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GUEST COLUMN: So-called renewable energy wastes scarce resources

By: Paul Prentice
July 19, 2017 Updated: July 31, 2017 at 10:36 am
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A recent Gazette headline and story, "Renewable energy lab forges ahead" (July 10), contains much false information. If this information is believed and acted upon it will lead to a tremendous waste of scarce resources. In doing so, it will create more poverty, not less.

The news story actually reads more like a press release from the renewable energy industry than like a serious investigative report. It presents no dissenting arguments or facts. It is just assumed that there is an energy problem and there is something right and virtuous about taxpayer funding of the National Renewable Energy Laboratory in Golden.

The article presents all the pros but none of the cons. A news article should present both sides of such an important issue. In economics, all benefits have costs. Shouldn't the benefits be weighed against the costs? Allow me to present some of the costs. But first, some basic science. The Law of Conservation of Energy states that energy can neither be created nor destroyed; rather, energy transforms from one form to another.

The very idea of "renewable" energy is preposterous. Ancient people first transformed the chemical energy stored in wood into heat energy to make their lives better. Modern people transform the chemical energy stored in the carbon bond into the energy of motion in their largely coal-fired electric cars. In neither case is energy created or destroyed; it is merely transformed from one form to another.

Second, we seek the most economical, i.e. the least-cost, method of transforming one form of energy into another. That conserves our scarce resources: land, labor, and capital. It allows an economy to create the greatest level of income and wealth for the greatest number of people. In fact, access to cheap energy fueled the entire industrial revolution that lifted billions of people out of grinding poverty and allowed life expectancy to soar.

On a fully-loaded cost basis, so-called renewables such as wind and solar and biofuels are very inefficient. None of the alternative sources of energy transformation can be produced at a price that people are willing to pay. All require massive taxpayer subsidies in order to exist. That is money that could be used for better purposes. Take away the subsidies, and these industries would vanish. A recent wind power project off the coast of New England has a capital cost of $300 million to produce 30 megawatts of electricity. That is a shocking cost of $10,000 per kilowatt of installed capacity. Compare that to a typical coal-fired plant that has a cost of less than $50 per kilowatt of installed capacity.

One of the reasons that European economies are so weak is their insistence on using the guns-of-government to determine energy use, rather than relying on market prices.

The overall population is experiencing a new kind of poverty. They are impoverished by energy prices that are 2-3 times those in the United States, sometimes more. Furthermore, for every new job generated in the renewable energy industry, a total of 2.5 jobs are lost elsewhere in the economy. Let us not make the same ignorant mistake here.

Finally, on a life-cycle basis, wind and solar and biofuels all have a net negative environmental impact when compared with traditional carbon and hydrocarbon energy. They not only cost more, they pollute more. If the goal is to create the most income and wealth at the least environmental damage, then continued use of carbon and hydrocarbon sources of energy transformation is the only logical policy.

Before we rush blindly and emotionally into the "renewable energy" future, we should have a robust public debate based on science and economics.

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Paul Prentice is Economics Fellow at The Centennial Institute at Colorado Christian University.

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