Green Energy Is Expensive & Won’t Save The Environment—It’s A Wealth Redistribution Scheme

offshore wind farms helped the UK to set a green energy generation record on June 6, 2017

Green Energy Is Expensive & It Won’t Save The Environment

June 7, 2017 was a blustery day in the UK—so blustery, in fact, that the country’s wind turbines helped the UK set a green energy generation record.

For the first time in the UK’s history, alternative energy sources outproduced fossil fuels.

This is being touted as a triumph by green energy advocates—it proves that wind and solar are powerful enough to underpin the power grid, allegedly.

But is this really true?

Are green energy sources powerful enough, cheap enough, and reliable enough to sustain human civilization?

And perhaps more importantly, is the expensive transition to green energy worth it?  Can green energy save the environment?

No.  It’s all smoke and mirrors.

Can Green Energy Power The World?

Hypothetically there’s more than enough power available from renewable sources—the sun powers most of earth’s life, after all.  That’s not at issue.

The problem is harvesting it.

For example, given current technology, there’s not enough silver on planet earth to build enough photo-voltaic cells to harvest enough solar energy to power the world.

In fact, we’d need over seven planets to get enough silver to meet our energy demands from photo-voltaic cells.

Of course, this may not be an issue if technology continues to increase, reducing or mitigating the need for silver.

But even if it does, wind turbines and solar panels require many other rare earth minerals.

A study done by the Yale School of Forestry & Environmental Studies done back in 2013 found that the scarcity of rare earth minerals is a major problem for the green energy industry.

Why?

Rare minerals are, well, rare.  That makes them expensive, and it limits their supply.

So it’s not just about silver, it’s dozens of other materials.  Some have even suggested that there’s simply not enough critical minerals to fuel the green energy “boom” for much longer.

Of course, I’m sure there’ll be workarounds.  But those just continue to add to the (already high) costs.

Green Energy Is Expensive

Speaking of costs, this one’s a bit of a no-brainer.

Everyone knows that solar and wind power aren’t remotely competitive on the open market—that’s why governments are subsidizing them like crazy.

Germany, for example, has a massive tariff on energy imports that keeps cheap Polish coal-power out of the country.

The average level of protection for solar energy is 33 Euro-cents per kilowatt hour.  The average cost of power in Germany?—just 29 Euro-cents per kilowatt hour.

Basically, the true cost of power is at least double what it should be, just on a cost-leveling basis alone.

Beyond that, the prices are highly inflated due to the massive tax breaks and subsidies solar and wind companies receive—not to mention the fact that Western governments have been bankrolling their research and development for decades.

It’s a shame we don’t fund cancer research like we fund solar energy research.

There are also many hidden costs when it comes to renewable energy—costs which are impossible to mitigate because they’re baked into the physics of power generation and consumption.

Here’s a good video explaining everything.

Remember, power is consumed the instant it’s generated: it flows from the generating station to your computer, or phone at nearly the speed of light.

This means that the volatility inherent in renewable energy sources (some days are cloudy, sometimes the wind blows harder than others) requires extensive compensation engineering—gas-fired backup stations are needed to pick up (or wind down) the slack depending on how the wind’s blowing.

Of course, this necessary redundancy increases costs and systemic complexity.

Likewise, the current is much harder to stabilize—super-windy days are nightmares for power companies trying to deliver a regular electrical flow.

Another example: a German power distribution company called 50Hertz spent over 351 million Euros in 2015 on what it calls “congestion management“, that is ironing out all the wrinkles caused by generation fluctuations.

Renewable Energy is Volatile, & Therefore Fragile—It Puts Us at Risk of Systemic Collapse

Higher volatility doesn’t just mean higher prices: it means higher systemic risks.

Let me explain.

Imagine the power grid is runs on a network of coal plants, each generating power for their region.  Now imagine a coal power plant suddenly breaks down.  What happens?  To the individual consumer, probably nothing.

Why?

Because power will simply be re-routed from somewhere else to makeup for the shortfall.  And if the problem continues, then other coal plants can fairly easily pick up the slack—they’ll just burn a little hotter.

