State legislators who advocate for an expansion of government incentives for alternative energy sources need to pay attention to the events happening across the pond where the European Commission is abandoning country-by-country targets for greenhouse-gas emissions after 2020.
Mounting debt and surging rates from an over-reliance on renewable energy sources such as solar and wind prompted the commission’s action, reports the Wall Street Journal (paywall):
Take Spain, where financial incentives for renewable energy have driven renewables to as much as 25% of electricity generation. They have also left the country with a $41 billion gap between what energy costs to produce and what utilities can charge for power. Mariano Rajoy's government has been scrambling to scale back the subsidies and close the gap. These efforts have left in the lurch those who installed wind and solar on the promise of high fixed payments for their power.
In Germany, Angela Merkel is also seeking to push through cuts in wind and solar subsidies and to cap new installations of renewable capacity going forward. Germany's feed-in tariffs—which guarantee renewable-energy suppliers above-market prices for their power—have helped drive up retail power prices by 17% in the past four years while costing utilities and small businesses billions. Many of Germany's largest energy users are exempt from the green surcharges, a fact that the European Commission is currently investigating as a possible illegal subsidy.
Moreover, the Journal says, European companies are moving production to the U.S. where the shale gas boom is producing an advantage in energy costs—not to mention a reduction in carbon emissions as natural gas picks up more of the share of electricity generation.
As the Journal said in a separate piece:
“The innovation of the private oil and gas industry in extracting natural gas from shale has done more to reduce CO2 emissions than have all of the Obama Administration's subsidies, mandates and crony-capitalist schemes for renewable energy.”
Another benefit of the gas boom has been lower heating bills, which have remained moderate even during recent cold snaps.
All of which suggests that state Rep. Tommy Sankey (R-Clearfield) is on the right track with his bill to repeal Pennsylvania’s Alternative Energy Portfolio Standards.
The standards—adopted in 2004—require the state’s electric companies to obtain 15 percent of their energy from alternative sources by 2023. Europe’s experience is crystal clear evidence it’s time for government to stop picking energy winners and losers.
One news story highlights hundreds of jobs lost and millions of taxpayer dollars down the drain via corporate welfare. Another celebrates millions of new state revenue and free market job creation. This contrast offers a lesson for lawmakers.
The closure of Pittsburgh-based Flaberg Solar, a manufacturer of mirrors for the solar energy industry, is a tragic story of job loss and taxpayer abuse. Flaberg was awarded $10.2 million in stimulus funds and received an additional $10 million in state grants, putting taxpayers on the hook for up to $20 million.
(T)he current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue [the plant's operation], said Flaberg Solar's parent company in a statement.
Flaberg Solar, which once employed 200 people, says it cannot afford to pay former workers severances owed them. Vendors stand by with uncollected receivables as the company projects a debt of as much as $7 million.
A second article reported that the commonwealth expects to collect $400 million from the Marcellus Shale Impact Fee in the first two years of the tax's existence.
Although the tax was an unnecessary money grab, its success in generating revenue demonstrates the ability of private ventures to produce thousands of jobs, economical energy and billions of dollars in wealth without government aid.
The entrepreneurial spirit exemplified in the development of Pennsylvania's Marcellus Shale is key to the higher standard of living Americans enjoy. In contrast, corporate welfare schemes like subsidies for Flaberg Solar squander capital and destroy jobs.
For years, you’ve heard conservatives say the wind power industry would be better off without government subsidies. But now even wind industry advocate and Tang Energy CEO Patrick Jenevin is joining the chorus via the Wall Street Journal.
Without subsidies, the wind industry would be forced to take a fresh look at its product, says Jenevin. And if there is truly a need for wind energy, entrepreneurs who improve the business's fundamentals will find a way to compete.
Jenevin, a developer of "clean energy" projects, including wind farms, makes the following points:
- Subsidies make wind power developers focus less on efficiency and more on securing government grants.
- While receiving $8.4 billion in cash grants or tax credits under the 2009 federal stimulus program, wind farms were increasingly built in less-windy locations.
- Wind power prices have increased nearly 46 percent since 2005.
- Wind power will make marginal-not revolutionary-contributions to the energy mix.
What is the cost of over-priced wind power to Pennsylvanians?
According to The Beacon Hill Institute of Suffolk University, the state's Alternative Energy Portfolio Standards, which require a percentage of electricity sold to retail customers be derived from sources such as wind power, will raise consumers' costs by as much as $3 billion in 2021.
To read more about the cost of renewable energy mandates see our Bleeding Green poligraph.
