President Obama’s recent speech in Las Vegas about energy is either amazingly dishonest or amazingly ignorant. It is as if the president and his advisers read Nineteen Eighty-Four by George Orwell and instead of treating it as a cautionary tale, they considered it a how-to manual for talking about energy. President Obama even trotted out his version of Emmanuel Goldstein (the Koch Brothers).
Time and time again in his speech, President Obama said that solar and wind power are cost-effective, even though the evidence based on data from his own administration argues that wind and solar are much more expensive than our existing coal, natural gas, and nuclear plants. The president continues to promote massive subsidies for solar and wind because these sources are, in fact, much more expensive than our existing sources of electricity generation.
The President’s Speech in Las Vegas: A Study in Blackwhite
The best way to understand the President’ speech is that it is heavily uses the concept of “blackwhite” from Orwell’s Nineteen Eighty-Four. In Nineteen Eighty-Four, Orwell describes blackwhite as:
…this word has two mutually contradictory meanings. Applied to an opponent, it means the habit of impudently claiming that black is white, in contradiction of the plain facts. Applied to a Party member, it means a loyal willingness to say that black is white when Party discipline demands this. But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary.
President Obama’s misuse of the term “rent seeking”
The president’s belief that black is white is present throughout his speech. One of the best examples is when the president argued that trying to get rid of government mandates and subsidies is “rent seeking”:
[w]hen you start seeing massive lobbying efforts backed by fossil fuel interests, or conservative think tanks, or the Koch brothers pushing for new laws to roll back renewable energy standards or prevent new clean energy businesses from succeeding — that’s a problem. That’s not the American way. That’s not progress. That’s not innovation. That’s rent seeking and trying to protect old ways of doing business and standing in the way of the future.
For President Obama’s benefit, here is the definition of “rent seeking”:
People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors.
Renewable energy standards mandate the use of electricity from renewable sources. These laws are pure rent seeking. Only through Orwellian doublespeak can someone say working to get rid of government mandates and subsidies is itself “rent seeking.”
President Obama’s misuse of the term “free market”
Another example of Orwellian blackwhite is President Obama’s twisted understanding of what it means to be “free market.” The president stated:
Now, it’s one thing if you’re consistent in being free market. It’s another thing when you’re free market until it’s solar that’s working and people want to buy, and suddenly you’re not for it anymore. (Laughter.) That’s a problem.
For 15 years I have worked for free market organizations that focus on environmental and energy issues. Not a single time have I ever seen a free-market group not promote a free-market position on solar. Who knows what President Obama is talking about?
But this attack shows us something important—that the public supports free markets and choice—not rent seeking and mandates. When President Obama makes a comment like this you can safely assume that it has been focus-group tested. President Obama and his handlers realize that they are vulnerable because their programs are anti-free market, anti-choice, and drive up energy prices and so, following the Orwellian doublespeak formula, they claim the exact opposite.
President Obama’s incorrect claims about the price of solar
As noted in the introduction, solar (and wind too) are more expensive sources of electricity generation than our existing coal, natural gas, and nuclear power plants. But that is not what President Obama claimed in his speech:
It’s thanks in part to these investments [federal R&D subsidies] that there are already places across the country where clean power from the sun is finally cheaper than conventional power from your utility — power often generated by burning coal or gas. (Applause.)
And it’s impossible to overstate what this means. For decades, we’ve been told that it doesn’t make economic sense to switch to renewable energy. Today, that’s no longer true.
Again, this is wrong. Solar is not cheaper than burning coal or natural gas. According to a recent study from the Institute for Energy Research on the cost of electricity from existing sources, electricity from existing coal and natural gas (as well as hydro and nuclear) is much, much more affordable than the estimates of the cost of the new solar installations from President Obama’s Energy Information Administration.
This chart from the IER report shows that electricity from existing coal costs $38.4 per megawatt hour and electricity from existing natural gas plants costs $48.9 per megawatt hour.
According to the Energy Information Administration, new PV solar costs $125.3 per megawatt hour. It is pure Orwellian blackwhite to say that $125 is less than $38 or $49.
It’s actually worse for solar than these numbers suggest. The electric grid must be kept in balance at all times. That means coal and natural gas, which can be turned on or turned off as needed, are more valuable to the electric grid than solar and wind because you cannot control when the sun shines or the wind blows.
