05-04 IBD

Why Can't We Learn From Others' Failures?

Posted 05/03/2011 06:49 PM ET

Alternative Energy: Like a man living out a fantasy, President Obama is still pressing his green energy agenda. But a glance at other experiences tells him it won't work. Why does he think he can do what can't be done?

'Instead of subsidizing yesterday's energy sources, we need to invest in tomorrow's," Obama said in his weekly radio address of April 23. "We need to invest in clean, renewable energy."

It was only one of several opportunities the president has taken lately to play green huckster. He seems dead serious about coercing the country into a renewable energy regime in the same way he rammed through his health care overhaul.
And just as ObamaCare will prove to be ruinous, so too will the green energy scheme.
Consider Germany. It began a renewable energy program that has neither paid off nor lived up to its green promise. This unsurprising conclusion is found in "Economic impacts from the promotion of renewable energies: The German experience" published by RWI, a German research center.
That country's program "is often cited as a model to be replicated elsewhere," RWI notes, but it's a model "without merit."
It adds: "Although Germany's promotion of renewable energies is commonly portrayed in the media as setting a 'shining example in providing a harvest for the world' (The Guardian 2007), we would instead regard the country's experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits."
To ensure that 12% of the country's electricity is generated by renewable sources — a European Union goal — Germany in 1991 adopted a feed-in law requiring utilities to buy power from independent producers and place it on their grids. As is always the case with government do-good programs, this mandate forced costs higher.
Solar power, for instance, cost 62 cents per kilowatt-hour while conventionally produced electricity cost 3 cents to 10 cents per kilowatt-hour.
Wind power costs were 300% higher than conventional power. This jacked up average household electricity prices by 7.5%.
While such an increase is unlikely to drive anyone into poverty, it's enough to affect a family's budget. Imagine, as well, how high the electricity rates would go if the portion of renewables larger than 12% were required by government.
Spain also has had an unpleasant experience with renewable energy. The country tried to establish a green economy — and failed. Gabriel Calzada Alvarez, a professor at Juan Carlos University in Madrid, found that "the Spanish/EU-style 'green jobs' agenda being promoted in the U.S. in fact destroys jobs."
For every green job created by the Spanish government, Alvarez found that 2.2 jobs were destroyed elsewhere in the economy because resources were directed politically and not rationally, as in a market economy.
Researchers from the Italian think tank Istituto Bruno Leoni have published similar findings about their country. There, "each green job cost 6.9 jobs in the industrial sector and 4.8 jobs across the entire economy."

With this information available, why would anyone continue to push green energy schemes? It takes an overbearing arrogance for someone to believe that the laws of economics must bend to his will.