Article

Wind subsidy to cost $1 million per job, think tank claims

MELBOURNE, Victoria, AU, March 1, 2006 (Refocus Weekly) It will cost as much as Aus$1 million for each job created under a government wind energy support system, claims a ‘free market think tank’ in Australia.

The state government in Victoria should not be trying to artificially stimulate interest in wind power, says Alan Moran of the Institute of Public Affairs in ‘Regulatory Subsidies to Renewable Energy in Victoria.’ Each new job created under that policy will cost taxpayers between $600,000 and $1 million.

The state is proposing a major expansion in wind power, and intends to increase green power to 10% of total electricity supply by 2010, which will be “double the likely share of renewable energy under present trends at current subsidy levels.” The cost of this power will double when compared with commercially generated electricity, from $34 per MWh to $78.

Other expenses will be required to provide back-up capacity made necessary by the “poor reliability” of wind energy, it notes, and current subsidies would require new support for selected projects that will cost consumers between $108 and $135 million per year. The proposal would require assurances of subsidies for at least 15 years, which will involve a ‘wealth tax’ on residents of $980 to $1,230 million.

“It has been argued that such measures will create new jobs; however, protectionist policies involving job subsidies... more [truncated due to possible copyright]  
The state government in Victoria should not be trying to artificially stimulate interest in wind power, says Alan Moran of the Institute of Public Affairs in ‘Regulatory Subsidies to Renewable Energy in Victoria.’ Each new job created under that policy will cost taxpayers between $600,000 and $1 million.

The state is proposing a major expansion in wind power, and intends to increase green power to 10% of total electricity supply by 2010, which will be “double the likely share of renewable energy under present trends at current subsidy levels.” The cost of this power will double when compared with commercially generated electricity, from $34 per MWh to $78.

Other expenses will be required to provide back-up capacity made necessary by the “poor reliability” of wind energy, it notes, and current subsidies would require new support for selected projects that will cost consumers between $108 and $135 million per year. The proposal would require assurances of subsidies for at least 15 years, which will involve a ‘wealth tax’ on residents of $980 to $1,230 million.

“It has been argued that such measures will create new jobs; however, protectionist policies involving job subsidies have proven to be unsuccessful in Australia and elsewhere ... because the increased costs result in job losses that more than offset any jobs that are created,” the report explains. Policies regarding GHG emissions are the responsibility of the commonwealth government, and state governments “do not have the appropriate national perspective or the expertise to undertake such activities.”

“To the extent they seek to implement separate policies, they are likely to encourage a job migration to jurisdictions that avoid incurring the costs,” says the IPA report which was produced to respond to the Victorian government’s issue paper on electricity.

The scheme to promote renewables in Australia, the Mandatory Renewable Energy Target, requires 9,500 GWh of new green power to be sourced by 2010 but total national consumption by that time is expected to be 230,000 GWh, which will require 4.1% more from renewables compared with the 2% goal set when MRET was launched in 1997, the report notes. A review in 2004 recommended the level be increased to 20,000 GWh by 2020 but, in 2004, the national government said expanding the target was not economically justified and the requirement would not be increased.

The Victoria government wants to facilitate development of 1,000 MW of wind energy by 2006, which will require $2 billion in capital investment. The state already has a number of measures to support renewables, including $41 million for renewables and geothermal, but the paper says voluntary purchases of green power at a premium cost “has not been successful enough to stimulate significant renewable energy developments.”

“Wind would have only the most trivial of market shares if it were not subsidised or favoured in some way by regulated requirements on the part of energy users,” it states. “Wind power has a level of firm reliability variously estimated at between 4% and 10% of its capacity” which will require back-up capacity from fast-start gas-fired plants at a cost of $10 per MWh.

The report disputes the success of wind energy in a number of European countries, noting that windfarms in Germany generate 26 billion kWh of electricity, 4.7% of the country’s gross demand, with payments of Euro 2.35 billion at an average of 9c/kWh. Wind generates two-thirds of the 39 billion kWh of green power from the EEG, it adds.

The Victorian government says wind turbines displace 1.3 tonne of GHG emissions for every MWh of output, based on the “simplistic assumption that whilst the wind is blowing, and WEFs are producing electricity, there is a simultaneous/instantaneous reduction in fuel use by brown coal generators,” the report adds. “This assumption ignores basic facts of generator response times and fuel mix,” and the target of 1,000 MW of installed wind capacity by 2006 could “impact significantly on generator profitability.”

Using a cost of $1.6 million of investment for every MW of installed wind capacity, Moran says the 1,000 MW target would require $1.6 billion, but only one long-term job is created for every 20 turbines, resulting in a total of 23 jobs at an annual subsidy cost of $599,565 to $999,782 per job. Short-term jobs would cost $153,300 per year per job, or a $613,200 subsidy for every job based on a three-month employment period.

“Whatever the estimates of new jobs that are apparently created by subsidies, it is no longer seriously maintained in policy or economists’ circles that any such jobs will eventuate in net terms,” the report concludes. “The brutal facts are that a subsidy for one job means a tax on existing jobs; the net outcome is, at best, no effect on employment but a negative effect on competitiveness and overall wage and income levels.”



Source: http://www.sparksdata.co.uk...

MAR 1 2006
https://www.windaction.org/posts/1480-wind-subsidy-to-cost-1-million-per-job-think-tank-claims
back to top