September 4, 2012
Massachusetts, Opinions

High-skilled, high-tech welfare

By BRUCE M. EVERETT | Cape Cod Times | www.capecodonline.com 4 September 2012

In an Aug. 23 front-page column, Sean Gonsalves claims Cape Cod Community College’s recent decision to install solar panels and wind turbines validates both the stimulus bill and the green energy jobs program. He is wrong on both counts.

Renewable energy is expensive. Onshore wind power costs at least three times as much as electricity produced from natural gas. Offshore wind costs six times more, and solar 10 times more. Renewables are forced into the marketplace by a complex web of federal and state subsidies that hide their true cost. The federal tax credits mentioned in the article are one subsidy; others include renewable energy standards, net metering, federal loans to manufacturers, production tax credits and local property tax relief, all of which disguise the true cost of renewable energy.

Cape Cod Community College has every right to seek federal and state support for its budget, but remember that the college is a public institution. The question is not whether the college saves money on solar energy but whether the public saves money. The renewable energy savings claimed by the college are an illusion. If we took $1 from every Cape Cod resident, we could buy the college a couple of S-class Mercedes cars. The college, the Mercedes factory in Alabama and the local car dealer might be thrilled with this arrangement, but the rest of us should object – and strongly.

We all understand that renewable energy subsidies provide jobs for people like Mr. Giles and his employees at Turning Mill Energy in Sandwich. We must remember, however, that the high costs of solar and wind energy are paid by someone else, and those lost dollars would have created jobs somewhere else in the economy.

We cannot evaluate the efficacy of federal spending programs by asking the recipients of federal largesse whether they are happy with the money. Of course they are happy! The real issue is whether American taxpayers and electricity ratepayers should be happy. When the federal government is running deficits north of $1 trillion a year, Turning Mill Energy’s federal tax credit has to be borrowed from China and paid back with interest by future generations.

I am happy for Mr. Giles and his colleagues, but they are enjoying a kind of high-skilled, high-tech welfare at our children’s expense.

In its current form, renewable energy is simply too costly to make a meaningful contribution to our energy balance. After all the federal dollars and all the hype over the past four decades, wind energy accounts for 1 percent of U.S. energy use today, and the Department of Energy projects growth to only 2 percent by 2035. Solar accounts for 0.1 percent of our energy today and is expected to meet less than 0.5 percent in 2035. Research may yet produce technological breakthroughs, but subsidizing the current generation of technology impedes rather than facilitates progress. Why spend research dollars on improved technology, when you can sell the current inferior stuff at a profit?

The U.S. economy cannot grow by forcing high-cost energy into the marketplace. Those who produce this high-cost energy will gain, and the public will lose.

We have recently discovered in the U.S. vast new reserves of natural gas – a cheap, clean and efficient option. Massachusetts needs to tap into this low-cost, environmentally friendly option and forget about wind turbines, solar and – oh yeah – that monstrous dirty fuel oil power plant on the canal. If we do, we’ll get lower taxes, lower electricity bills and more jobs.

Bruce M. Everett of Chatham teaches graduate-level energy economics at the Fletcher School at Tufts University.