Pennsylvania's alternative energy mandates will result in higher energy costs, leading to lower incomes and less investment, and costing the state thousands of jobs, according to a new study from the Beacon Hill Institute at Suffolk University.
The commonwealth's Alternative Energy Portfolio Standard requires a set percentage of electricity generation to come from solar, wind and other specific "alternative energy" sources, phased in through 2021. The Beacon Hill analysis projects that this will increase electric bills by 12 to 15 percent, cost residents and businesses $16.3 billion more than conventional power (approximately $130 per resident), and result in in 17,380 lost jobs by 2021.
Our new Poli-Graph, "Bleeding Green: How Much Money will Pennsylvanians Waste on Alternative Energy Mandates?" highlights the costs of these mandates, which benefit a few politically-selected corporations at the expense of taxpayers, residents, and businesses.
Pennsylvania Independent's Melissa Daniels writes that corporate welfare programs to benefit solar companies are on their way out in Pennsylvania, saving consumers more than $100 million. Two major state programs offering taxpayer subsidies for solar projects have expired:
Pennsylvania spent millions on pushing solar as the SREC [Solar Renewable Energy Credits] market developed. The $100 million Sunshine Solar Rebate Program offered rebates to consumers and small businesses who installed solar projects. The Commonwealth Financing Authority gave more than $57.6 million in grants and $7.3 million in loans for 79 solar-related projects; CFA no longer accepts applications for solar energy grants.
"Green" corporate welfare programs have been under fire for several years, most nobably following the fiasco when Solyndra, a company taking millions in federal loans, went bankrupt.
However, Pennsylvania continues to mandate that utilities get more electricity from specific alternative energy sources, including solar. These mandates drive up prices, and while celebrated for "creating green jobs," actually destroy jobs and undermine economic growth.
Thankfully, legislation to escalate these mandates-which would cost consumers an estimated $139 million annually in higher electric prices-has stalled out, PA Indy reports. Testimony from the Pennsylvania Utility Commission sums up why Pennsylvania lawmakers are more hesitant to subsidize more Solyndras:
Robert Powelson, chairman of the Pennsylvania Utility Commission, testified his opposition before the House Consumer Affairs Committee in January.
"By advancing the current solar carve-out, which acts as a subsidy for the solar industry, HB 1580 would increase the price of solar renewable energy credits, therefore, increasing consumers' bills," Powelson wrote. "This is simple supply and demand economics."
The Environmental Protection Agency's derailing of American's economy is frightening enough to scare even the Ghostbusters (and they ain't afraid of no ghost).
Pennsylvania will be the 7th hardest hit state by the EPA's regulatory nightmare, costing the commonwealth more than 23,000 jobs while raising electricity rates by nearly 11 percent, according to American Legislative Exchange Council.
According to Count on Coal, an organization that educates citizens on how coal keeps electricity affordable, Pennsylvania gets 49 percent of its electricity from coal and the industry generates tens of thousands of jobs. That is, until the EPA forces 10 Pennsylvania coal power plants to shut down by 2015.
The EPA's powers are being challenged by many, including Pennsylvania's governor. A coalition letter signed by Gov. Tom Corbett opposing the EPA overreach states:
...EPA's actions are adding to already overburdened state resources and are limiting the ability of states to administer their own, effective environmental programs and further slow the nation's economic recovery.
Similarly, the Pennsylvania Public Utility Commission said the EPA's approach "appears to be regulatory overkill and, more importantly, could threaten cost effective and reliable provision of electrical services in our State."
Unfortunately, the EPA has become a regime of regulations without representation. Learn more here.
A new study by the Manhattan Institute confirms that forcing states to purchase renewable energy hurts taxpayers.
Pennsylvania is one of the 29 states (as well as the District of Columbia and Puerto Rico) that has a renewable energy standard -- Pennsylvania calls it an "Alternative Energy Portfolio Standard." These mandates force utility companies to produce a percentage of their electricity from renewable energy sources, such as wind and solar.
Given that state solar energy is at least 10 times more expensive than electricity from natural gas, it is not surprising that forcing companies to use it drives up costs.
- In 2010, residents in states with renewable energy mandates on average experienced electricity prices 31.9 percent higher than in non-mandated states. Similarly, commercial rates were 27.4 percent higher, and industrial rates were 30.7 percent higher.
- Of the ten states with the highest electricity prices, eight have RPS mandates: Hawaii, Connecticut, New York, New Jersey, New Hampshire, Rhode Island, Maine, and California.
- Of the 10 states with the lowest electricity prices, only two have RPS mandates. They are Washington and Oregon.
This is more evidence that should lead state lawmakers to oppose increasing state solar mandates bill, which would force Pennsylvanian families to pay millions more for electricity.
