Environment

The Continuing Failure of Green Conceit

May. 13, 2012 10:46pm

- American Enterprise Institute

Kenneth P. Green is a resident scholar at the American Enterprise Institute.

Green has studied energy and energy-related environmental policy for nearly 20 years. An environmental scientist and policy analyst by training, Green’s recent studies include the efficacy of green-jobs programs, drivers of oil and gas prices, the Deepwater Horizon oil spill, the embedded energy costs in consumer goods, and resilient policies to address the risks of climate change. He has just published his second supplemental textbook, “Abundant Energy,” a concise guide to energy and energy policy intended for a college audience. In addition, Green has testified before regulatory and legislative bodies at the local, state and federal levels, including many times before the U.S. House of Representatives and the U.S. Senate. He was also a designated expert reviewer for two reports by the United Nations' Intergovernmental Panel on Climate Change.

For several years now, President Obama and his allies in the environmental movement have promised to usher in a green economy that will create millions of new green jobs that “can’t be outsourced.” Under the wise leadership of our energy bureaucracy, government officials would “invest” taxpayer money in “the right kind of technologies,” ushering them over the “development valley of death,” to produce the industries of tomorrow. 

Both theory and a continuing accumulation of evidence tell us this is all feel-good blather.

Let’s look at the theory. First, government bureaucrats do not have magical knowledge of which technologies are going to outperform any other technologies, nor do they have a crystal ball that can tell them how existing technologies might improve, or new superior technologies spontaneously arise. The idea that bureaucrats have such knowledge is an example of that Frederich Hayek called “the fatal conceit. Second, economic theory also tells us that governments don’t “create” jobs. What creates jobs is consumer demand for goods and services paired with entrepreneurs willing and able to invest time and money to satisfy consumer demand. All the government can do is subsidize some industries, while jacking up costs on others. French philsopher Frederic Bastiat pointed this out around 1850 in an essay called What is Seen and What is Not Seen.

Now, to the empirical evidence. When talking about our bold green energy future, President Obama held up Spain as an example of what America should be doing. Spain invested heavily in wind power and other types of renewable energy. Alas, after studying the Spanish Experience, Professor Gabriel Calzada Álvarez and colleagues at Spain’s Universidad Rey Juan Carlos found if America followed Spain’s example, for every renewable energy job that the U.S. managed to create, the U.S. should expect a loss of at least 2.2 traditional jobs on average. And they found that green jobs are costly: each green job created in Spain’s effort cost about $750,000, and only one in ten of the new green jobs were permanent. Doing the math on that, creating even three million new green jobs would cost $2.25 trillion dollars. Even in a time where the trillion is the new billion, that’s a lot of money.

But we don’t have to look to Europe for examples anymore, right here at home we have a vast quantity of evidence showing that the ‘green job’ promise is hollow: Solyndra, Beacon Power, Ener1, Fisker Automotive, Tesla Motors, Abound Solar, the GM Volt…all recipients of government largesse, all utter failures at creating either market-worthy products, or “green jobs.”

The Mackinac Center for Public Policy reports that in Michigan, federal stimulus money amounting to $34.5 million managed to create a whole 183 jobs amongst 14 companies. As Mackinac details, “Two of the 14 companies, Great Lakes Industry in Jackson and Polar Seal in Grand Rapids appear to have had their awards revoked. Other grant and loan recipients include: Amptech of Manistee ($300,000 grant/$273,000 loan for seven workers); Eaton Rapids Castings of Rochester ($1.36 million grant/$650,000 loan for six workers); Energetx of Holland ($3.5 million loan for 56 workers); Heat Transfer International of Kentwood ($2.2 million grant/$550,000 loan for seven workers); KC Jones Plating of Warren ($150,000 grant/$150,000 loan for six workers); LOC Performance of Plymouth ($1.5 million grant for an unreported number of jobs); LUMA Resources of Rochester Hills ($500,000 grant/$325,000 loan for 12 jobs); and Merrill Technologies of Saginaw ($3 million grant for an unreported number of jobs).”

Polls suggest that the public still supports the idea of government sponsorship of green technologies and the pursuit of green jobs, and a green economy. One has to hope that they come to understand the fatal conceit of government central planning before government blows through all the real green – the stuff inside our wallets.

Kenneth P. Green is a resident scholar at the American Enterprise Institute. He can be followed on Twitter @KennethPGreen

Comments (3)

  • MAMMY_NUNN
    May. 22, 2012 at 7:11pm

    Almost all forms of energy involve heat or molecular transformation which produce heat.

    Report this comment

    MAMMY_NUNN  
  • The Third Archon
    May. 14, 2012 at 4:20pm

    Here’s the thing–no one can perfectly predict the future form of technology, however, just as hydrocarbon fuels and the internal combustion engine are themselves historically contextual technological innovations, which we have not always had, and will not always have, so to will new technologies, superior to the old leading to their gradual obsolescence, emerge. It might not be photovoltaic, it might not be geothermal, it might not be wind or wave based energy, it might not be nuclear fission, but it might be, we can’t forsee the engineering solutions to our current technological limitations, or else they WOULD NOT BE TECHNICAL PROBLEMS and the technology would ALREADY exist. Yet nonetheless, if history is any guide, new technology will emerge replacing the old–there’s no reason to think the internal combustion engine is special, the absolute be-all-end-all of engineering, the most efficient machine we COULD create. Rather, our capacity is ever expanding with our knowledge, opening new beautiful horizons of engineering.

    Report this comment

    The Third Archon  
  • PatrickJ
    May. 14, 2012 at 10:32am

    Facts are FACTS, let’s spread the FACTS of this zombies (and his followers) failures.

    Report this comment

    PatrickJ  

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