Green: Markets Are Key to Environmental Protection

Posted November 9, 2011 at 6:03pm

Despite an unbroken record of failed efforts to usher in a utopian “green” economy, proponents of the great green future are undaunted.

No matter how many conventional jobs are killed to produce a tiny number of green jobs, no matter how much taxpayer money is thrown into renewable energy boondoggles, no matter how many businesses face extinction from overly aggressive Environmental Protection Agency regulations, the only course correction the greenists will entertain is more: Throw more money at green-tech peddlers, put more restrictions on conventional energy and layer more regulations onto the productive economy.

A quick recap of recent green failures is in order. Let’s start with green power and green jobs.

Studies from think tanks and universities and investigative reporting in major European newspapers show that efforts to force green energy into the economy only raises energy costs, kills jobs in the conventional economy and leads to industry flight.

In Spain, for every green job created with massive taxpayer subsidies and regulatory mandates, 2.2 jobs were destroyed (or could not be funded) in the general economy. In the United Kingdom, the ratio was 3.7 jobs killed per green job created. In Italy, about five to seven jobs were destroyed or defunded for every green job created.

Subsidy money is running out, and European countries are rethinking — and cutting back — on green energy subsidization. One thing they’re not doing is “doubling down.”

Apparently, the Europeans, while idealistic, have heard the saying that it’s foolish to throw good money after bad.

And let’s not forget about some other high-profile failures of recent days.

• Solyndra: half a billion dollars of taxpayer dollars down a rat hole of a company that had a lousy business model, was a huge financial risk and was put on the fast-track to taxpayer wallets only because of political considerations such as the urgent need for a presidential photo op.

• Back in January, another solar power company, Evergreen Solar, embarked on a new job creation initiative, having sucked down $43 million in state government subsidies it used to perfect its technology before opening a production facility — in China.

• More recently, and only days ahead of a new Obama administration effort to check up on the soundness of its green investments, another “green energy” company, Beacon Power Corp. has entered bankruptcy after taking $43 million dollars in “loan guarantees” from the Department of Energy last year.

But, the green boosters insist, this is America! We can (and we must!) go green! Never mind that equally advanced technological powers such as Japan, Israel, Germany, France and others have all tried and failed. Our willpower will prevail!

Alas, it’s not that simple: The problems are not a matter of will but are based on fundamental problems of physics and economics. Trying to integrate diffuse and variable energy sources like the wind and sunlight into the energy grid of a modern country at any significant scale is extremely challenging, and the redundancy requirements make it extremely expensive. Wishes and willpower will not make this go away.

As for creating “green jobs,” one has to wonder what it is about the idea that “capital is finite” green-job boosters can’t understand? This isn’t rocket science: If you take money out of the private economy where it’s already creating jobs, give a cut to government bureaucrats and dump the rest on rent-seeking “job creators” legally obligated to pay union labor rates, you don’t get more jobs, you get fewer jobs on net.

The path to prosperity and environmental protection is not to be found in green utopian planning, throwing taxpayer dollars at green-tech peddlers or piling on green regulations. It’s not to be found in a mentality of “use less energy, have less goods, buy less things, live in smaller spaces, be less, live less, do less.”

Instead, prosperity and environmental protection are created by accepting and facilitating people’s natural desire to live larger lives: lives of greater prosperity, harnessing greater amounts of energy, enabling people to buy more houses, goods, education, clothing, food, entertainment and more.

What’s needed to get the economy back on its feet is less wasteful government spending, less government tinkering with the energy economy, limiting regulations to the mitigation of clear and present dangers, minimizing the costs of regulatory compliance and unshackling the free-enterprise energy economy that drove the American economy to heights other countries could only envy.

Markets, not mandates, are the path to a more prosperous, environmentally protected future.

Kenneth P. Green is a resident scholar at the American Enterprise Institute.