Essay by Eric Worrall
Professor Aled Jones exposing the “myth” that renewables are too expensive and utterly reliant on government subsidies.
‘Decarbonisation is too expensive’ – how to sell climate change action to bean counters
Published: September 29, 2022 1.20am AESTAled JonesProfessor & Director, Global Sustainability Institute, Anglia Ruskin University
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With fellow academics, I studied instances from the past 30 years when governments succeeded in using public investment and regulation to rapidly scale up the deployment of renewable energy technologies like solar panels and wind turbines.
We found that the traditional approach to making energy policy – carrying out cost-benefit analyses, otherwise known as bean counting – tended to impede the roll-out of renewable energy because it misconceived the economy as something static which always operates in an optimal way. This perspective assumes that policy can do little to disrupt the structure of existing markets. The meteoric rise of entirely new sectors over the last decade, such as the global electric vehicle market and offshore wind, show that policy can in fact drive radical changes.
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Myth one: decarbonisation will make electricity expensive
Subsidising low-carbon technology is an investment, not a cost. A recent study suggested it is an opportunity for the global economy with a potential return of US$12 trillion.
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Myth two: renewables need massive subsidies
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Renewables now compete with and even beat the cost of generating power from fossil fuels. Offshore wind, for example, produces electricity at about a quarter of the current price charged to consumers in the UK – a price set by the wholesale cost of gas. Building new wind turbines no longer relies on subsidies.
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Myth three: jobs will disappear
The transition from fossil fuels in energy systems will shed nearly 3 million jobs in mining, power plant construction and other sectors. But it is expected to create more than 12 million new ones in transport, renewable power generation and energy efficiency by 2030.
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If we continue to fuss about the costs of action then by 2050 there won’t be very many beans left to count.
An essay which starts by dissing “traditional” cost benefit analysis pretty much sets the tone for the rest of the claims.
Professor Jones “Myth 1” claim that renewables will not increase power bills isn’t borne out by the evidence. If renewables were cheaper than reliables, California would have the cheapest electricity in the America.
Even President Obama didn’t claim renewables would reduce energy prices.
Professor Jones’ “Myth 2” claim that renewables are not utterly dependent on government subsidies is also refuted by the evidence. Tens of thousands of Spanish entrepreneurs were bankrupted when the Spanish socialist government abruptly and retrospectively cut renewable subsidies in 2010. If Renewables were competitive, and subsidies are simply an accelerator for a transition which will happen anyway, there wouldn’t have been a wave of Spanish bankruptcies when the subsidies were pulled.
Professor Jones’ response to the third “myth”, that renewables will boost prosperity by creating more jobs, is the most interesting of his claims.
I agree with Professor Jones that a genuine switch to Net Zero would create more jobs – but they would be miserable, poorly paid jobs.
Basic economics dictates if you have to hire more people to perform the same service, there is less money available to pay the extra workers. Replacing 3 million jobs with 12 million jobs to produce the same amount of electricity as before does not create wealth, it destroys wealth. Quadrupling the number of workers to produce the same electricity means either the wages which used to be paid to 3 million people now have to be stretched to pay 12 million people, or the service the 3 million people used to provide is now 4x more expensive. Most likely a mixture of both price increases and wage cuts.
Economic growth and wealth creation is about getting more done with less, the primary goal should not be to create jobs – more jobs are created as a side benefit of a growing economy. Our comfortable modern existence is only possible because our ancestors focussed on growth rather than jobs. As a consequence we’re a lot better at getting work done than our ancestors.
Consider a farmer working a field. A few centuries ago, working a large field required an entire team of people. But nowadays a large field can now be plowed or reaped by a single farmer driving a large agricultural machine, or even a robot machine which doesn’t need any direct oversight. That way, instead of say 20 people being paid from the profits of that field, most of the profits go to one person, the farmer who owns the machine – minus the cost of refuelling and maintaining that machine.
This reduced need for farm workers does not mean 19 people are now jobless – it means those 19 people who are no longer required to work the field are liberated to find other, better paying jobs which also use machines to amplify human labor – which is exactly what happened during the urbanisation which occurred during the Industrial Revolution.
Greater efficiency means everyone has a chance to work fewer hours for more money. Employee rights advances like the 40 hour work week was only possible because we all got richer, because it was no longer necessary to work the fields by hand, because most of us don’t have to work our butts off just to get the basic necessities.
If you want a glimpse of life before the industrial revolution, just visit a really poor country. But even the poorest countries today are better off than our ancestors were.
The USA, Australia and Britain have already had a taste of this downward pressure on prosperity, especially places with high renewable penetration. How much did you pay last time you filled your gas tank? How painful was your last household energy bill? At what point is the green fairy supposed to turn everything around, and make all that magic renewable energy cheaper? How many homeless people are required, to convince places like California they might have made a mistake?
Even Professor Jones’ final claim that “… there won’t be very many beans left to count“, a reference to the alleged climate threat to coffee, couldn’t be more wrong. In Australia there is a company called Jaques Coffee which grows a delicious, award winning low altitude tropical coffee – their coffee plantations are only 1200ft above sea level, as opposed to 3000ft+ for most premium coffees. Jaques exports their product all over the world. How did they produce a delicious coffee which grows at a lower altitude than most other premium coffees? Because Australians have been selectively breeding low altitude coffee varieties for more than a century – we simply don’t have access to high altitude tropical highlands like East Africa and South America.
This green nonsense will only get worse, if we allow our politicians to continue listening to academics like Professor Jones, if we fail to challenge the absurd economic narratives of climate advocates, and if we allow our politicians to continue pushing forward with heavily subsidised, impossibly expensive renewable energy.