Basically, the grid’s inter-connectivity provides a “safety net” in case one plant (or transmission line etc) fails.  And if too many plants fail, or demand is too great to compensate for, the resulting blackout will probably be local and likely won’t last that long.

This stability is the primary benefit of an integrated grid.

However, too much integration can also be a problem.  For example, the 2003 Blackout was caused by hot transmission lines that sagged and grounded.  This resulted in a cascading power failure that left 50 million people in the US and Canada without power.

Luckily, the grid operates with enough autonomy that such problems are contained to specific geographical regions.  It could’ve been worse: after all, the Canadian and US integrated power grid services some 360 million people—most were unaffected.

In a sense, the current power grid is actually a network of many smaller grids that operate fairly independently, but help each other out when needed.

A balance must be struck between not enough integration (having a safety net is a good thing) and too much integration (you don’t want the entire grid to collapse).

Right now, we strike a pretty good balance.

And this brings me to the problem caused by the volatility inherent in solar and wind power.

In a system powered entirely by wind and solar energy, the only way to mitigate the volatility (also known as intermittentcy), thereby ensuring a stable current and preventing local blackouts, is to integrate the system.

Why?

Because the wind’s always blowing somewhere.  If the sun’s not shining in England, it’s shining in Spain.  The law of large number reduces the volatility for the whole system by aggregating the risk—it’s just like how the average price of 100 stocks will change on a daily basis less than the price of a single stock.

Bigger systems reduce short-term volatility.

But making it bigger also makes the system far more complex, and fragile—it masks the risk because there are no autonomous nodes: each region relies upon, and is relied upon by, every other.  There are no individual grids, it’s just one grid.

This means that if there’s a cascading failure, or some sort of unforeseen problem, the entire power grid fails, everything fails—there are no local blackouts, only systemic collapses.

Let’s compare the two systems and explore why that’s a problem.

In the first (low-volatility sources), greater connectivity among self-sufficient grids provides a lot of upside (fewer outages), while the downside (cascading failures) is limited to local regions.  The integrity of the system as a whole is never threatened.

Therefore, the system is robust.

In the second (high-volatility sources) greater connectivity is a necessary predicate (the system can’t exist without being large and complex), not an upside, while the downside (systemic collapse) is ruinous—it could literally plunge a society back into the middle ages.

This system is fragile.

Look at it this way: say 100 million people are impacted by a blackout.  Which would be more damaging, ten blackouts impacting ten million people spread over ten days?  Or one blackout impacting all 100 million people over one day?

In both cases the same number of people are impacted, but the first is much less damaging, since 90% of people still have power—society continues.  In the second, society as a whole is disrupted.

If you’re interested in learning more about systemic risk, or how to analyze robustness and fragility, you should read Nassim Taleb’s Antifragile—he popularized this type of analysis.

Green Energy Isn’t A Panacea—It Won’t Save The Environment

I don’t want to get into a discussion about whether global warming is man-made or not.

I don’t really care.  It doesn’t matter.

What does matter is the efficacy of our “solutions”—assuming global warming is a problem, is transitioning to green energy the best way to solve it?

No.  Not even close, actually.

At best, green energy is a wealth redistribution scheme; at worst, it’s actually increasing the pace of environmental degradation.

Why?

Because if the goal is reducing carbon emissions, green energy is probably the most inefficient way of doing it.

Take Australia for example: to reach their carbon-reduction objectives for the Paris Agreement they could either switch to renewable energy—at a cost of hundreds of billions—or stop clearing land for new ranches, which would be free (well, there’d be a nominal cost due to limiting the expansion of the cattle industry, but frankly it’s not that lucrative anyways).

The choice is obvious to anyone with a half a brain.

Another example: when we in the West pass strict environmental legislation, or institute carbon taxes, in order to limit emissions from our factories, we assume that they must comply with the law.  Now of course, this would be true in a closed system—but the economy isn’t a closed system anymore.

Instead, we’ve signed free trade deals, or have removed our tariffs on imports from most of the world.  This means that it’s very easy for a factory to simply leave Michigan and move to China—thereby avoiding the environmental regulation or tax altogether.

