Having gone green myself. I did not see the situation in quite the same light as Keith.Keith Lockitch, PhD in physics, is a fellow at the Ayn Rand Center for Individual Rights, focusing on science and environmentalism wrote:
Will a green energy industry be an engine of economic growth? Many want us to think so, including our new President. Apparently a booming green economy with millions of new jobs is just around the corner. All we need is the right mix of government “incentives.”
These include a huge (de facto) tax on carbon emissions imposed through a cap-and-trade regulatory scheme, as well as huge government subsidies for “renewable,” carbon-free sources. The hope is that these government sticks and carrots will turn today’s pitiful “green energy” industry, which produces an insignificant fraction of American energy, into a source of abundant, affordable energy that can replace today’s fossil-fuel-dominated industry.
This view is a fantasy--one that could devastate America’s economy. The reality is that “green energy” is at best a sophisticated make-work program.
There is a reason why less than 2 percent of the world’s energy currently comes from “renewable” sources such as wind and solar--the very sources that are supposedly going to power the new green economy: despite billions of dollars in government subsidies, funding decades of research, they have not proven themselves to be practical sources of energy. Indeed, without government mandates forcing their adoption in most Western countries, their high cost would make them even less prevalent.
Consider that it takes about 1,000 wind turbines, occupying tens of thousands of acres, to produce as much electricity as just one medium-sized, coal-fired power plant. And that’s if the wind is blowing: the intermittency of wind wreaks havoc on electricity grids, which need a stable flow of power, thus requiring expensive, redundant backup capacity or an unbuilt, unproven “smart grid.”
Or consider the “promise” of solar. Two projects in development will cover 12.5 square miles of central California with solar cells in the hope of generating about 800 megawatts of power (as much as one large coal-fired plant). But that power output will only be achieved when the sun is shining brightly--around noon on sunny days; the actual output will be less than a third that amount. And the electricity will cost more than market price, even with the life-support of federal subsidies that keeps the solar industry going. The major factor driving the project is not the promise of abundant power but California’s state quota requiring 20 percent “renewable” electricity by 2010.
More than 81 percent of world energy comes from fossil fuels, and half of America’s electricity is generated by burning coal. Carbon sources are literally keeping us alive. There is no evidence that they have--or will soon have--a viable replacement in transportation fuel, and there is only one in electricity generation, nuclear, which “green energy” advocates also oppose.
We all saw the ripple effects last summer when gas prices shot above $4 per gallon, and higher transportation costs drove up prices of everything from plane fares to vegetables. If green policies cause a permanent, and likely far greater, hike in the cost of all forms of energy, what shockwaves would that send through our already badly damaged economy?
We don’t want to find out.
Regardless of one’s views on global warming--and there is ample scientific evidence to reject the claim that manmade carbon emissions are causing catastrophe--the fact is that kneecapping the fossil fuel industry while diverting tax dollars into expensive, impractical forms of energy will not be an economic boon, but an economic disaster.
We in developed countries take industrial-scale energy for granted and often fail to appreciate its crucial value to our lives--including its indispensable role in enabling us to deal with drought, storms, temperature extremes, and other climate challenges we are told to fear by global-warming alarmists.
If we want to restore economic growth and reduce our vulnerability to the elements, what we need is not “green energy” forced upon us by government coercion but real energy delivered on a free market.
I for one saw pure market forces at work behind the spike in oil prices in the summer of 2008. To me it appeared that market speculators created an artificial demand for oil futures contracts, a demand many times greater than baseline usage. These investors created this demand because they believed oil was scarce, and that these contracts would be worth more than the inflated prices they were paying. Obviously the investors miscalculated and a glut was created (interesting aside I believe this glut became a deflationary trigger on commodities – but that is a whole different conversation). But even if the market timing was miscalculated the underlying logic is sound – petroleum reserves are finite. At some future point demand will greatly exceed supply and then prices will skyrocket.
In this “beyond peak-oil” scenario the added cost of today’s renewable energy sources begin to make sense. The system I purchased does not breakeven at today’s energy prices and today’s cost of capital. My gamble was that in the future the cost of energy will be higher and that the cost of capital will remain low. In that scenario, renewable energy begins to make sense.
But there is another issue that I think Keith is missing. Massive markets, like the energy market, do not turn on a dime. You can’t run out of petroleum one day, and run your car from a windmill the next. The development cycle for alternate energy sources is deep and long. In a purely free market where maximization of owner’s equity is the main concern. How can the development of alternatives be seen as anything other than a competitive idea to be suppressed in deference to maximizing short term profits?
I have trouble imagining how a purely free market, without government subsidies, avoids this future train wreck. What do you think?
Too funny 
