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5 Reasons Why the Romney Energy Plan is Bad for the Economy

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Mitt Romney’s energy plan, which will supposedly add four million jobs, calls for more drilling, oil and gas and little mention of renewable energy. Moving forward in this direction could have severe negative impacts on the progress this country has made in areas of wind, solar and bio energy…not just environmentally, but economically as well. Here are five reasons why Romney’s energy plan is bad for the economy:

1) Investing in renewables will create 1.7 million more jobs than investing in fossil fuel: As reported by a recent study by the Center for American Progress and the University of Massachusetts, $150 billion invested in renewables would generate 1.7 million more jobs than the same amount invested in fossil fuel extraction.

2) Fossil fuels increase our costs by $120 billion/year: The National Research Council estimates the hidden costs of burning fossil fuels for transportation and electricity generation to be about $120 billion a year, primarily relating to its effect on human health.

3) 25% renewable consumption = 297,000 new jobs/25 billion in revenue: A study by the Union of Concerned Scientists found that a national standard requiring utilities to obtain at least 25 percent of their power from wind, solar and bio energy by 2025 would create 297,000 new jobs, generating $13.5 billion in income for rural landowners and $11.5 billion in new tax revenues for local governments.

4) Wind Energy employs 75,000 nationwide, = 35% of new power generation. It has been reported that the wind tax break, which amounts to 2.2 cents per kilowatt-hour of wind-generated electricity, has allowed wind power to compete against coal, gas and nuclear energy. Today, Iowa gets 20 percent of its electricity from wind, creating 7,000 new jobs and generating $5 billion in private investment. Romney’s vow to kill the wind tax credit would put some 37,000 jobs at risk, particularly in Midwestern states. As Romney has failed to mention, wind energy has actually represented 35% of all new generating capacity over the past 5 years, second only to natural gas, and more than nuclear and coal combined and employs over 75,000 nationwide.

5) The green economy produced 2.7 million jobs in 2010. According to a recent report, the green or clean tech economy produced 2.7 million clean tech jobs across the country in 2010. This represented 2.1% of the roughly 130 million overall non-farm payroll jobs and was up 27% from the 2.1 million jobs reported in 2003.

So when we look at Romney’s proposed energy plan, it’s clear the “green” that’s missing is not just about the environment.

Image: Maria Dryfhout / Shutterstock.com

Content Discussion

Edward Kerr's picture
Edward Kerr on October 5, 2012

Great post Elizabeth,

However, you missed one not so little point. You correctly point out the health costs of burning fossil fuels but you failed to mention the major exigent cost of relying on a dwindling resource. That being the cost of maintaining a military who's main purpose seems to be to keep the oil flowing. I won't even go into the "spiritual" damage that those wrongful military actions do to the heart of America.

Ed

Geoffrey Styles's picture
Geoffrey Styles on October 5, 2012

Elizabeth,

A crucial point that you have missed relates to whose money gets invested along the way to creating those jobs. In the case of the opportunities emphasized in the Romney plan, it's mainly private-sector money going in, and development results in the payment of substantial bid premiums, lease payments and production royalties, yielding billions in incremental federal revenue each year, net of oil & gas tax incentives, per a Wood Mackenzie study last year.  By contrast, renewables still require large public investments, at a time of large deficits. That diminishes their attractiveness as a federal job-creation strategy.   

It's also worth keeping in mind that energy of all kinds remains a capital-intensive pursuit.  As such, its biggest employment impacts are always going to be in the other 93% of the economy that uses energy, rather than producing it.  And for those impacts to be positive--not negating energy sector gains--the energy produced needs to be competitive.  It's also worth noting that the bulk of the jobs attributed to the clean economy so far are not in things like wind and solar (54,000 total, per Brookings/Battelle) but in mass transit, waste management and recycling, conservation, and various services.

Elizabeth Kraus's picture
Elizabeth Kraus on October 6, 2012

Great comments! Keep them coming!

Paul O's picture
Paul O on October 6, 2012

Elizabeth,


Frankly I would be persuaded if you could show me, rather Show us empirical evidence of Jobs Growth in countries where Renewables are actually seriously being pursued.

In other words, Have the Germans for instance, realized the kind of jobs that  renewables advocates preach, or have the Spanish?

Renewables advocay has become a near religious excercise where it is difficult to tell bottomline facts from spin. If we can but see these wonderful results realized in some other country, it would go a very long way to proving the claims being made.

John Miller's picture
John Miller on October 8, 2012

Elisabeth,

A few comments on your references:

 1. Refer to Geoffrey Style’s comment below.

 2. Your NRC reference on fossil fuel costs appears to be a one-sided analysis, which only identifies and roughly estimates the theatrical negative impacts of fossil fuels.  No consideration for the possible positive value-added impacts of fossil fuels appears to be covered.  This unfortunately overstates the perceived costs of fossil fuels (and inflates renewables values) by not even attempting to provide a more balanced and accurate analysis.  Even though fossil fuels do have significant negative environmental costs, the possible positive value for the Public is also very significant.  Take for example during the winter in northern climates, the value of fossil heating fuels are very significantly positive and save many lives from fatal cold exposure each year (Federal Agencies value human lives at $6-8 million each).  Fossil fuels are required for supporting essentially all economic output and related activities including food production & processing, accessing goods & most services (including medical), getting most folks to work or school, etc.  A more accurate assessment of renewables impacts on jobs and costs-savings should include an objective and comprehensive ‘full lifecycle’ of fossil fuels; costs plus benefits.

