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Ed Dolan

Ed Dolan

Edwin G. Dolan holds a Ph.D. in economics from Yale University. Early in his career, he was a member of the economics faculty at Dartmouth…

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The Renewable Energy Illusion

The Renewable Energy Illusion

Are solar, wind, and other alternatives the magic bullets that will solve the world’s environmental and energy problems? Take a closer look, says Ozzie Zehner in Green Illusions. Zehner not only argues that green energy has technological, environmental and economic limits, but also that without an appropriate policy context, some forms of alternative energy could do more harm than good.

The dirty secrets of clean energy

The first part of Zehner’s book—by far the best—is devoted to explaining why neither photovoltaic, nor wind, nor biomass, nor any of the other alternatives to fossil fuels will be able to deliver a future of abundant, cheap, clean energy. Chapter by chapter, he brings out the environmental and economic limitations of each technology. Among the highlights—

•    Carbon isn’t the whole story. When you count toxic sludge from making solar panels, noise from windmills placed too close to residential areas, or changes in land use patterns from cultivating biofuel crops, you find that alternative energy has negative externalities of its own that offset its low-carbon benefits at least in part, and sometimes entirely.
•    Energy not only has to be produced, it has to be delivered when and where it is needed. Solar and wind power work fine in niche applications, but if you think about scaling them up to supply 20 percent or more of our energy needs, as some hope to do, you run into problems integrating these intermittent energy  sources with our antiquated national electric grid. If you include the needed costs of upgrading the grid and providing backups, solar and wind start to look a lot more expensive. Of course, upgrading the grid would reduce waste for all production technologies, but as Zehner explains that the remote locations and inherent intermittency of solar and wind make the upgrades even more urgent and expensive.
•    Beware of promises based on performance of alternative energy under ideal conditions. Under actual operating conditions, the costs of wind, solar voltaic, cellulosic ethanol, and the rest are typically higher than suggested by extrapolations from laboratory experiments or carefully controlled demonstration projects.

Zehner is quick to insist that he is not anti-green; he just wants to ask questions that the mainstream environmental movement glosses over. My one criticism is that he sometimes overstates his case. The first thing that raised my doubts was his claim that owners of home photovoltaic systems are routinely disappointed with high maintenance costs and performance well below what they were promised.  My own 6 kW system, after five years, has had no maintenance costs and has produced about 10 percent more power than the supplier estimated. Of course, that is only a sample of one, but it was enough to make me start reading more critically. I began seeing other spots where the author overstated his arguments. For example, he was unable to resist clichés like using a photo of a flaming water faucet to illustrate his section on fracking. Unfortunately, despite hundreds of endnotes, Zehner neither cites the source of the photo nor mentions documentation from the State of Colorado (a flaming faucet locale featured in the documentary Gasland) that explains why the link from fracking to flaming faucets is far from clearly established.

Still, details like these do not negate Zehner’s main point: Yes, there are lots of ways to generate energy without burning fossil fuels. Unfortunately, none of them is reliably cheap or totally clean; at best some but not all alternative energy sources are cleaner than fossil fuel alternatives—which brings us to Zehner’s next topic.

The policy context

If alternative energy is somewhat clean, but not really as clean as its “zero carbon” claims, then it is neither all bad nor all good. Whether the benefits of alternative energy outweigh its drawbacks depends on the policy context. Zehner argues that current U.S. energy policy is far too “productivist,” as he puts it. It aims to add alternative energy to the output mix, but at the same time to keep energy “affordable,” which means pricing it at a level that encourages extravagant use. In his own words,

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Alternative-energy production expands energy supplies, placing downward pressure on prices, which spurs demand, entrenches energy-intensive modes of living, and finally brings us right back to where we started. . . In short, we create an energy boomerang—the harder we throw, the harder it will come back to hit us on the head.

The solution? A pricing policy that stifles this “boomerang effect” by encouraging conservation rather than expansion of energy output.  I would have liked to see this idea more fully developed, in at least three respects.

First, it would be worth putting even more emphasis on the need for a policy that mandates full cost pricing, including environmental costs, for all forms of energy. Coal should be charged for the carbon and sulfur dioxide it produces, solar panels for the toxic residues of manufacturing, wind for the upgrades to the grid that are needed to deliver it, and so on. A full-cost pricing policy would dramatically raise the prices of the dirtiest energy sources, like coal and bitumen from Canadian oil sands. It would also charge for proper disposal of toxic sludge from manufacturing solar panels and for upgrades needed to integrate wind power with the grid. Raising the price of these cleaner but not perfectly clean alternative sources would encourage conservation of energy of all kinds while still giving them a comparative advantage over the dirtiest fossil fuels.

A second point is that we should avoid policies that subsidize consumption of energy, even when it comes from relatively clean sources. The feed-in tariffs that are offered to alternative energy producers are one example, as are mandates for utilities to include a certain percentage of alternative energy in their power mix. In both cases, the result is that utilities are required to buy alternative energy at a relatively high price, and then blend it with cheaper energy from coal or other conventional sources and sell the blend at price reflecting the average cost. Such policies stimulate the production of alternative energy, but they don’t encourage conservation. (Subsidies for basic research on alternative energy would not be subject to this objection, since they do not artificially lower the cost of energy to consumers.)

