Op-Ed

Who should pick energy winners, losers?

At issue | Nov. 25 Herald-Leader article, "Jobs could come by switching from coal, study says"

The recent report by the Mountain Association for Community Development is a worthwhile contribution to the ongoing energy debate in Kentucky, though perhaps not for the reasons intended by the authors.

Its intended purpose was to tout the job creation and career opportunities related to "clean energy." However, as much as we all eagerly look for job expansion in the clean-energy sector, we must take a realistic view of Kentucky's economy and where the jobs will come from and go.

The job figures cited in the report — a net gain of 25,000 jobs — are not nearly as informative as the underlying policy advocacy necessary to "create" those jobs. "Green jobs" are largely dependent upon direct government spending, tax subsidies, regulation and mandates. Although these policies are a fact of life in current energy markets, they result in abnormal and induced impacts to the economy and should be seriously scrutinized before renewed or expanded. Such spending programs are not sustainable in the long run. To be fair, each energy source receives some type of government support, though with significant disparities.

According to the Energy Information Administration, in 2007, the federal government spent $16.6 billion on energy-related subsidies. Solar- and wind-based electricity generation received a price support of $24 and $23 respectively per megawatt hour in 2007, while coal received only 44 cents and natural gas 25 cents.

From 1999 to 2007, subsidies for renewable energy increased from 17 percent to 29 percent of the total allocation. Coal subsidies decreased from 7 percent to 6 percent during the same period.

Bottom line: Although wind and solar energy have some sought-after traits, they're only competitive energy sources when showered with generous appropriations from the treasury.

Similar government interventions underpin the job creation assumptions in the MACED report. It paints a picture of a potentially reinvigorated manufacturing base in wind and solar industries, which rests upon tax credits and renewable portfolio standards — government mandates that a certain percentage of electricity generation comes from renewable energy.

The report fails to evaluate the potential displacement of jobs in Kentucky's existing manufacturing sector, especially within energy intensive industries such as aluminum and automotive, when electricity prices increase from the switch from coal to renewables.

It argues that job creation awaits in weatherization and home energy efficiency efforts. To MACED's credit, it explicitly reveals the "short-term job creation" in these fields in Kentucky exists almost exclusively because of the $72 million sent to the state from the federal stimulus package. To continue creating jobs in these fields, one must assume more government money will be required.

The 25,000 jobs reported by the Center for American Progress and cited by MACED will require a $150 billion investment in clean energy. Where does the money come from? According to the CAP report, "this level of clean-energy investments can be achieved through the combination of spending programs, subsidies and regulations."

MACED's and CAP's policy positions are absolutely relevant within the public debate. They represent a mainstream, left-of-center point of view of how policy can reallocate resources toward favored industries.

Their honest assessments of what it takes to create green-collar jobs serves a great purpose in revealing the role of government choosing winners and losers.

The question will be whether or not the American public is ready to embrace more government intervention in the economy. And, how much will be expected of taxpayers when it's time to pay the bills? It's a debate worth having. MACED deserves credit for an intellectually honest entry into the discussion.

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