Economist Mark Hendrickson, a member of CF's Council of Scholars, looks at the failure of government funded "green energy" projects in his latest column for the Center for Vision and Values. He identifies key lessons from these government fiascoes, for which the Solyndra scandal is only the most famous of many examples at the federal and state level.
There are at least four important reasons why we should stop funding "green" government programs:
First lesson: government-appointed experts are incompetent economic planners—a fact of life that any intelligent adult should know after the spectacular failure of central economic planning in the socialist experiments of the 20th century. No matter how brilliant and how well-intentioned government planners may be, they do not and cannot know what consumers want and how much they are willing to pay for it. Only free markets can solve this challenge. If electric cars are to be a viable industry, private companies will make them so.
Second lesson: The government's involvement in Solyndra raises troubling questions about possible corruption. While I think the Solyndra deal stinks to high heaven, I wonder whether any laws have been broken. Where is the dividing line between influence peddling, legitimate lobbying, political deal-making, and actual crime? Many farm-state Republicans have supported the uneconomical ethanol boondoggle for decades in exchange for generous support of their electoral campaigns, so the practice is bipartisan.
Third lesson: Government job programs are a blatant failure. They have never been economically beneficial. In the 1930s, Franklin Delano Roosevelt had the department of agriculture hire 100,000 Americans to monitor how much acreage American farmers were cultivating. These federal jobs produced no wealth. Their jobs made no more economic sense than paying people to dig holes and then fill them up.
Today's green workers are economically nonsensical, too. True, they sometimes produce something, but the economic value is invariably less than the amount of tax dollars needed to subsidize their job. In other words, federal jobs make us poorer.
Fourth lesson: Finally, we simply can't afford these green boondoggles. Uncle Sam's official debt is now $15 trillion, and when you include off-budget items and unfunded liabilities, the situation is far worse. Given this fiscal reality, it is the height of irresponsibility to throw taxpayer dollars at any special interests, and it is particularly egregious to subsidize enterprises that are plainly uneconomical.
HB 1580, which we wrote about previously, would accelerate state mandates for utilities to use solar power as part of their electricity portfolio.
A new Energy Association of Pennsylvania report calculates increased energy costs of more than $139 million annually if HB 1580 becomes law. Studies of similar laws in other states indicate that these costs will be directly passed on to consumers via higher utility rates.
The House Consumer Affairs Committee is scheduled to vote on HB 1580 on December 8. Government mandates in the legislation unfairly transfer the investment risk of solar power facilities from private investors to us, the consumers.
That risk is real and the bill should be voted down.
Environmental advocacy group PennFuture recently distributed a talking points memo warning solar supporters to avoid mentioning the infamous $528 million Solyndra scandal. Solyndra is but one of many green energy investment failures. Brightsource Energy Inc., a solar manufacturer with political connections, was the recipient of another $1.4 billion bailout.
Why should Pennsylvania force investment in an industry whose failure rate is skyrocketing? Solar energy's viability should depend on its success in the marketplace, not on subsidies and mandates enacted by politicians and backed by taxpayers.
A new study by Penn State scholars found Pennsylvania's alternative energy mandates will cost taxpayers up to $60 million next year and up to $440 million in ten years. Twenty-five to 30 percent of this price tag stems from meeting the state's solar requirements.
While solar looks bright on the surface, any jobs that depend on government assistance are overshadowed by a dependency on taxpayer pocket books. According to the Federal Energy Information Administration, solar energy producers already get 55 times more subsidies per megawatt hour than coal, and 95 times more than natural gas. Moreover, state solar energy is 10 times more expensive than electricity from natural gas and nearly six times more expensive than coal.
Given that Pennsylvania families can ill afford higher energy costs in this sluggish economy, Harrisburg policymakers are pushing a bill that would make these mandates more expensive.
House Bill 1580 would require that all solar credits used to fulfill the state's mandate be purchased from in-state companies, instead of companies within the PJM territory (PJM manages the electricity market in Pennsylvania and in all or parts of 12 other states and the District of Columbia).
The Penn State study shows that Maryland and Jersey—states in the PJM market that already require solar credits be purchased in-state—have solar credit prices that average 40 percent and 160 percent higher than Pennsylvania.
So just to recap, solar power drives up electricity prices for consumers, while lower prices for natural gas are reducing consumers' electric bills and saving Pennsylvanians on heating costs. Yet legislators are considering mandating the former and taxing the latter.
To learn more about Pennsylvania's alternative energy mandates, known as the Alternative Energy Portfolio Standards, click here.
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