MIT: Green Energy Can’t Work Unless You Tax Everything


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Andrew Follett Energy and Science Reporter
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Researchers at the Massachusetts Institute of Technology have confirmed what many in the energy world already knew: Without government support or high taxes, green energy will never be able to compete with conventional, more reliable power plants.

The study, announced by MIT’s News Office Wednesday, determined that conventional energy would be consistently less expensive than green energy over the next 10 years. The study concludes that the government could make green energy competitive by offering enormous amounts of taxpayer support.

The study confirms that green energy can only work when energy prices are extremely high and require government support. Projections from the International Energy Agency estimate that developing wind and solar power enough to substantially impact global warming could cost up to $16.5 trillion by 2030.

“Windmills, solar panels, and ethanol could not compete with coal, natural gas, and oil without mandates and subsidies even when the price of the conventional fuels was relatively high,” Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute, told The Daily Caller News Foundation. “Now that prices for fossil fuels have plummeted, very little new renewable energy capacity will be installed unless the mandates and the subsidies are raised even higher.  The bankruptcy this week of Abengoa’s U. S. solar unit with up to $10 billion in debt is a sign of things to come.”

The MIT study also noted that solar and wind power are more than twice as expensive as natural gas, and tax on carbon dioxide emissions could increase electricity prices enough for green sources to compete. Even environmental groups such as The Sierra Club worry increasingly cheap energy will make the case for green power weaker.

“Wind and solar can’t compete with conventional sources on their own merits,” Chris Warren, a spokesperson for the Institute for Energy Research, told The Daily Caller News Foundation. “That’s why the national environmental lobby and their allies are peddling the idea of a carbon tax. They want to punish the use of natural gas, oil and, coal to make their preferred sources appear more profitable. In practice, a carbon tax would have a devastating impact on American families already struggling in the Obama economy–hurting the poor and middle class the most.”

Critics have said carbon taxation disproportionately harms the poorest members of society. A 2009 study by the National Bureau of Economic Research found that a carbon tax would double the tax burden of the poorest households, making it effectively impossible to have both a carbon tax and a living wage. A tax on all man-made greenhouse gas emissions would make the tax burden of the poorest households three times greater than the richest households, according to the study.

Only four nations  — Ireland, Sweden, Chile, and Finland — actually have carbon taxation today. The largest economy to ever have a carbon tax, Australia, repealed it in 2014 over concerns it was harming the economy. No country taxes carbon dioxide emissions at the levels deemed necessary to substantially mitigate global warming by the Intergovernmental Panel on Climate Change (IPCC).

“You often hear, when fossil fuel prices are going up, that if we just leave the market alone we’ll wean ourselves off fossil fuels,” Christopher Knittel, an MIT energy economist who co-authored the study, said in a press release. “But the message from the data is clear: That’s not going to happen any time soon.”

Innovative new drilling techniques such as hydraulic fracturing and horizontal drilling have made conventional energy cheaper and reduced dependence on foreign oil and natural gas. America surpassed Russia last year as the world’s largest and fastest-growing producer of oil and natural gas.

High prices aren’t green energy’s only issue. Green energy sources tend to be unreliable as the amount of electricity they generate cannot be predicted in advanced. The output of a wind or solar power plant is quite variable over time. The times when green energy sources generate the most electricity don’t coincide with the times when power is most needed. Peak power demand also occurs in the evenings, when solar power is going offline.

“Cheap gas is inimical to the green energy business (and all other competitors),” William Yeatman, an economist at the Competitive Enterprise Institute, told The Daily Caller News Foundation. “But even if gas prices were through the roof, like in early 2008, intermittent wind and solar power still couldn’t compete without subsidies and mandates, for the simple reason that you can’t rely on them.”

Since the output of wind turbines or solar farms cannot be predicted with high accuracy, grid operators have to keep excess conventional reserves running just in case. Adding power plants that only provide power at intermittent and unpredictable times makes the power grid more fragile.

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