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Oval Office Speech Should not Endorse China’s Renewable Investments

Posted By Nicolas Loris On June 15, 2010 @ 2:27 pm In Energy | Comments Disabled

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In the 1990s, Gatorade ran its “I wanna be like Mike [2]” campaign – a series of advertisements of kids aspiring to be basketball legend Michael Jordan. In light of the oil spill, President Obama is ramping up his “I wanna be like” campaign when it comes to America’s energy policy. In his May 27th speech on the oil spill [3], after calling for Congress to pass cap and trade legislation, President Obama said the United States should be more like China when it comes to our green economy:

It’s time to accelerate the competition with countries like China, who have already realized the future lies in renewable energy. And it’s time to seize that future ourselves.”

He will likely do the same tonight in his first Oval Office speech. To be clear, China hasn’t quite realized the future is in renewable energy. According to the latest monthly oil report [4]from the Energy Information Agency (EIA), “China may account for 40 percent of this year’s expected rebound in oil consumption and nearly 45 per cent of oil demand growth in the next five years.” To say that China is moving away from fossil fuels and towards a green energy economy is misleading, especially when coal provides 70 percent of the nation’s energy [5]and 80 percent of its electricity. It is projected that China’s coal capacity will nearly triple [5] by 2030.

That being said, China’s significant investment in renewable energy technology should not be a “follow their example” lesson for the U.S. Rather, it should be a “if all your friends jumped off a bridge” lesson. The reason we should not be spending taxpayer dollars for massive investments in green energy is primarily an economic one. The reason renewables provide a very small fraction of our nation’s electricity demand is that they’re too expensive without the crutch of the government. As colleague and Research Fellow in energy economics David Kreutzer said, “In a big non-surprise, communist leaders make China the world leader in products people wouldn’t buy if they had a choice. Add green energy to the list with lead-painted toys and melamine-laced baby food. These are just some areas where it doesn’t make sense to outdo China, and overpriced electricity is one of them.”

The other economic problem is that it pulls resources away from more productive use. If it takes more labor and capital to produce renewable energy, there is a net cost to the economy. Proponents of wind and solar argue this is a good thing. Apparently they forgot the there’s-no-free-lunch-lesson you learn in Economics 101. Government spending will create some jobs to build windmills and solar panels and work at biomass plants but this diverts labor, capital and materials from the private sector that could be used more efficiently to create even more jobs. In effect, government subsidized green jobs destroy jobs elsewhere. If the United States should learn any lesson, it should be not to go down this road as China is currently and as other European countries have done. Those countries are currently paying the price in terms of high unemployment, and as a result, are peeling back the support [6].

Further, these are not policies that will move us away from oil. A push for wind and solar in lieu of this oil spill is a non sequitur since our nation derives less than 5% of its electricity from petroleum.

The difference between the “I wanna be like Mike” campaign and the “I wanna be like China” campaign is that Jordan is a proven winner but renewable energy hasn’t been, thus far, in the marketplace. Our government and other governments have tried to make it a winner with lavish subsidies, but it still cannot compete.


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URL to article: http://blog.heritage.org/2010/06/15/oval-office-speech-should-not-endorse-china%e2%80%99s-renewable-investments/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/china-oil1.jpg

[2] I wanna be like Mike: http://www.youtube.com/watch?v=b0AGiq9j_Ak

[3] May 27th speech on the oil spill: http://www.whitehouse.gov/the-press-office/remarks-president-gulf-oil-spill

[4] o the latest monthly oil report : http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100610/BUSINESS/706109902/1005/rss

[5] coal provides 70 percent of the nation’s energy : http://www.heritage.org/Research/Reports/2009/11/Ten-Things-about-China-and-Climate-Change

[6] are peeling back the support: http://www.foundry.org/2010/05/07/let-the-sun-set-on-solar-subsidies/

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