President Obama’s Green Initiatives did not Create Jobs or Save the Planet

Posted by PITHOCRATES - June 2nd, 2012

Week in Review

If the Energy Department was a private corporation it would be the ideal bailout target for a company like Bain Capital.  Inept management, poor investments and bad strategic policy.  It has everything.  So much so that it would be easier for the bailout team to ask them at Energy what actually worked.  It would keep the initial meeting much shorter (see Difference Engine: To and from the grid posted 6/1/2012 on The Economist).

Since then, interest rates have fallen, while the price of solar panels has tumbled even more so—thanks to Chinese overcapacity. Meanwhile, electricity rates (at least those in southern California) have risen noticeably. Your correspondent reckons photovoltaic solar systems now cost half as much as they did four years ago.

Two things could make or break America’s affair with solar power. One concerns the ushered in by the economic stimulus bill of 2009. Many of those temporary tax credits are now coming to an end. If nothing is done to extend them, the incentives will fall from a peak of over $44 billion in 2009 to $16 billion this year and $11 billion by 2014. That could bring the solar-installation business to a screeching halt and wipe out tens of thousands of green jobs. The industry’s future depends largely on the outcome of the November election….

The irony is that those who invest their own money to generate clean electricity from solar panels on their rooftops are likely to be the last to benefit from it environmentally. Nowadays, most people work outside the home during the day and consume the bulk of their residential electricity in the evening and during the night. In California, that is when the state—which meets only 70% of its electricity requirement from its own resources—relies heavily on cheap electricity imported from dirty coal-fired power stations elsewhere in the country. This situation will only be exacerbated if, as expected, plug-in battery vehicles, needing to be recharged overnight, account for an increasing share of the Californian fleet.

That aside, all your correspondent now has to worry about is whether the 31% anti-dumping tariff recently imposed on Chinese solar-panel makers really does deter them. Having seen such trade spats play out many times before, he suspects the tariffs will only spur Chinese firms to acquire the few remaining American solar-panel makers so that they can carry on manufacturing in low-cost Wuxi or Shanghai and do their final assembly in middle America (presumably with local subsidies to boot).

So solar panels have never been cheaper thanks to the Chinese.  Which is good.  These lower prices will encourage people to save the planet by installing solar panels onto their roofs.  Unless the government raises these low prices with a 31% anti-dumping tariff.  Hmm.  Looks like you have to choose between saving the planet.  And providing green jobs.  For as this anti-dumping tariff clearly shows you can’t have both.

And because jobs are more important than the environment the government is subsidizing the clean energy industry.  Let’s crunch some numbers.  They say we could lose “tens of thousands of green jobs.”  So let’s assume there were 80,000 jobs created in the first year.  And they declined by 10,000 every year to reflect with the growing number of bankruptcies in the green energy sector.  Dividing the incentive by the cost in the first year you get a cost of about $550,000 for each job created.  If do the same for the last year you also get a cost of about $550,000 for each job created.  That’s a lot of money to pay someone.  And I’m guessing that the Chinese aren’t paying their employees a half million each in wages and benefits.  Not when they’re making these solar panels so cheap that the U.S. has to slap an anti-dumping tariff on them.

Of course these numbers don’t include the $500 billion the government blew on Solyndra.  Or the other Solyndras out there.  Which when you factor all of these in these green jobs are costing the taxpayer probably in excess of a million dollars each.  For what?  To pay someone a $50,000 wage on an assembly line so he or she can take these earnings and stimulate the economy?  Talk about a negative return on investment.  And the president is attacking Mitt Romney’s Bain Capital past?  If Bain Capital took over the United States government to turn it around to get a sensible return on tax dollar investments guess who would be the first fired from his job?  The incompetent chief executive that spent a million dollars plus to get $50,000 worth of stimulus.

And the kicker is that none of this matters.  When solar power is available people are at work.  When people are home cranking up their air conditioners and plugging in their electric cars for the night the sun is down and coal-fired power plants are meeting this peak demand.  So we get nothing.  No jobs.  And we don’t even save the planet.  We just get higher taxes and more debt.  A pretty crappy deal if you ask me.  We have coal.  We should just use coal.  And not demonize it.  We’d arrive at the same outcome.  Only with fewer taxes and less debt.  And cheaper electricity.  Because we’d be bringing more coal-fired plants on line.  Now that is a smart turnaround plan.  The kind of turnaround that could end up in the win column at Bain Capital.

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