Expensive Energy

Do “green” energy subsidies work?  Pretty much by definition, they do not.  Without the subsidies, “green” energy is unsustainably expensive.  Even—especially—when the subsidy is a government mandate to use/buy the “green” energy, the only thing green about it is the money necessary to buy it.  The cost of the ethanol subsidy/mandate in our gasoline has been well documented as appearing not only in the cost of our gasoline, but in the cost our food, as well.

Wind energy provides another example of an expensive, and failed, “green” energy subsidy.  The Wall Street Journal writes

Twenty-nine states have these rules requiring local utilities to purchase between 20% and 33% of their electric power from renewable sources.

Minnesota, in particular, the WSJ reports, required as recently as 2007 that utilities in the state push their use of renewable energy  to 25% by 2025, to 12% by this year.  That means wind energy because in that Midwestern and northern state, the sun doesn’t shine as much as it does in New Mexico or Arizona.

The Minnesota Rural Electric Association says its members lost $70 million last year because these utilities are forced to buy wind power they “can’t use and can’t sell.”  Even so, residential utility bills for MREA’s customers run $50 to $100 per year higher than they would absent the mandate.  That’s not chump change for Mr Everyman.

What are Minnesotans getting for their extra $100 of energy expenditures?  Nada.  Not more energy.  The wind does not blow all the time, so the wind mills stand idle while still costing money.  When the wind blows too hard, the wind mills must be shut down, so they stand idle while still costing money.

Not more jobs.  Minnesota’s wind-generated electricity doesn’t come from wind mills built in Minnesota.  They import it from North Dakota.  When the wind is blowing just right.

The WSJ also described a study published this year by the Manhattan Institute, a New York City-based market-oriented think tank, that compared states with renewable energy mandates with those that allow utilities to purchase the cheapest electricity available.

The states with mandates paid 31.9% more for electricity than states without them.  Residents of North Dakota, a state without a mandate, pay $7.63 per kilowatt hour for electricity.  Neighboring Minnesota pays $10.76.


2 thoughts on “Expensive Energy

  1. [g]

    I see that you’ve listed a number of government subsidies on your own blog. Think how much better off British citizens would be if the taxes levied to pay for those subsidies were left in their hands instead of being washed through a Know Better government.

    Think how much better off British citizens would be if the borrowing done to support much of those subsidies were not done–this borrowing represents future taxes that must be levied to pay the vig.

    The ripples spread wide. Take your farm subsidies, for instance. We have much the same thing, for much the same purpose, in the US: to prop up small farms and to prop up farm prices. Do small farms–or large ones–have any more of an inherent right to exist than any other enterprise? Where are their supports? The right answer is to do away with the subsidies, and let all enterprises in an industry compete successfully or fail.

    Those price supports have other pernicious effects. The artificially high prices are too great for our poor to afford–so we have food stamps to help them buy that unnecessarily expensive food. And who pays for those food stamps? Taxpayers, either today, directly, or tomorrow to pay for the borrowing done today.

    Eric Hines

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