ON THE RELATIVE COSTS OF GREEN

CLOSER LOOK

With oil prices up to $125/barrel, mainstream interest in energy alternatives has obviously soared, and most politicians have obviously jumped on the bandwagon, regardless of the collateral costs.  Witness what government subsidies for corn-based ethanol has done to help boost global food prices.

The Wall Street Journal has a piece that takes a stab at looking at the relative costs of the alternatives on a more uniform basis:

"...maybe we should look at what our energy subsidy dollars are buying now.

Some clarity comes from the U.S. Energy Information Administration (EIA), an independent federal agency that tried to quantify government spending on energy production in 2007. The agency reports that the total taxpayer bill was $16.6 billion in direct subsidies, tax breaks, loan guarantees and the like. That's double in real dollars from eight years earlier, as you'd expect given all the money Congress is throwing at "renewables." Even more subsidies are set to pass this year.

An even better way to tell the story is by how much taxpayer money is dispensed per unit of energy, so the costs are standardized. For electricity generation, the EIA concludes that solar energy is subsidized to the tune of $24.34 per megawatt hour, wind $23.37 and "clean coal" $29.81. By contrast, normal coal receives 44 cents, natural gas a mere quarter, hydroelectric about 67 cents and nuclear power $1.59."

The piece goes on to add:

"The same study also looked at federal subsidies for non-electrical energy production, such as for fuel. It found that ethanol and biofuels receive $5.72 per British thermal unit of energy produced. That compares to $2.82 for solar and $1.35 for refined coal, but only three cents per BTU for natural gas and other petroleum liquids.

All of this shows that there is a reason fossil fuels continue to dominate American energy production: They are extremely cost-effective. That's a reality to keep in mind the next time you hear a politician talk about creating millions of "green jobs." Those jobs won't come cheap, and you'll be paying for them."

Given the relative efficiency of nuclear power and other lower cost, but otherwise politically controversial alternatives, perhaps more attention needs to be paid to public policy on those fronts.  We may end up getting more "Green efficiency" in the traditional sense of green.

Comments

[Alex Tolley]

I read this article too, and it is the most egregious piece of c**p that I have read in a while. Look at the report - it is a mish mash of confusing data. In the appendix, there is nicely understated letter from Sen. Alexander that hints at how biased this report is and asking for a full comparison with existing energy sources.

The WSJ article tries to imply that somehow the real cost of wind or solar power is $20+ kWh. This is nonsense. The report even shows this.

The WSJ article is nothing more than another planted piece for the fossil fuel industries trying to derail alternative sources of energy that are finally creating power at a cost approaching that of traditional sources.

The reality is that alternative energy production has to fight an uphill battle against entrenched institutions. The use of baseload coal generation costs is used as the bar that alternatives are expected to reach to become viable. If the costs of GW and in the case of oil, military intervention, were included, the bar would look very different. Given the rise in oil from $25 to $125, shouldn't oil fired plants
generating costs be somewhat higher now too?

[Alex Tolley]

Renewable Energy Is Delivering Power
May 19, 2008; Page A14

Your editorial on the cost of renewables versus fossil fuels ("Wind ($23.37) v. Gas (25 Cents)," May 12) misses the real story about government subsidies.

In fact, renewables are becoming increasingly cost-effective while receiving a fraction of what Congress hands out to conventional energy sources. Renewables receive less than 1% of the $40 billion spent every year on fossil fuels.

We agree with your point that taxpayers should get a return on investment. By that measure, however, renewable energy sources are delivering. Last year alone, the federal government spent $1.2 billion on nuclear energy, leading to zero megawatts installed. By contrast, wind, solar and geothermal received $800 million in 2007, resulting in approximately 6,000 megawatts installed.

It's therefore not surprising that 85% of Americans support incentives for renewable energy development, such as continuation of the investment tax credit and production tax credit. These common-sense policies will create jobs and economic growth and help us achieve national energy security.

Congress should ensure that these industries have a stable tax policy now.

Rhone Resch
President, Solar Energy Industries Association

Randy Swisher
Executive Director, American Wind Energy Association
Washington