Sunday, September 11, 2011

Another flawed attack on green energy in Ontario

This John Ivison column from yesterday is the latest from a Canadian pundit to attack the Ontario government's green energy efforts: "McGuinty's green bubble ready to pop." It, like the Wente column (response), relies on some questionable material that deserves some attention.

Ivison cites international experience for this proposition to be applied here in Ontario: "...involvement in the volatile renewable energy business is not for widows, orphans or governments." To support that proposition, he offers two points, neither of which really stand up on scrutiny.

1. First, the bankruptcy of a California solar producer (and others) as China emerges as a solar power:
This week, Solyndra, a California-based solar manufacturer touted as the future of green production by President Barack Obama, went bankrupt, taking with it a US$535-million loan guarantee from the U.S. government. It was the third U.S. company to file for bankruptcy in recent months, while two German companies have said they are shutting their U.S. plants. The cause is a 50% slide in solar-grade silicon prices, the result of Chinese producers ramping up production.
The Solyndra bankruptcy has received a lot of attention and is being used by right wing advocates as cause for defunding green energy initiatives. However, there is context surrounding the Solyndra bankruptcy and how the overall solar industry is doing in the U.S. that doesn't support the notion that governments should just walk away from funding such technologies.

For example, Solyndra may have gone bankrupt but "...the U.S. has a $247 million trade surplus with China when it comes to solar energy overall — even with China’s massive subsidies for its firms. Solyndra and other start-ups may have failed despite government investment, it worked for other companies, as Lacey points out on Climate Progress..." More on the success of the U.S. solar industry, even in the face of Chinese subsidies: "And even with pressure from Chinese companies, the U.S. is a $1.9 billion net exporter of solar products – proving the value that the industry provides to the U.S. economy."

Further, Solyndra itself was apparently not competitive, it may have just been a company that was bad to invest in: "Many people in the industry were critical of Solyndra even before it received a loan guarantee. While trying to scale the manufacturing of its technology too quickly, Solyndra ended up being a capital-inefficient player during a time when market forces were dramatically pushing the price of conventional PV down."

And once again, as noted in a recent Brookings Institute study, green jobs have been flourishing in the U.S., solar included, demonstrating that governments who support them are making good investments despite the occasional failure:
"...the state of California as a whole, which has gained almost 80,000 green jobs since 2003 — a 4.2% annual increase – and leads the nation in the number of clean energy jobs."
...
[D]uring the middle of the recession–from 2008 to 2009–the clean economy grew faster than the rest of the economy, expanding at a rate of 8.3 percent. This is likely due, in part, to the American Recovery and Reinvestment Act (ARRA), which channeled large sums of public spending towards clean energy projects through much of 2009.
So does it make sense then that the bankruptcies of three businesses in the U.S. means governments should jettison support for these technologies of tomorrow? No. Not if we want these emerging industries to help move our economies away from dependence on fossil fuels, which is where we have to go. What is it that these right wing critics are saying anyway? That western economies should cede to China on emerging industries? That's crazy and the trade numbers don't support that.

2. Ivison's second point on the international experience Ontario should learn from is out of Spain. He cites these conclusions from a Spanish study which has been debunked (below):
A study from the University of Madrid should give Ontario voters even more pause for thought. Spain experienced a state-sponsored solar bubble that was, in the words of the authors, "ter-ribly economically counterproductive." Spain was at the forefront of supporting renewable energy with billions of taxpayers' dollars, but the study found that for every green job created, massive government subsidies killed more than two jobs, principally because the higher cost of electricity affected the cost of production for energy intensive businesses. It concluded that the jobs created were few in number, mainly in construction and installation, at a cost of $775,000 each.

"These costs do not appear to be unique to Spain's approach but are instead largely inherent in schemes to promote renewable energy sources," the study concluded.
Sounds bad, again. But, this study, which is being cited frequently by right wing proponents of late has indeed been debunked by many sources. The study which reaches the conclusions he relies upon is this one from 2009 and it contains the phrasing Ivison references, "terribly economically counterproductive," in the first paragraph of the executive summary.
Spanish Study Cited By Fox Has Been Widely Discredited. LaJeunesse's claim that "Spain apparently destroyed 2 jobs for every green job it created" is based on a discredited study conducted by Gabriel Calzada from Spain's Universidad Rey Juan Carlos. The study was commissioned by an industry-funded group and has been widely criticized for its suspect methodology and unsupported conclusions. [Media Matters, 9/1/11]
Among those critical of the study, a U.S. Department of Energy white paper that concludes the Spanish study's methodology is flawed and therefore: "the primary conclusion made by the authors - policy support of renewable energy results in net job losses - is not supported by their work."

You can read on in the Media Matters item for others who are highly critical of the Spanish study: the Wall Street Journal, the Spanish government, a Spanish think tank and so on.

One other point, at the risk of this post getting way too long, Ivison quotes a solar executive as saying the death of the feed-in-tariff for solar (something both the NDP & PCs promise) will not cause their shop to close: "The [feed-in-tariff] helps but we made this investment fully realizing that it will evolve." Evolve seems to be the key word there. They may be contemplating that the FIT will evolve from its current rate to a future lower rate, etc. It's not clear at all that the opposition parties' promises to end the FIT are what is good for the future of this industry. [Clarification (5:05 p.m.): The NDP propose to end the FIT for some but not all projects.]

It's fair to say, whenever you read a column on green energy these days, be vigilant. Particularly during elections.