Putting Solar’s Growth in Perspective
President Obama was very impressed with the growth in solar production and installations in the United States, but failed to compare it to the growth in natural gas and oil production. He stated:
America generates 20 times as much solar power as we did in 2008 — 20 times. Last year was solar’s biggest year ever. Prices fell by 10 percent; installations climbed by 30 percent. Every three minutes, another home or business in America goes solar. Every three weeks, we install as much solar capacity as we did in all of 2008.
That is an impressive increase, but numbers from the Energy Information Administration suggest the president is vastly overstating the rate of growth. According to EIA, in 2008 the United States produced 89 trillion BTUs of energy from solar, which grew to 427 trillion BTUs in 2014. That is an increase of about 5 times, not the 20 times increase the president claimed. Even if the 2015 solar production numbers grow 40 percent from the 2014 production numbers (solar production grew 40 percent from 2013 to 2014), that would still only be a 6.7 times increase.
Not only does President Obama vastly overstate the increase in solar production, but he also fails to acknowledge that the increase in solar production is dwarfed by the increase in oil and natural gas production. The Obama administration has lavished solar with billions of dollars in subsidies. But even with those subsidies, the increase in natural gas and oil production has far outstripped the increase in solar production. In fact, natural gas plant liquids (hydrocarbons in natural gas that are separated as liquids at natural gas processing, fractionating, and cycling plants) have increased 5 times as much as solar.
This graph is all the more surprising because in 2008, people thought that natural gas and oil production would fall. It shows that even spending billions upon billions of dollars subsidizing President Obama’s pet energy sources, American ingenuity wins out by producing much more oil and natural gas.
Solar jobs are awfully inefficient at producing electricity
President Obama argues that installing solar is good for the economy. He stated:
And one of the reasons we’ve done this is not just because it’s good for the environment and good for the overall economy — it takes workers to install all this new capacity. And that’s why, last year, the solar industry added jobs 10 times faster than the rest of the economy. Solar has helped a lot of construction workers find work while Congress was dragging its feet on funding infrastructure projects. In fact, the solar industry now employs twice as many Americans as mining coal. (Applause.)
This is all well and good, but it means that solar jobs are awfully inefficient at producing energy. In 2014, coal produced 20.3 quadrillion BTUs of energy while solar produced 0.43 quadrillion BTUs. Coal produced 47 times as much energy with half as many workers. On a per worker basis, coal produces 94 times as much energy as solar. In other words, coal is much more efficient at energy production than solar.
President Obama’s incorrect claims about job losses and economic harm
In his speech, the President argues time and time again that moving to solar and wind is economically a good decision. For example, he argues:
And anybody who suggests that moving to a clean energy economy is going to somehow cripple our economy, or lead to fewer jobs . . . I just want everybody to remember, we’ve heard these arguments before. We have engaged in this debate many times before.
The President is correct that we have engaged in this debate before and Senator Reid (who he was sharing the stage with) and the American people roundly rejected the President’s vision. In 2009, President Obama, with Democratic majorities in the House and Senate, tried to pass the Waxman-Markey cap-and-trade bill. The bill passed the House, but stalled in Senator Reid’s Senate. In fact, as the Senate Majority Leader, Reid never even brought the bill up for a vote.
One of the reasons that the American people and the Democrats in the Senate turned on the President is that it is pure Orwellian blackwhite to say that moving to more solar and wind will not lead to fewer jobs. Government data show that solar and wind power are expensive. This is well known. Not only are solar and wind expensive, but they are unreliable and require backup generation to produce electricity when the wind isn’t blowing and the sun isn’t shining. In a true accounting, this increases their costs even more.
In fact, President Obama used to tout Spain as the way forward on electricity generation until an IER-commissioned study found that for every 1 green job financed by Spanish taxpayers, 2.2 jobs were lost as an opportunity cost. Again, this is a simple acknowledgement that the subsidies must come from somewhere; and by driving up electricity prices, solar and wind power harm jobs and the economy as a whole.
Conclusion
President Obama’s speech in Las Vegas is purely Orwellian. As noted above, he makes claim after claim that is incorrect. This speech is a paean to solar power, but according to President Obama’s own Energy Information Administration, solar thermal is the most expensive source of electricity generation and solar PV is the third most expensive. Solar has a place in our energy system, as do wind, coal, nuclear, geothermal, natural gas and other sources. But federal bureaucrats should not direct energy policy by regulations, subsidies, and mandates. The American people should direct policy through their own choices. President Obama needs to trust the American people, instead of throwing billions of their tax dollars to solar and wind companies.