Renewable impoverishment

This excerpt has been reprinted from “Obama’s Renewable-Energy Fantasy” by Rupert Darwall in The Wall Street Journal, July 5. Recently Bill Gates explained in an interview with the Financial Times why current renewables are dead-end technologies. They are unreliable. Battery storage is inadequate. Wind and solar output depends on the weather. The cost of decarbonization using today’s technology is “beyond astronomical,” Mr. Gates concluded. Google engineers came to a similar conclusion last year. After seven years of investigation, they found no way to get the cost of renewables competitive with coal. “Unfortunately,” the engineers reported, “most of today’s clean generation sources can’t provide power that is both distributed and dispatchable” — that is, electricity that can be ramped up and down quickly. “Solar panels, for example, can be put on every rooftop, but can’t provide power if the sun isn’t shining.” If President Obama gets his way, the U.S. will go down the rocky road travelled by the European Union. In 2007 the EU adopted the target of deriving 20 per cent of its energy consumption from renewables by 2020. Europe is therefore around a decade ahead of the U.S. in meeting a more challenging target — the EU’s 20 per cent is of total energy, not just electricity. To see what the U.S. might look like, Europe is a good place to start. Germany passed its first renewable law in 1991 and already has spent $351 billion on its so-called Energy Transition. The German environment minister has estimated a cost of up to $877 billion by the end of the 2030s. With an economy nearly five times as large as Germany’s and generating nearly seven times the amount of electricity (but a less demanding renewables target), this suggests the cost of meeting Obama’s pledge is of the order of $2 trillion. There are other, indirect costs to consider. Germany is the world’s second largest exporter of merchandise, behind China and ahead of the U.S. But high and rising energy costs are driving German companies to locate new capacity overseas. There is no rational justification for policies favouring renewables. In 1972 environmentalist guru E.F. Schumacher wrote “Small Is Beautiful,” taking as his guide what he called Buddhist economics, which he’d discovered in Burma. A civilization built on renewable resources, he claimed, was superior to one built on non-renewable resources. “The former bears the sign of life,” Schumacher wrote, “while the latter bears the sign of death.” Mr. Obama’s renewable target is a triumph for Shumacher’s Buddhist economics — which amounts to being poor and staying poor.