Don't Count on 'Countless' Green Jobs

The evidence shows alternative energy is expensive.

By MAX SCHULZ
In signing the American Recovery and Reinvestment Act this week in Denver, President Barack Obama claimed that the law -- which among other things will ramp up funding for renewable energy development -- is "laying the groundwork for new green energy economies that can create countless well-paying jobs."
This statement follows promises he made during his campaign for the presidency. Mr. Obama said, for example, that he'd create as many as five million such jobs by investing over $150 billion over 10 years on wind, solar, biofuels and other renewable energy sources.

He's also proposed a federal "renewable portfolio standard" that would require 25% of our electricity to come from clean sources -- a mandate that would boost demand for windmills, solar farms, and other clean but expensive technologies (nuclear power, however, would be excluded). This transformed energy economy, Mr. Obama said at a campaign debate in Nashville, Tenn., last October, would be an "engine of economic growth" to rival the computer.
If the green-jobs claim sounds too good to be true, that's because it is.
There's an unavoidable problem with renewable-energy technologies: From an economic standpoint, they're big losers. Renewables simply cannot produce the large volumes of useful, reliable energy that our economy needs at attractive prices, which is exactly why government subsidizes them.
The subsidies involved are considerable. The U.S. Energy Information Administration reported in early 2008 that the government subsidizes solar energy at $24.34 per megawatt-hour (MWh) and wind power at $23.37 per MWh. Yet even with decades of these massive handouts, as well as numerous state-level mandates for utilities to use green power, wind and solar energy contribute less than 1% of our nation's electricity.
Compare the subsidies to renewables with those extended to natural gas (25 cents per MWh in subsidies), coal (44 cents), hydroelectricity (67 cents), and nuclear power ($1.59). These are the energy sources (along with oil, which undergirds transportation) that do the heavy lifting in our energy economy.
The alternative technologies at the heart of Mr. Obama's plan, relying on mandates and far greater handouts, will inevitably raise energy prices -- and high power prices are job killers. Industries that make physical products, whether cars or chemicals or paper cups, are energy-intensive and gravitate to low-cost-energy locales.
With some of the highest electricity prices in the country, California and New York have hemorrhaged manufacturing jobs. California-based Google houses its massive server farms in states like North Carolina and Oregon, which have lower electricity costs. Policies that drive up energy costs nationwide, as Mr. Obama intends, will inevitably drive more manufacturing jobs overseas.
What about jobs in the traditional industries currently supplying Americans with reliable, affordable energy? The American Petroleum Institute reports that the oil and gas industry employs 1.6 million Americans. Coal mining directly and indirectly supports hundreds of thousands of jobs, according to the National Mining Association and the U.S. Bureau of Labor Statistics. A radical plan to transform our energy economy will put an untold number of these men and women out of work.
Digging deeper each month to pay for expensive renewable energy, consumers will have less to save or spend in other areas of the economy. Killing jobs in efficient industries to create jobs in inefficient ones is hardly a recipe for economic success. There may be legitimate arguments for taking dramatic steps to fight climate change. Boosting the economy isn't one of them.
Mr. Schulz is a senior fellow at the Manhattan Institute's Center for Energy Policy and the Environment. This op-ed is adapted from the forthcoming Winter issue of City Journal.