There is a memorable line from Seinfeld when George tells Jerry, “Remember, it’s not a lie if you believe it.” Perhaps this explains the New York Times’ July 14th paean to renewable energy generation. In the piece, the editors state, “The fact that the United States has been able to reduce emissions from the power sector while keeping prices low shows that the world can address climate change by ushering in an era of abundant, affordable and clean energy.”
It’s not a lie if the Times believes it.
The Times crows that electricity prices, adjusted for inflation, have decreased by 17% since 2007. It also points to the seven-fold increase in wind generation in Texas, and the rapid decreases in the price of wind and solar power, as well as battery storage.
The hard truth about renewables is far less rosy, and the Times’ claim that the world can be fueled by renewable energy alone is laughable.
Let’s start with electricity prices. The editorial acknowledges that “electricity prices vary a lot from state to state, for many reasons. For example, prices in California, which has made reducing emissions a priority, have gone up in recent years… But they have fallen in New York, which has set similarly ambitious climate targets.”
What the Times fails to mention is that the states with the most ambitious renewable generation and climate mandates, including New York, California, and many New England states, have the highest electricity prices in the continental US. In 2017, for example, the average residential price in New York was over 18 cents per kilowatt-hour, 40 percent higher than the national average, and just slightly below the California average. And with Governor Cuomo’s mandate to develop 2,400 megawatts of offshore wind generation, residential customers in New York can expect to see much higher prices, thanks to lavish subsidies for wind developers.
So what explains Texas and the seven-fold increase in wind generation? Subsidies, of course. Thanks to the federal production tax credit, along with a $7 billion subsidy (paid by Texas ratepayers) to construct high-voltage transmission lines from wind-swept west Texas to the state’s population centers, it’s no wonder that wind generation has surged. As Warren Buffett famously remarked back in 2014, the only reason to build wind generation is for the tax credits.
The Times also touts decreasing wind and solar costs. But wind generation is reaching an upper limit for turbine size and public acceptability; the newest offshore models are twice the height of the Statue of Liberty. And while solar panel costs have decreased, demand for the rare earth elements used to construct those panels is increasing. The same is true for electric vehicle batteries. Hyundai believes that electric vehicle battery prices will stop falling starting in 2020 due to increased demand for those raw materials.
What about the Times’ claim that world energy demand can be met with renewable energy? According to the latest BP Statistical Review of World Energy, in 2017, global non-hydroelectric renewable energy production totaled about 500 million tons of oil equivalents (MTOe), less than 4 percent of world energy consumption. And global energy use continues to grow far faster than renewable energy production.
In 2017, for example, world energy consumption increased by 250 MTOe, equivalent to an increase of over 5 million barrels of oil per day. But despite rapid growth of installations in the U.S., Europe, and China, wind and solar energy output only increased by about one-fourth of that amount. The Times also exaggerates the impending death of coal, which continues to provide almost 40 percent of total world energy, a figure that has remained virtually unchanged for the last 20 years.
So the Times’ claim that the other 96% of world energy consumption can be met with renewables, while keeping energy prices low? George would approve.
And what about climate change? The U.S. continues to lead the world in reducing carbon emissions. But that’s not because of growth in renewable energy; it’s mainly due to increased use of natural gas, which has been made possible by hydraulic fracturing. Real funny that the Times forgot to mention the Governor’s 2014 ban on fracking in New York State, which they supported. Apparently, the Times is all for using natural gas to generate electricity and reduce emissions, just as long as it’s produced somewhere other than New York.
Jonathan Lesser, PhD is president of Continental Economics and has more than 30 years of experience working for regulated utilities, government, and as a consultant in the energy industry.
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