double renewable energy production in three years do much to push out hydrocarbons. Projections show that while demand for renewable energy—largely biofuels and wind power—will rise, driven largely by ballooning subsidies and production mandates, fossil fuels and nuclear power will still make up the lion’s share—84 percent—of electricity generation by 2030. Wind and solar together will supply a mere 5 percent, according to data from the Energy Information Administration.18

The main reason renewables will not be a prominent provider of energy is that they simply do not produce enough energy output. Take wind power. By 2010, some experts project wind turbines in the United States will produce an annual 112 billion kilowatthours of energy. That may sound like a lot but Robert Bryce, author of Gusher of Lies, puts that number in perspective by pointing out that in 2006, U.S. consumer electronics alone generated 147 billion kilowatt-hours of electricity. Or that the nation’s coal-fired plants generate over 2,022 billion kilowatt-hours of power a year.19

Moreover, while wind capacity has been rising in the last few years due to massive infusion of government support and subsidies, it is expected to actually fall this year for the first time since 2004, according to the American Wind Energy Association, reflecting wind’s inability to compete in price with natural gas. Its faltering track-record has prompted T. Boone Pickens to scrap his $10 billion wind power project announced in 2007 to create the world’s most massive wind farm in the Texas Panhandle.20 

The fact remains that the economics and technology for a shift in the next few decades from fossil fuels to wind and solar is simply not there. President Obama’s secretary of Energy, Nobel Laureate Steven Chu, told the New York Times nothing short of a technological “revolution” is needed to make solar power happen, and that technology will have to get five times better than it currently is to have any impact in curtailing carbon dioxide emissions.21

In California, where the wind blows and sun shines more than most states, power companies face a daunting mandate from Governor Schwarzenegger (R) to provide 33 percent renewables in the energy mix by 2020. Even providers in the renewable industry are dubious. CEO of Greenvolts, a California-based solar power company: “I think it’s a huge challenge. I think it’s going to take us a great effort from all different parts of industry and government to pull off. The grid that we need is not in place. The technologies are not in place.”22 Others worry about the cost of the mandate.

Even European nations—which have struggled for decades to make renewables viable and are required by the European Union to bring these source to 20 percent of energy use by 2020—have failed to make renewable energy part of the mainstream. Today renewables make up only 6 percent of total energy source, little changed from a decade ago.23

Myth: Renewable energy is good for the environment.

Fact: Jesse Ausubel, Director of the Program for the Human Environment at Rockefeller University: “A fundamental credo of being green is that you cause minimal interference with the landscape… Renewables may be renewable, but they are not green.”24 Increasingly, scientific, peer-reviewed studies are showing that the renewable energy sources being mandated by the Obama Administration and Congress would be extremely harmful to the environment and natural resources, and emit much larger amounts of carbon than fossil fuels.

Once viewed as the Holy Grail of environmental protection, renewables increasingly are coming under fire for their large ecological footprint. Biofuels particularly have been the subject of numerous peer-reviewed studies showing the harmful effects of using corn, soybeans, and even switchgrass as a source for transportation fuel. Increasingly, scientists and environmentalists are sounding the alarm that continued use will cause deforestation, threaten biodiversity, harm water quality and jeopardize water supplies,25 and emit greater levels of carbon dioxide than fossil fuels. 

Biofuels. A 2007 study in Science Magazine by scientists with the Nature Conservancy and the University of Minnesota caused a flood of debate after reporting that clearing rainforests, savannas, and grasslands to produce biofuels in Brazil, Asia, and the U.S. could release up to 420 times more carbon dioxide than fossil fuels.26

Other studies, including the international Organisation for Economic Co-operation and Development’s (OECD), reported: “When…soil acidification, fertilizer use, biodiversity loss, and toxicity of agricultural pesticides are taken into account, the overall environmental impacts of ethanol and biofuels can very easily exceed those of petrol and mineral diesel.”27

Environmental groups too, once the champions of renewable energy, are now calling for a halt to President Obama’s policies funding and promoting biofuels. Friends of the Earth reports that not only are biofuels “harming the environment, but that the government is paying to do so.” The group is calling for an end to Obama’s support for and mandates on biofuels production which, they estimate, will provide more than $400 billion in subsidies between 2008 and 2022.28

Similarly, a study by the World Wildlife Fund concludes, “Biofuels are a bad deal for forests, wildlife and the climate if they replace tropical rain forests. In fact, they hasten climate change by removing one of the world’s most efficient carbon storage tools—intact tropical rain forests.”29

Even the more advanced “cellulosic” biofuel—which converts plant fibers such as corn stalks, switchgrass, and other un-edible crops—is now being widely criticized for the impact it will have on biodiversity and even greenhouse gas emissions. According to Conservation Magazine, “New research is crystallizing fears that cellulosic fuels might wreak havoc on the world’s landscapes.”30 

