In discussing implementation by the California Public Utilities Commission (CPUC) of California’s new renewable energy law, CPUC Commissioner Timothy Alan Simon urged consideration of the economic, technical, and political consequences of the CPUC’s actions: “Renewable energy is a fuel source—it’s not a religion.” The promotion of renewable energy remains critical, but as Commissioner Simon admonishes, public policy and investments advancing renewable energy must be based on sound economics and physics rather than religious incantations.
Searching for solutions to our nation’s persistent and unacceptable levels of unemployment, political, labor, and environmental leaders have religiously embraced the easily accepted, but unproven, assertion that taxpayer investments in a green economy create green jobs. President Barack Obama emphasized the creation of “green jobs” in executing the American Recovery and Reinvestment Act (ARRA). Governor Jerry Brown similarly promised that the California renewable legislation mandate for “green technologies” would create “tens of thousands of new jobs.” California regulators have discriminated against out-of-state renewable resources, rationalizing that such exclusionary practices will promote in-state green jobs. The BlueGreen Alliance, a “partnership of labor unions and environmental organizations dedicated to expanding... jobs in the green economy,” reported that ARRA’s “green investments” as of year-end 2010 had created or saved “nearly 1 million jobs.”
The Energy Industry Is Capital Intensive
Promises and claims of green job creation ignore the fundamental economics of the energy industry. Regardless of the fuel selected to generate power, energy production is capital, not labor, intensive. The fuel choice has negligible impact on the employment consequences of a new power plant. Construction of a renewable power plant creates construction jobs and the associated “multiplier” effects in the local economy. However, these benefits are transitory and largely undistinguishable from the short-term stimulus any large-scale infrastructure project, such as restoration of highway bridges or the strengthening of levees, provides.
Moreover, green power plants offer only a minute number of long-term employment opportunities. Modern generating facilities, particularly those using renewable resources, can exploit the most advanced technologies with the intent to lower costs by reducing the number of operators. Wind and solar projects can essentially eliminate any labor requirements related to fuel supply. If the objective of energy policy is job creation, we should prioritize new oil and natural gas pipelines, whose construction lasts many years, and nuclear power plants, where safety concerns and associated regulations dictate certain levels of “redundant” employees.
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