Streetwise Professor

April 7, 2013

Take Care of Our Fine Feathered Friends: Wind Blows (and Ethanol Does Too), or Wind (and Ethanol) are Bat Sh*t Crazy

Filed under: Climate Change,Economics,Politics,Regulation — The Professor @ 4:25 pm

FWIW, I am one of the “experts” on the WSJ’s new “The Experts: Energy” feature.  The first installment was a week ago.  The next one, about renewables, runs next Monday-tax day! Yay!

The question was: “What is the most promising renewable?”  My first instinct was to respond with the punch line from the very non-PC joke Ty Cobb told to a journalist who interviewed him late in life: “I feel like the country boy whose Mama told him to say something nice to his prom date, and he told her: ‘you don’t sweat too much for a fat girl.’” But I resisted the temptation to say that on the WSJ: here, not so much resistance.  But you’ll just have to wait a week to see what I said.  Snarky, but not quite so snarky as that.

It wouldn’t be quite so hard to answer the question: “What is your least favorite renewable?”  Here, we have to have separate categories for electricity generation and motor fuel.

With respect to electricity, the runaway winner is wind.  Economically: a turkey.  Environmentally: it kills turkeys.  Well, maybe not turkeys, but it does slaughter countless winged creatures.  Not that enviros will tell you that.  Rather, they are willing participants in a conspiracy of silence to cover-up the avian and chiropterian holocaust.

First, the economics.  Really.  I don’t have to go find these things.  They find me.

I could go on and on, but let me just point you to Germany.  Germany has made a huge bet on wind.  Huge.  And it is becoming a huge economic albatross (speaking of birds) around Merkel’s neck.  Two articles this weekend point that out, both from sources that are usually pretty enviro-friendly.

The first is from Bloomberg:

With consumer power bills increasing and Merkel facing elections in September, Germany’s energy policy is rising on the political agenda. The cost of developing wind farms in the North Sea has surged following construction glitches and delays in linking turbines to the grid.

“The entire energy switch has derailed,” Marc Nettelbeck, an analyst at DZ Bank AG, said this week by phone from Frankfurt. “The difficulties connecting offshore wind farms to the power grid reduces their profitability and renders the original investment calculations of utilities invalid.”

Merkel has sought to spur development of wind farms at sea — where gusts are typically strong enough to keep turbines generating around the clock — because most renewable sources can’t provide constant, or baseload, power like nuclear plants.

The connection setbacks are “problematic for baseload power capacity and can lead to the failure or delay of the energy switch,” Nettelbeck said.

Spending Reduction

EON, the country’s biggest utility, said last month it will lower clean-energy investments to less than 1 billion euros in 2015 from 1.79 billion euros last year. RWE will cut annual renewables spending in half to about 500 million euros in the next two years.

Read the whole thing.  It gets worse.

The second is from the FT:

The EU’s biggest economy has long been a champion of renewable power, a haven investors could depend on.

This made it a green leader well before it decided to phase out nuclear power after the 2011 Fukushima disaster in Japan, and drive its renewable generation up even further.

Though it is not very sunny nor even that windy, Germany now accounts for nearly half of Europe’s solar power capacity and 30 per cent of its wind power.

Renewable power – mostly wind, solar and biomass – made up a formidable 22 per cent of Germany’s electricity generation last year.

But, with the levy added to German power bills to help pay for this growth nearly doubling to €0.053 per kWh – and an election looming in September – environment minister Peter Altmaier has unveiled plans to freeze renewable subsidies for two years. He has also said future rises would be limited to 2.5 per cent a year after that.

Other proposals to reduce costs include a requirement for renewable generators to sell their electricity to buyers under long- term power purchasing agreements – a far less attractive option than the current system of selling power to the grid and getting paid a set tariff.

These new measures are supposed to take effect from August, but face so much political opposition that nothing may happen before the election.

Still, the consequences have been swift. One big municipal utility with substantial renewable investments, Munich’s Stadtwerke München, has already suspended new clean power projects.

Germany touts that it has made 1.4 billion euros on exporting surplus power (mainly from wind).  It doesn’t tout the fact that it spent 14 billion euros subsidizing wind production.  (H/T Tim Worstall.)

Wind is a diffuse energy source.  Wind production is greatest at night, and smallest when it’s hot.  Meaning that it is there when you don’t need it and isn’t when you do.  Load tends not to be located in windy places, meaning that it requires a substantial investment in transmission.  And wouldn’t you know (a) this is expensive, and (b) people don’t like transmission lines.  Wind is also intermittent, and requires backup traditional generation (fossil fuel or nuclear).

Other than that, it’s great.

But it’s so environmentally friendly, right? Aren’t these small prices to pay?

Why don’t you go ask your fine feathered friends that question?

