New Study Shows Renewable Energy May Always Need Government Support

Published April 29, 2016

A new study published by the Massachusetts Institute of Technology says renewable energy sources will be unable to compete with conventional energy without government support or high taxes on fossil fuels for at least a decade.

The authors also conclude renewable energy may always need government assistance to stay in business.

The study’s authors say while renewable energy has made promising gains in the past few years—the cost of solar dropped by about two-thirds from 2009 to 2014—new drilling and extraction techniques have made fossil fuels cheaper, substantially increasing the amount of oil and gas available. In the United States alone, oil reserves have expanded 59 percent between 2000 and 2014, and natural gas reserves have expanded 94 percent in the same period. As a result, the trend of cheaper renewables has been outpaced by even cheaper fossil fuels.

Researchers determined conventional energy would be consistently less expensive than green energy for the next 10 years. Green energy can only work when energy prices are extremely high, write the authors of the study. Developing enough wind and solar power to substantially impact or displace fossil fuels and substantially reduce carbon dioxide emissions could cost $16.5 trillion by 2030. 

More Investment Needed

Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute, points to the Ivanpah solar power plant, which is located near Las Vegas, Nevada and is about to be shut down by regulators, as a good example of why green-energy investments should be watched carefully to see if their promises are fulfilled.

“The [Ivanpah] plant received around $1.6 billion in federal loans, and over $535 million in tax credits, so taxpayers are already into it for over $2 billion, and it’s about to go bankrupt,” Ebell said. “Of course, the environmentalists will say we need to invest more money into the system and tight-fisted conservatives need to release more funds so they can keep the project running.” 

Promises Left Unfulfilled

“The price of some [renewable] technologies came down, but if you go back to the 1970s, when these renewable energy sources started being touted as the clean solution to our energy needs, they were over-promoted as to when they would be competitive,” said Ebell.

“They predicted renewables would be competitive in just a few more years, and that prediction never came true,” Ebell said. “You can go back and look at all the studies on renewable power, and [you’ll find] their predictions never turn out to be true.”

Conventional power prices continue to drop, Ebell says.

“We’ve become more efficient at mining, transporting, and burning coal,” Ebell said. “With the collapse of oil and gas prices, how are renewables ever going to catch up?” 

Kenneth Artz ([email protected]) writes from Dallas, Texas.

Internet Info

Thomas Covert, et al., “Will We Ever Stop Using Fossil Fuels?” Journal of Economic Perspectives, February, 2016: