Forcing Consumers to Buy Renewable Energy

Congress pretends to solve an energy crisis

Ronald Bailey
Reason Magazine

Carbon rationing is dead on Capitol Hill. The Democratic leadership in the Senate has concluded that they cannot round up enough votes to pass a cap-and-trade carbon rationing bill that aims to cut the emissions of greenhouse gases. But in the face of the catastrophic Gulf oil spill, congressional leaders feel that they must be seen as doing something about energy. And if that something provides members of Congress an opportunity to hand out federal pork to their friends, that’s a bonus.

So Democrats and some Republicans are pushing legislation that will reward favored industries, chiefly wind and solar power, by forcing consumers to buy the electricity that they produce. How? By requiring that retail electricity distributors purchase 15 to 20 percent of their electricity from wind and solar power producers by 2020. This so-called national renewable energy standard, or clean energy standard, is being carved out of energy legislation such as the American Clean Energy Leadership Act [PDF] proposed by Sen. Jeff Bingaman (D-NM).

Supporters argue that renewable energy standards cut greenhouse gas emissions, create jobs, revitalize rural communities, boost energy independence, and even lower energy prices. Many politicians find them irresistible as a way to signal to voters that they are serious about energy policy. As a consequence, two-thirds of Americans already live in the 28 states that since 1995 have begun to pursue various schemes to force consumers to buy wind and solar power. But are the claims of supporters economically credible?

…The claim that renewable energy mandates boost overall job creation is persistent and powerful, but the experience of other countries clearly shows that such mandates destroy more jobs than they create. A study last October by an independent German economics think tank found that each solar power job cost $240,000 and overall the result of renewable energy subsidies was higher energy prices, lost jobs in other sectors of the economy, and reduced consumer purchasing power. The German study mirrored the findings of an earlier Spanish university study which reported that every green job created by subsidizing renewable energy destroyed 2.2 jobs in other sectors of the economy.

Vast agricultural subsidies have failed to “revitalize” rural areas, so why should one expect that renewable energy mandates causing wind farms to sprout across the vacant countryside will do the trick?…if renewables like wind power were already cost competitive, then Congress would not need to mandate them…

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