Wind turbines A/K/A bird cuisinarts, bat blenders.

Master Resource and Watts Up With That? provide chapter and verse about the number of flying creatures killed every year by wind turbines.  The numbers are in the 10s of millions in the US alone, not to mention Europe. Each turbine kills several hundred birds per year.  In some locations, bats are major contributors to the body count.

In contrast: it is estimated that the Exxon Valdez spill killed less than 700,000 birds.

So surely, the enviros are shrieking in their opposition to wind, right? Right?

Hardly.  And as the links above demonstrate, the Federal government is actually complicit in efforts to cover up the bird and bat body counts.  Indeed, the Feds actually give licenses to kill.

To recapitulate.  Wind is economically inane and environmentally dubious.  Other than that, I see no problems whatsoever.

Now ethanol.  Another historically enviro-leaning source, The Economist, takes it apart.  Like wind, it is neither economically efficient nor environmentally friendly:

Moreover, ethanol burned in an engine produces more than twice as much ozone as the equivalent amount of petrol. Ground-level ozone is a big cause of smog. And, while good at boosting a fuel’s octane rating, ethanol packs only two-thirds the energy per gallon of petrol. As a result, motorists get fewer miles per gallon using fuel blended with ethanol than with undiluted petrol. So, even if blended fuel is cheaper per gallon than petrol (thanks to ethanol’s subsidies), the overall cost of using it tends to be higher

Not to mention (which the Economist does) that ethanol mandates are screwing up the gasoline market, and inflating the price of motor fuel in the US.

And definitely not to mention (which the Economist does not, at least in this article), that the subsidy- and mandate-driven demand for ethanol has increased the demand for corn, thereby increasing corn prices, and food prices generally.  The biggest victims of this?  The poor, notably in developing countries, who spend a very large fraction of their income on food.

Wind and ethanol are monstrosities.  Moreover, governments-through subsidies and mandates-are the Frankensteins who created these monsters.  (At least the original Dr. Frankenstein created only one monster.)

To the extent that fossil fuels create externalities, it is best to provide incentives to reduce their consumption, and to encourage the production of substitutes, through taxes (taking into account the heavy tax burden that fossil fuel consumption already incurs).  Then let market participants determine the most efficient way to mitigate these externalities.  Instead, for decades governments have attempted to pick winners, and constructed an elaborate system of subsidies and mandates that have been driven by politics and politicking, and which have led to the massive stimulation of the worst of the non-fossil fuel technologies: wind and (corn-based) ethanol. In so doing, they have picked total losers.

What’s more, the subsidization of inefficient technologies, actually suppresses the incentive to develop more efficient technologies (where efficiency includes the environmental costs).   This unseen impact is arguably as devastating as the seen effects-and those are bad indeed.

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13 Comments »

  1. For a bat casualty count from my neck of the woods, read about 2/3 down the linked article: http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20130407/OUTDOORS/304070316

    Comment by DrD — April 8, 2013 @ 6:54 am

  2. Took a look at The Experts Panel. My favorite headline: Mark Muro: Let’s Enact a Carbon Tax and Spend the Revenue Wisely. Yeah, right.

    Comment by Howard Roark — April 8, 2013 @ 12:07 pm

  3. A few other thoughts. My lib friends are constantly defending renewables in the following ways:

    1. We can’t afford not to. Translation: Economics is not considered.
    2. All these problems mentioned above can be fixed over time. If there’s a will, there’s a way. Translation: They don’t understand that the entire concept is flawed from the beginning and/or please refer to collective farming.
    3. Big Oil doesn’t care and won’t invest in the future, so government has to.
    4. We have to do something, we can’t accept the status quo.

    As for the poor, the elites have hamstrung any possible development in places like Africa. They have shamed them into preserving their land to protect their wildlife, etc. That’s all well and good, but Africans are sitting on vast tracts of land that could earn them far more money and wealth than they could ever do managing pathetic eco-tourism parks. We’re essentially creating play areas for the rich.

    As for the renewables industry, I had to laugh at a scandal in Oregon where a wind farm company took advantage of state subsidies by splitting their farms up into smaller entities. They could then get a subsidy for each separate one. The state cried foul and got a court to say that it was actually only one entity and thus eligible for only one subsidy. I guess we can start calling these evil profiteers “Big Wind.”

    Lastly, the Sierra Club is against nuclear, fossil fuel, hydro, and coal… which consitutes over 90% of the energy we use today. Somebody tell me who isn’t looking at reality.

    Comment by Howard Roark — April 8, 2013 @ 12:21 pm

  4. Professor: You seem to be ignoring the buzzwords. Buzzwords counterbalance facts, statistics, knowledge & reality. The solutions you attack (aha! w/ that Alinsky accusation, you are on defense!) are part of Obama’s (& the Greenie’s) ‘common sense’ ‘balanced approach’ to climate change. Most voters (actually 50% + 1 <<<< Integer, NOT %) who were counted (It is NOT WHO votes that COUNTS, but who COUNTS the votes!) don't want to be bothered with difficult concepts like simple math. Buzzwords will do fine.