MIT researchers recently found that were the still experimental cellulosic fuel to provide 10 percent of the world’s energy, “large tracts of natural forests, woodlands, and grasslands will be converted to either food or cellulosic biofuels production.” By 2050, with cellulosic demand expected to consume as much as 11 percent of the world’s land, ecosystems throughout the world could lose up to 70 percent of their natural forests and habitat, particularly in tropical regions.31

Furthermore, the clearing of plants and soil for cellulosic production would likely release carbon dioxide, according to new research, negating any positive effects the use of the biofuel would have over fossil fuels. MIT scientists predict that under the most conservative estimates, using cellulosics in place of fossil fuels would still take 50 years to offset the released carbon from using the biofuels.

Solar and Wind. Solar and wind power also are embroiled in environmental battles, as Washington and the states move forward to mandate production, raising concerns about the impact that will have on protected lands and endangered species. The New York Times: There is an “emerging conflict between the Obama administration’s plans to greatly expand the use of renewable energy and the concerns of those who fear solar arrays, wind farms and geothermal plants could disrupt or destroy wildlife habitat and soak up precious water supplies in the arid West.”32

To provide solar power of the magnitude that President Obama, Governor Schwarzenegger, and other lawmakers desire, millions of acres would need to be cleared to install solar panels. In California and Nevada, environmentalists are battling officials over 160,000 acres of federal land in the Mojave Desert where they assert desert plants, endangered species, and water supplies are threatened by a wide expanse of large-scale solar installations.33

Sixty-three solar projects have been proposed for construction in the area on lands operated by the federal Bureau of Land Management. The National Park Service has warned the agency that “the projects could produce air and light pollution, generate noise and destroy wildlife habitat…” and “strain limited water resources already under pressure” from development.34

Wind power also is under intense scrutiny for its impact on birds and other species on the endangered list,35 land use issues—powering New York City alone would require a wind farm covering an expanse the size of Connecticut36—and, indirectly, carbon release.  

Wind’s variability requires that conventional power sources such as natural gas supplement wind farms. But greater reliance on natural gas than previously thought would result in higher levels of carbon emissions than has been reported. A study conducted by the Renewable Energy Foundation, a research organization in Great Britain, finds that in January, Great Britain’s coldest month of the year and when energy demand is at its highest, wind capacity would not be high enough. Wind farms would be able to supply only four percent of their capacity, requiring fossil fuel plants to supplement power as often as 23 times a month, “impair[ing] efficiency and reduce[ing] emissions savings.” 37

According to the researchers, “Carbon savings will be less than expected, because cheaper, less efficient plants will be used to support these wind power fluctuations. Neither these extra costs nor the increased carbon production are being taken into account in the government figures for wind power.”38

Detrimental to the environment in numerous respects, renewable energy fails to be the “green” environmentally-friendly alternative supporters promised it to be. Furthermore, renewables will impose enormous costs on consumers that even their proponents concede is a troublesome aspect of solar, wind, and biofuels. Renewable energy is a lose-lose proposition.

Dana Joel Gattuso is a senior fellow in environmental policy at The National Center for Public Policy Research.



Footnotes:

1 Black & Veatch in Matthew L. Wald, “Cost Works Against Alternative and Renewable Energy Sources in Time of Recession,” The New York Times, March 29, 2009, at http://www.nytimes.com/2009/03/29/business/energy-environment/29renew.html?_r=1&ref=us.

2 Alan Gomez, “Going Green Can Cost Too Much Green,” USA Today, May 4, 2009. See also, Associated Press, “Durango Goes to Windmills,” April 13, 2007, at http://www.denverpost.com/news/ci_5660567.

3 Nathanial Gronewold, “Brighter Days Seen for Solar, Next-gen Biofuels,” Greenwire, E&E Publishing, LLC, June 8, 2009.

4 See Table, http://www.solarbuzz.com/DistributedGeneration.htm.

5 Electric Power Research Institute in Wald, op. cit.

6 Ibid.

7 Ibid.

8 PBS, News Hour segment, “With Green Energy’s Limitations, Scientists Hunt for Alternatives,” February 17, 2009. See transcript at http://www.pbs.org/newshour/bb/environment/jan-june09/energy_02-17.html.

9 Ibid.

10 Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 2007, April 2008, at http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/index.html.

11 All expenditure comparisons are in constant 2007 dollars unless otherwise specified.

12 Energy Information Administration, Federal Financial Interventions and Subsidies in Energy Markets 2007, op. cit., Executive Summary, p. xii..

13 Ibid, Chapter 2, pp. 16 and 22; and Appendix C: Historic Perspectives on Energy Tax Expenditures, Table C1., p. 216, “Alcohol Fuel Exemption.”