Not only does this cost us jobs, but it also means that a relatively efficient American factory is replaced by a very inefficient Chinese factory that has ten-times the emissions footprint.

In fact, a 2014 study found that one-quarter to one-third of all China’s carbon emissions were caused by factories building things for offshore markets.

This is why carbon taxes often increase global carbon emissions.

Ironic.

A final point (which I’ve already alluded to): green energy isn’t that green.

It takes an enormous amount of energy to harvest all the natural resources that go into building wind turbines or solar panels—so much energy that it’s questionable whether or not green energy is actually self-sufficient.

If our goal is truly to reduce emissions, then the cheapest and most effective way to do it is to reduce our consumption, and improve the efficiency of our existing technology.

The Opportunity Cost of Green Energy

A final point worth mentioning: green energy industries have received hundreds of billions of dollars in government funding for research and development, and general subsidies.

Many projects have resulted in abject failure—anyone else remember Solyndra?

Regardless, all this investment has allowed green energy technologies to develop rapidly, and given the continuance of massive subsidies, it’ll probably continue to improve.

What concerns me with this is the opportunity cost: what could we have done if we spent that money, and dedicated legions of scientists and engineers on already proven technologies?  How efficient would our fossil fuel and nuclear plants be, our transmission lines, our back-end consumption be?

I think it’s likely that we’d have seen similarly disruptive technologies evolve in other contexts: we could’ve made our existing energy infrastructure dirt cheap, clean, and efficient—and it would’ve been a lot cheaper since we would’ve have started from scratch.

A good example here is fuel efficiency in the automobile market.

Your average automobile is three times as fuel-efficient as it was the the 1970s, and that was done by private corporations.  That means that we can power three times as many vehicles on the same quantity of fuel—huge energy savings.

Imagine how rapidly the technology would’ve developed if it was supported in the same way solar research was?  We probably could’ve improved our engines decades ago, rather than pouring money into basic research.

But I suppose we’ll never know because we wasted billions chasing the sun and the wind.

Or better (for the environment) yet: what if we had spent all that money building nuclear & hydroelectric plants? The resources were there & the technology was already proven.

Had we done this, America’s power grid could’ve been emission-free 20 years ago, and it would’ve cost a lot less money than waiting until solar energy to slowly mature.

Furthermore, power would’ve been so cheap that it’s questionable whether our manufacturing industries would’ve been offshored at nearly the same rate—America would likely still have its manufacturing base, and the middle class that goes with it.

My point: it took 30 years of investment, and hundreds of billions to make solar energy (almost) viable.

It would’ve taken a whole lot less time and money to simply improve the stuff we already had.

One last note, although I’ve formatted this article primarily around solar and wind, there are other types of green energy that pose different problems.

For example, biofuels force us to choose between using agricultural land for either food or fuel production, or clearing more natural habitats (which of course, is bad for the environment).  A widespread adoption of biofuels could result in food shortages or higher prices—as is already being observed.

But that’s just the bad.

Some forms of green energy are worth investing in where possible, like hydroelectric and geothermal: both yield significant power at low prices.  The problem with them is that they’re restricted according to the local geography.

The Future of Green Energy: Wealth Redistribution

Due to the heavy push by moneyed interests, we will probably continue to increase our reliance on wind and solar energy.

Too bad.

We’d be better off investing in common sense ways to improve our energy efficiency (insulating our buildings better, build more efficient power lines etc.).  Doing so would actually save us money on power consumption, and reduce our carbon emissions (again, assuming you care about those, which I don’t).

Instead, we’ve invested heavily in green energy, which is about the least efficient way of solving the problem at hand.

That’s why I don’t think it’s about the environment—at least for the guys at the top—it’s about making money.

This is wealth redistribution, pure and simple.

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About Spencer P Morrison 62 Articles
JD candidate, writer, and independent intellectual with a focus on applied philosophy, empirical history, and practical economics.Author of "America Betrayed" and Editor-In-Chief of the National Economics Editorial.

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2 Comments on "Green Energy Is Expensive & Won’t Save The Environment—It’s A Wealth Redistribution Scheme"

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Reaper of Souls
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Great article! You should read “The Limits of Growth” and do an article about it.

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