    More info here: http://obamaputin.com

    Vlad

    Comment by ObamaPutin — April 8, 2013 @ 10:41 pm

  5. Big Oil doesn’t care and won’t invest in the future, so government has to.

    This one always makes me laugh. We launch projects with a 10-15 year development period, followed by a 25-40 year operating period. Every asset we construct has a design life of 25 years, and this often gets extended up to and beyond 40 years. How many politicians look beyond the next election?

    There’s also the fact that, whilst private oil companies maximise daily production, they do not do so at the expense of the reservoir integrity. Contrast this with the state run firms – particularly those in the former USSR – which would wreck the reservoir by excessive water injection in order to boost production figures.

    There’s much to criticise about how major oil companies are run, a lack of long-term thinking is not one of them. Whereas government programs appear to have been dreamed up in somebody’s lunch break for the sole purpose of winning votes in 6 months time.

    Comment by Tim Newman — April 9, 2013 @ 1:25 am

  6. Oh, and I appreciate the sentiment I quoted above was not that of Howard Roark.

    Comment by Tim Newman — April 9, 2013 @ 1:27 am

  7. No worries Tim, I understood. Thanks.

    Comment by Howard Roark — April 9, 2013 @ 10:30 am

  8. Congrats on being selected for the WSJ panel, Prof.

    Comment by Chris — April 9, 2013 @ 11:41 am

  9. We have two separate but equally stupid phenomena. Buzz words do exist, as a shallow substitute for thinking, I wish these were just buzz words; for many they are the expression of a belief system (yes, I know I have been beating this to death). Not all are true converts – some are just fashion-istas. The true believers, however are dangerous, and no amount of rational argument will quench their thirst for cramming their virtue down our throats. This is particularly the case if they are getting paid to do so. where belief, emotional and material self interest dovetail, watch out!

    As regards to Africa – a great example of this is the campaign to eradicate malaria – the answer people is the application of DDT in the home, and some edible oils spread on the local puddles around them,

    There, I said it: I have just pissed on Rachel Carson’s grave! Also, how could I spread oil around some foreigners’ houses when we “need” it to make ethanol? The fact is that many “reformers” and “environmentalists” love humanity, but hate people.

    How can our enlightened elites ignore simple truths like this? It is easy: their virtue is paid for by other people, in this case people of color. Sotos’ first law – one’s own stubbed toe hurts more than someone else’s decapitation. In this case it is even easier. They cannot see their victims, their victims’ losses are prospective not current, and their misery can be blamed on International Kapitalism, the Jews or whatever other demon is currently in fashion.

    The most extreme strain of this dementia is the elimination-ist ranting: “There are two many people, we use too much, etc.” Like a lobotomized Malthus all of history, all human potential is discounted and their self loathing is projected on the world.

    The only answer is the one the Perfesser gives – mock them mock them and mock them again. As Luther noted, laughter is the one thing the Devil cannot bear. As regards to the lunatic fringe, and by those I mean those that will bravely sacrifice other peoples lives to save the “environment”, Gaia or whatever false godhead they want to coerce us to serve.

    Instead, suggest that they take the first concrete step to improve the lot of humanity by Kevorkian-izing themselves, in an Environmentally sensitive way of course, Don’t let them drown themselves where their decomposition will increase the BOD (biological oxygen demand)and kill the waterways, nor add to fertilizer runoff by lying in a field, etc. I suggest jumping off a whale watching tour boat: you will entertain your fellow passengers, save fuel on the trip home (less dead weight as it were) and the crabs will be happy.

    Spleen emptied.

    Comment by Sotos — April 9, 2013 @ 3:14 pm

  10. Damn kindle – meant to say as regards to the lunatic fringe, etc. don’t just mock them.

    Sorry

    Comment by Sotos — April 9, 2013 @ 3:35 pm

  11. Sotos, DDT? But it will kill birds and mess up the ecosystem! Humans, of course, are not part of the ecosystem, per the environmentalists. And yes, if the environmentalists took your advice, there would be plenty enough of them to reduce our carbon footprint significantly. Problem solved.

    Comment by Howard Roark — April 9, 2013 @ 5:00 pm

  12. Actually, I also have a suggestion for the improvement of the environment: You can inhale all you want. Just don’t exhale.;)

    Comment by MJ — April 9, 2013 @ 11:16 pm

  13. @MJ
    Wow-totally awesome proposal dude.

    Comment by pahoben — April 10, 2013 @ 8:05 pm

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