3. The U of CS analysis once again uses the one-sided fossil fuel environmental costs approach to develop their estimates of renewable power production savings.  Unfortunately, they also significantly under estimate the cost for future new renewables capacity and omit other impacts of ‘variable’ wind/solar power supplies.  Until commercial level power storage technology is developed, wind/solar variable power require effectively 100% redundant backup (peaking) natural gas power capacity.  Since this capacity must be operating in continuous hot standby mode, significant fossil fuels will continue to be required (Re. http://theenergycollective.com/jemillerep/98281/costs-replace-us-coal-power-clean-energy).  Other biofuels or biomass energy sources get even more complex, and continue to be very economically challenged.

4. Wind power has received more than just 2.2 cent/KWH subsidies.  Beside the renewable power standards adopted by many states and local PUC regions that effectively create a guaranteed market for renewable power (independent to cost considerations), wind power has also benefited from added state and federal tax credits, loan guarantees, etc., and recently, new EPA coal power development regulatory barriers.  Although wind power has grown at relatively larger rates than most other power generation in recent years, wind still only supplies 3% of total U.S. power generation (compared to coal-about 40%, natural gas-25(+)%, nuclear-19% and hydropower-8%; EIA MER 2012 EOY projection).

5. Analysis of the ‘Red, White and Green’ (recent) report finds the data appears to be based more on political input/opinion than fundamental economic/job analysis.  The challenge in interpreting this report begins with clearly defining ‘green jobs’.

After analyzing your references, its unclear how one could readily agree with your posting titled conclusion.  Much more comprehensive and quantitative economic analysis is needed to support the position that Mitt Romney’s Energy Plan will be less effective in job creation than current clean energy alternatives.

John Miller

Elizabeth Kraus's picture
Elizabeth Kraus on October 9, 2012

Hi John. Thanks so much for your comments and diligence. I have a couple of questions for you. You mention that "much more comprehensive and quantitative economic analysis is needed to support the position that Mitt Romney’s Energy Plan will be less effective in job creation than current clean energy alternatives", and perhaps that is true, but people need to make a decision by Nov. 6th and we don't have that time. So, since you seem to be very educated on this manner:

1) Do you think his energy plan will provide enough economic benefit to outweigh the costs of the long term environmental impact?

2) What do you see as the strengths and weaknesses of his plan from an economic and environmental standpoint?

Just to clarify, I am actually on the fence as to who to vote for. I am a staunch capitalist, but am concerned with the long term economic and environmental impact of his nearly exclusive focus on non-renewables - especially his plan to open up more public lands for drilling. Any insight would be appreciated.

 

John Miller's picture
John Miller on October 9, 2012

Elisabeth,

Free market vs. Government controlled economics is a key issue with the pending election (Re. http://theenergycollective.com/jemillerep/109856/what-energy-independence).   Energy security and long-term environment performances are conditional upon how quickly and successful our country recovers from the recent recession (GDP growth, jobs, average incomes, cost of energy, available tax revenues, etc.).  The U.S. environment was in horrible shape back in the 1960’s, primarily in high population and industrial density areas within most states.  Fortunately the Fed’s created the Clean Air Act (1970) and the original EPA.  Not only was this action supported by bipartisan engagement of Congress and the President, but the program was hugely successful in cleaning up our country.  Despite the current political rhetoric, the U.S. has the strictest controls on air, water and land pollution in the world (excluding carbon).  Today we also have the cleanest burning fossil fuels in the world.

One of the most confusing issues created in recent years is myth that renewable fuels/energy are affordable, sustainable, and efficient.  Unfortunately most renewables are much more expensive than fossil fuels and are generally unsustainable without Government subsidies.  The most successful renewables have been hydroelectric, biomass power (burning wood/waste), biofuels (corn ethanol) and wind power.  Curiously wood, the historic biofuel since the dawn of civilization, continues to provide more U.S. energy than all other individual renewables (excluding hydro) and despite over 20 years of Government renewables subsidies.  Historic and current barriers to greater renewables expansions continue to be largely cost.

Where is the money for future renewables going to come from?  Possibly a strong economy and the consumers/taxpayers?  Until the U.S. economy fully recovers, increased deficit spending and raising taxes (carbon or other) risks plunging the country back into another recession.  Yes, the Romney energy plan focuses on developing domestic fossil fuels over more expensive renewables in the short-term.  Despite opinions to the contrary, fossil fuels will continue to be required for many decades to facilitate a well managed and orderly transition to alternative fuels.  With our current anemic recovery from the recent recession, which action is more reasonable: facilitating development of free markets in an environmentally responsible manner (i.e. full compliance with existing regulations) to achieve renewed economy health, or randomly investing taxpayer revenues in much more expensive-risky renewables through further increased deficit spending and possibly increasing taxes during a weak economy.

Continuing to improve the environment is also important, but not necessarily an immediate crisis vs. the need to achieve full recovery from the recession and help ensure the average middle class has sufficient increased income to afford more expensive cleaner-renewable energy in the future.  A related question voters should consider is: “Which Presidential candidate is better qualified to work with Congress in a truly bipartisan and responsible manner in order to make the critical decisions needed on how best to solve possible longer term environmental issues?  I suggest you compare the past experiences of Governor Romney vs. President Obama in their ability to effectively work with both parties.

Another suggested reference on this subject: http://theenergycollective.com/geoffrey-styles/120481/election-2012-romney-energy?ref=popular_posts

I hope this is helpful,

John Miller