Subsidies Make the Energy World Go ‘Round

Published October 6, 2008

The green energy and alternative energy movements are on the march. The subsidies for solar, wind, geothermal, and hydro energy are in place and poised for any program that passes the test–is it something other than old reliable coal and oil?

The May issue of American Spectator, a conservative chronicle of politics, fawningly interviewed the old wildcatter and gambler, T. Boone Pickens of Texas, who rambled through the encounter asserting that the oil price problem was because we depend too much on our enemies (not true, we depend mostly on Canadian and Mexican oil), that we are involved in a tremendous transfer of wealth to the evil Saudis and others (not true, America sends less than 10 percent of its money for oil to the Middle East), and we need to move to alternative sources to solve the problem. Mr. Pickens suggests wind, and he is off on a $10 billion-plus project in the panhandle of Texas that will, if it really works, solve nothing. Wind will have a minor impact on natural gas usage, but no effect on gasoline or diesel, which come out of different distilling products of petroleum.

Mr. Pickens says he will erect 1,500 wind turbines, with a 1 or 2 megawatt capacity, on 400,000 acres in North Texas around Pampa, which is a remote and desolate land, and that’s a beginning to the answer. Really? $1-2 million each for the turbines, which are rated at 1 or 2 megawatts but will produce only 30 percent of that capacity, so 1,500 turbines would produce about one-half the energy of a normal coal plant? At what cost … and given the remote area, what transmission line costs?

But it sounds good–after all, wind is free. But it’s also inconsistent and very inefficient. The United States uses abut 14 trillion kilowatt hours, or 1.4 billion megawatt hours, per year, and there are 8,760 hours in a year. That’s an hourly need of output of about 1,600 1,000 megawatt plants operating at capacity, so the number should be 10 percent greater for current use–1,760 megawatts. California would need around one-eighth and Texas one-tenth–220,000 and 176,000 megawatt capacities.

As an example of what a scam Mr. Pickens is proposing, his 400,000-acre wind farm with 1,500 turbines that each have a capacity of 1 to 2 megawatts (which could be put up on less than 10,000 acres) would produce over a year, only about a third of capacity, or about 6,500 megawatts, 0.5 percent of Texas’s electricity needs.

It has been said that the whole state of Connecticut would be needed to do a wind farm for New York City. Consider that one turbine with 1 megawatt capacity has 300 kilowatt of actual output because one-third of capacity is the usual turbine real production. Each turbine takes up about 4 acres with accessories and transmission and road access. New York’s population of 8 million would require on the high side of 60,000 megawatts of output, which would take 240,000 acres for the turbines alone. Connecticut has 5,018 square miles, 321,000 acres, so the residents and other activity of the state would have to be satisfied with what’s left, about 25 percent. But back-up coal or other electricity sources would still be required for windless or slightly breezy days.

In comparison, a 1,000 megawatt coal or nuclear plant takes less than 100 acres, so 6,000 acres would be adequate area for all the coal plants to supply New York City, with no back-up plants on the grid.

Mr. Pickens points out that although wind is his game, he needs the subsidies and tax credits to make wind a viable consideration. According to The Wall Street Journal of May 12, 2008, “At the trough: a peek at U.S. energy subsidies by Keith Johnson, the U.S. Energy Information Administration reports that solar energy is subsidized at $23.34 per megawatt hour, wind at $23.37 per mgw hour, nuclear at $1.59 per mgw hour, “clean coal” (low-sulfur coal) at $29.81 per mgw hour, while regular coal got 44 cents per mgw hour, hydroelectric 67 cents, and natural gas 25 cents.

For non-electricity energy generation ethanol and bio fuels get a subsidy of $5.72 per BTU, solar $2.82, and refined coal $1.35. Natural gas and other petroleum distillates get 3 cents per BTU subsidy.

Woops, that’s another part of Mr. Pickens’ proposal. He suggests that natural gas should run vehicles. Presently the natural gas delivery system provides only 2,500 outlets for the whole country compared to 200,000 gas stations and, as you might expect, a new natural gas solution for energy will need some subsidies. You might also have guessed that Mr. Pickens’ company, Clean Energy Fuels, founded in 2006, is the largest supplier of natural gas for vehicles in the United States.

And the jump in natural gas prices that accompanied the environmentalist push for natural gas electricity production will be magnified by a switch of transportation to natural gas, increasing the cost for all uses. Natural gas is not free and supplies are limited by production capacity.

Although the U.S. Energy Information Administration reports that federal energy subsidies have risen from $8 billion to $16 billion annually in the past seven years, there has been no change in total energy production in America, and very little change in the proportions of sources. Clearly our consumption is not up that much so the dramatic increase in energy prices has to do with the world demand and the value of the dollar. America is conserving or using less for a growing economy over the past decade. No time for panic and scare mongering.

John Dale Dunn ([email protected]) teaches emergency medicine at Carl R. Darnall Army Medical Center, Fort Hood, Texas and is a policy advisor to The Heartland Institute of Chicago, and the American Council on Science and Health of New York City.