14 Ibid, Executive Summary, pp. xv-xvi.

15 Al Gore has called on America to “commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years.” See Nitya Venkataraman, “Gore Pushes for Sweeping Changes to Energy Policy,” ABC News, July 17, 2008, at http://abcnews.go.com/Politics/GlobalWarming/story?id=5395608&page=1.

16 Energy Information Administration, An Updated Annual Energy Outlook 2009 Reference Case Reflecting Provisions of the American Recovery and Reinvestment Act and Recent Changes in the Economic Outlook, April 2009, Table A8., “Electricity Supply, Disposition, Prices, and Emissions,” p. 33, at http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf.

17 Ibid.

18 Ibid, Tables A8 and A16.

19 Robert Bryce, Gusher of Lies: The Dangerous Delusions of “Energy Independence,” pub. PublicAffairs, 2009, p. 126.

20 “Wind Power Stalls,” Los Angeles Times, Editorial, July 12, 2009, at http://articles.latimes.com/2009/jul/12/opinion/ed-wind12.

21 John M. Broder and Matthew L. Wald, “Big Science Role Is Seen in Global Warming Cure,” New York Times, February 12, 2009.

22 PBS, op. cit.

23 See Gabriel Calzada Alvarez, et. al., Study of the Effects on Employment of Public Aid to Renewable Energy Sources, Universidad Rey Juan Carlos (Madrid), March 2009, p. 3, at http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf; and EurActiv.com, “The EU’s Energy Mix: Aiming for Diversity,” June 8, 2009, at http://euractiv.com/en/energy/eu-energy-mix-aiming-diversity/article-163228?_print.

24 Jesse H. Ausubel, “Renewable and Nuclear Heresies,” International Journal of Nuclear Governances, Economy and Ecology, 2007, Vol. 1, No. 3, pp. 229-243.

25 See “Bioenergy Makes Heavy Demands on Scarce Water Supplies,” ScienceDaily, June 4, 2009, at http://www.sciencedaily.com/releases/2009/06/090603091737.htm.

26 Joseph Fargione, et. al., “Land Clearing and the Biofuel Carbon Debt,” Science, February 2008, pp. 1235-1238. See http://www.sciencemag.org/cgi/content/abstract/1152747.

27 Richard Doornbosch and Ronald Steenblik, Biofuels: Is the Cure Worse than the Disease? OECD, Round Table on Sustainable Development, Paris, France, Sept. 11-12, 2007, p. 4.

28 Friends of the Earth press release, “$400+ Billion in Subsidies for Biofuels,” May 7, 2009, at http://www.foe.org/400-billion-subsidies-biofuels.

29 World Wildlife Fund press release, “Biofuel Plantations on Tropical Forestlands Are Bad for the Climate and Biodiversity, Study Finds,” Dec. 1, 2008, at http://www.worldwildlife.org/who/media/press/2008/WWFPresitem10876.html.

30 David Malakoff, “Biofuels Déjà vu: Lured by Dreams of ‘Green’ Fuel, Could we End Up Trampling Biodiversity in the Name of Saving the Planet?” Conservation Magazine, April-June 2009, at http://www.conservationmagazine.org/articles/volume-10-number-2/biofuels-deja-vu.

31 Ibid. See also G. Philip Robertson, et. al., “Sustainable Biofuels Redux,” Science, Vol. 322, No. 5898, pp. 49-50, Oct. 3, 2008, at http://www.sciencemag.org/cgi/content/summary/322/5898/49.

32 Scott Streater, “Park Service Warns of Solar Projects’ Impacts to Mojave Desert,” New York Times, April 23, 2009, at http://www.nytimes.com/gwire/2009/04/23/23greenwire-park-service-warns-of-solar-projects-impacts-t-10660.html.

33 See Pat Brennan, “Desert Damage: The Dark Side of Solar Power?” Miami Herald, March 30, 2009.

34 Streater, op. cit.

35 See Scott Streater, “Wyoming Wind Power Boom Could Drive Sage Grouse to Endangered List,” Land Letter (E&E Publishing, LLC), June 4, 2009.

36 See Jesse H. Ausubel, op. cit.. Also, Sara Goudarzi, “Study: Renewable Energy Not Green,” Live Science, July 24, 2007, at http://www.livescience.com/environment/070724_renewable_energy.html.

37 Renewable Energy Foundation, “Wind Power Study Reveals Hidden Cost and Reliability Issues,” (Great Britain), June 7, 2008, at http://www.ref.org.uk/Files/pr.07.07.08.pdf. See also, James Oswald, et. al., “Will British Weather Provide Reliable Electricity?” Energy Policy, Vol. 36, Issue 8, August 2008, pp. 3212-25.

38 Ibid.

 


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