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Renewables are a costly shot in the dark

By Roger Meiners

The Colorado Renewable Energy Standard requires that investor-owned power companies must produce 30 percent of their power from "renewable energy" in fewer than nine years. Not to be outdone, some "clean energy" advocates assert Boulder can have 80 percent renewable by 2025. Trying to legislate such fantasies has real world consequences: Renewable energy is expensive — more than double the cost of using natural gas or coal. It is available only intermittently — Germany, an aggressive wind energy jurisdiction, reports a capacity utilization rate of just 15.5 percent during 2010. Making energy more expensive and less reliable will hurt Colorado`s economy.

Making electricity more costly or unavailable has serious consequences. About half of our energy is used in producing food, medicines, and other consumer goods. Anything that increases the price of energy increases the prices of goods that use energy. Such price increases disproportionately affect the poorest. This is also the case with rising electric bills. Industry generally moves to where electricity is cheaper, not more costly.

Choosing technologies through politics is a bad idea. Politicians love it because they can dish out favors to their special interests. Remember the Synfuels Corporation? Congress and President Jimmy Carter wanted to spend $88 billion, back when that was a lot of money, on synthetic fuels generated from coal to replace oil. The plug was pulled on that fiasco in 1985. Carter also promised, in 1978, that solar power would produce 20 percent of U.S. electricity by 2000. Instead of letting politicians choose among technologies, we should leave that to market-based competition.

More recently the New York Times reported that after the state of Massachusetts gave $43 million to a solar producer, the firm spent the money and then laid off 800 workers and moved to China. Politicians, even if well-intended, are not good at picking winners.

Renewables are a costly shot in the dark. A major report from the UN Environmental Programme that endorses massive a move to "green energy" as we abandon coal, natural gas, oil, and nuclear energy, admits: "No one knows how much a full-fledged green transition will cost, but needed investment will likely be in the hundreds of billions, and possibly trillions, of dollars. It is still not clear at this point where such high volumes of investment capital will come from, or how it can be generated in a relatively short period of time." ("Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World," p. 306)

Green energy advocates propose equally dramatic shifts in production technologies, building practices, growing food, and transportation. These calls for massive changes in all aspects of modern life are wrapped in nice packages by the carbon-reduction literature that promises not only environmental benefits but to employ millions in high paying jobs. Despite the new green packaging, these calls for creating a new society through central planning are as old as human history. The repeated failure of utopian experiments suggests extreme caution in undertaking transformations of society.

Some say we know better and must move to renewable energy to limit carbon emissions. Even if they are right, Colorado`s carbon emissions are irrelevant. American energy consumption has fallen in recent years and is expected to grow little in the future the U.S. Energy Information Administration reports. China`s energy production is already bigger than ours and growing fast –mostly from burning coal. India is rising quickly and there are a couple billion other poor people who would like the things electricity brings — lights, refrigeration, clean water, and other things we take for granted.

If the concern is carbon reduction, rather than punishing lower-income people and making the state less attractive for job creation by raising energy costs, put the money into research on carbon reducing technologies that will have global benefits. Colorado`s universities could play a major role in innovations to produce a cleaner world.

Roger Meiners is Professor of Economics, University of Texas-Arlington, and coauthor of "The False Promise of Green Energy" published earlier this year by the Cato Institute.

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