A third point is that once we get energy pricing right, competition among production of relatively clean and relatively dirtier types of energy would take a back seat to competition between production and conservation as the best way to reduce energy use and its associated environmental harms. Should we put solar panels on the roof or weather strip our leaky window frames? If the panels are highly subsidized, they are likely to be our first choice, even though the return on investment in weather stripping might be far higher. (At one point Zehner quips that the cost of the solar panels per pound of CO2 saved could well be as high as the cost of weather stripping windows with gold leaf. That may not even be an exaggeration.)

Once the principle of full cost pricing is accepted, exactly how we tweak prices to their appropriate level is, in my view, a matter of secondary importance. Zehner seems to favor pollution taxes, and arguments can certainly be made in support of that approach. Other people favor cap and trade as a way to put a price on externalities. Still another option is to impose costs on energy producers and users through improved environmental liability rules that protect pollution victims and their property. Take your choice.

Social change and the environment

The preceding arguments on energy policy and technology are all set forth in the first 146 pages of Green Illusions. Unfortunately, I find the second, and longer, part of the book to be less persuasive.

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In this part, Zehner develops the thesis that “unsustainable energy use is a symptom of suboptimal social conditions.” Things like women’s rights, citizen governance, and demilitarization may not seem like environmental issues, he says, but “in reality they are the most important energy and environmental issues of the day.” Environmentalists, in his view, “yield the greatest progress when addressing our social fundamentals.” Near the end of the book, he sums up his thesis in these terms:

Future environmentalists will drop solar, wind, biofuels, nuclear, hydrogen, and hybrids to focus instead on women’s rights, consumer culture, walkable neighborhoods, military spending, zoning, healthcare, wealth disparities, citizen governance, economic reform, and democratic institutions. (p. 342.)

I wonder. Do we really have time to “drop” work on energy issues in order to deal first with social policy? Women’s rights, democracy, and global peace were already the focus of social activists in the nineteenth century, or even before. If those pioneers of social reform could visit us today, they would no doubt be gratified that we have made some progress, but they would be quick to tell us we have a long way to go.

Furthermore, it is not clear that the causal linkages from social change to environmental health are as simple and linear as Zehner thinks. Take wealth disparities, for example. Why should we think greater equality of income distribution would reduce greenhouse gas emissions?


On the one hand, we know that lower- and middle-income people spend more of their income on consumer goods in general and energy in particular, which by itself, would suggest that more equal distribution of a given income would cause more pollution, not less. On the other hand, higher-income households save more, which would lead to more investment and faster growth. That would tend to cause more pollution, unless we had policies in place that reduced the quantity of pollution per dollar of GDP. However, such policies would be worthwhile regardless of income distribution. In short, the relationship between income distribution and the environment turns out not to be so simple after all.

The same could be said for women’s rights, the subject of one of the longest chapters in Zehner’s book. In his view, the issue is simple: greater women’s rights lead to lower population growth, and lower population growth to a cleaner environment. But is that always true?

Yes, it is plausible that if women in, say, Afghanistan had greater rights they might have fewer children. But what about China?  From what I read, the first thing many Chinese women would do if they had more control over their reproductive rights would be to have more children. What about the United States? Is there any evidence that women in the United States want fewer children, on average, than their husbands and boyfriends do? Maybe there is, but if so, Zehner does not bother to mention it.

Furthermore, the link from population growth to environmental quality is not as simple as Zehner thinks. At one point, he writes,

When comparing a modestly consuming populace whose numbers will someday be smaller [China] with a more substantially consuming populace growing exponentially [the United States], it is not difficult to determine which is sustainable within the limits of a finite planet and which is not. (pp. 343-44)

I question that. A footnote to the quoted passage asserts that “China’s per capita consumption is growing, but is unlikely to reach American levels.” What will stop it? Why is Zehner willing to extrapolate exponential growth of the U.S. population (which is now growing less than 1 percent per year, fueled mostly by immigration, not a high birthrate), but unwilling to extrapolate exponential growth of the Chinese economy, which has been outpacing that of the United States by a wide margin? The footnote does note that China’s economy is more energy intensive than those of the United States or Europe, but he attributes that to outsourcing of heavy industry. Partly true, but why the outsourcing? Much of China’s cost advantage in heavy industry comes from the fact that its pollution controls are weaker, and from the fact that its unequal income distribution—even more unequal than that of the United States—keeps wages low. In short, despite China’s low fertility rate, I would argue that its economic model is, on the whole, even less environmentally sustainable than that of the United States.

The bottom line? I like the first part of Green Illusions. Zehner is right to point out that even the best alternative energy technologies are not as green as they are sometimes made out to be, and that some of them, like “clean coal,” are a complete fraud. He is right that conservation has to be part of any green energy strategy, encouraged by prices that make polluters pay for the harm they do. Even if you don’t go in for Zehner’s full program of social change, read at least the first 146 pages and donate the rest to your local recycling center.

By. Ed Dolan

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  • Just_chris on December 11 2012 said:
    What a chalk and cheese assessment. I think it is good to challenge conventional wisdom but I think the green illusion is a bit alarmist as a title. I agree with the idea of factoring in the full cost of power generation but the idea that this would some how spell the end for re is a bit hard to swallow, let's not forget coal and petrol don't magically appear at the point of use. CO2 per kWh is not a bad measure environmental impact it's not perfect CO2e is better because it can include things like land use change. I would love to see the end of income tax and a complete shift to consumption or impact based tax systems. As always the cost in dollar terms for chemical pollution or bio diversity loss will be tough to calculate. I am of the opinion that those should perhaps be controlled via laws rather than taxes as chemical sluge can normally be processed rather than dumped and bio diversity protected by often simple changes in business practice.

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