Green Jobs Claims Based on Flawed Assumptions 

Dear Ken [Silverman],

You are a fine writer but your October 20, 2008, EnergyBiz Insider story, “Growing Green Jobs,” demonstrates that you need to refresh your discernment and investigative reporting skills.

Unfortunately, you apparently have “bought” exaggerated claims of economic and job benefit put forth by a variety of renewable energy advocates that are based on flawed analyses. I urge you to look more closely at the claims and the underlying analyses and “economic models” for unjustifiable assumptions and other flaws.

Among the flaws and faulty assumptions – leading to gross overstatements of job creation and other economic benefits – that I believe you will find are the following:

1. Ignoring the fact that much of the capital spending is for equipment purchased elsewhere, often imported from other countries. (This is a common error in the case of “wind farms”, where as much as 75% of the capital costs are often for turbines, towers and blades – much of which is imported.)

2. Assuming that employment during construction results in new jobs for local workers – when many of the construction jobs (particularly in the case of wind energy) are short terms (6 months or less) and filled by skilled workers who are brought in temporarily. Similarly, assuming that “permanent” jobs are all new jobs and filled by local workers – when they may be filled by people brought in for short periods for maintenance work.

3. Assuming that temporary workers who are brought in for short periods spend their pay checks and pay taxes locally. In many cases, these workers spend most of their money in the areas where they and their families have permanent residences and where the workers spend most of their weekends and pay taxes.

4. Assuming that the full purchase price of the goods and services purchased locally (which often are minimal anyway) has a local economic benefit. In fact, only the local value added may have a local economic benefit. This can be illustrated by the purchase of a gallon of gasoline – let’s say for $2.50. Only the wages of the service station employees, the dealer’s margin and the taxes paid locally or to the state will have a local or state economic benefit. The economic benefit of the share of the $2.50 that pays for the crude oil (much of it imported), refining, wholesaler, and transportation almost certainly will flow elsewhere.

5. Assuming that land rental payments in the case of “wind farms” all have local economic benefit. In fact, these payments will have little or no local economic benefit when the payments are to absentee landowners or if the money is spent or invested elsewhere or if it is used to pay taxes that flow to Washington DC or state capitals.

6. Using “input-output” models that spit out “indirect” job and other economic benefits but which are based on untested or flawed underlying data and assumptions and unproven “multiplier” effects.

7. Ignoring the COSTS imposed by the development. In the case of wind energy, these would include but not be limited to (a) the environmental and ecological costs associated with the production of the equipment, (b) constructing and operating the “wind farm” (e.g., site and road clearing, habitat destruction, noise, bird and bat kills and migration interference), (c) scenic impairment, (d) neighboring property value impairment, and (e) local infrastructure costs.

8. Ignoring the fact that the electricity produced from renewable sources such as wind, has less real value because it is intermittent, volatile and unreliable and most likely to be produced at night in colder months, not on hot weekday late afternoons in July and August when demand is high and the economic value of electricity is high.

9. Ignoring the “backup power” costs; i.e., the added cost resulting from having to keep reliable generating units immediately available (often running at less than peak efficiency) to keep electric grids in balance when those grids have to accept intermittent, volatile and unreliable output from “wind farms.

10. Ignoring the fact that electricity produced from renewable sources located in remote areas results in higher transmission costs, e.g., (a) sometime requiring construction of additional transmission capacity, the costs of which are passed on to electric customers and which imposes other environmental, scenic and property value costs, (b) involving “line loss” of electricity so that part of the electricity that is produced never reaches customers or serves a useful purpose, and (c) resulting in inefficient use of transmission capacity because the output is intermittent and generally unpredictable.

11. Ignoring the true higher cost of the electricity (or other energy form) resulting from the renewable energy source – and the associated fact that electric customers then have less money to spend on other needs (food, clothing, shelter, education, medical care – or hundreds of other things normally purchased in local stores) or even to save.

12. Perhaps most important, ignoring the very important fact that the investment dollars going to “renewable” energy sources would be available for investment for other purposes that will often produce greater economic benefits.

Ken, it is well past the time that you and other writers, reporters, and editors stop misleading your readers by relying on press releases and glib claims from individuals and organizations (including government agencies and contractors) that crank out excessive claims based on flawed analyses.

Respectfully,

Glenn R. Schleede
18220 Turnberry Drive
Round Hill, VA 20141-2574
540-338-9958

Download original document: the above adapted to a standalone essay: “False Renewable Energy Job & Economic Benefits Claims”